• The Cost of Upgrading
After posting the AT&T iPhone plans this morning, I started thinking about how much this would end up costing me.
Currently, my girlfriend and I are on a FamilyTalk plan with 700 shared minutes between two iPhones. The current cost for this plan is $109 per month, or about $125 after fees and such. This includes unlimited data for both phones, and 200 text messages each.
With the release of the iPhone 3G, the data plan goes from $20 per month to $30, bringing the new price of our plan up to $129. This has been known since WWDC, and frankly isn’t much of a surprise. While data plans for other devices and carriers may be lower, the difference can be easily explained by noting that the iPhone’s browser is much more likely to be used, creating additional overhead. Whether or not this overhead is proportional to the increase in cost is up for debate.
The next thing to be aware of under the new pricing structure is the lack of included text messages. AT&T’s pricing sheet lists a few options for text plans, but the only available selection for a FamilyTalk plan is shared unlimited text messages for $30 per month. That, or we can pay $.20 per SMS. Consumers, for whatever reason, accept that SMS is somehow not data, and should be a separate charge. TechCrunch did the math for me and found that AT&T charges for text messages at a rate of $1,310 per megabyte.
I guess we’ll take the unlimited text option. That brings us to $159 per month; a difference of $501. Over the life of the two year contract, the total additional cost for service adds up to $1,200 (not counting any extra taxes). Assuming we both get the 16GB model (likely), the total cost of the upgrade is $1,798, plus tax. Unless you also count the $18 per phone “activation” fee, in which case the total cost is $1,834.
To stress the point, $1,834 is the additional cost above what we’re already paying. Plus taxes and fees. So how much are we saving by having AT&T subsidize the iPhone?
Coming soon, AT&T will offer a no-commitment option of $599 for 8GB and $699 for 16GB.
$400 per phone.
Of course, it would be unfair and misleading to not take into account the resale value of our current phones , which is a remarkable $350 for an 8GB, on average. Presumably less for a 4GB. Since we would be selling a 4GB and an 8GB, I’ll assume a total resale value of $600.
That’s $1,234 ($617 per phone), if you’re keeping score. Plus taxes and fees.
I’ll be honest, as someone who travels a lot and has been wishing for faster data speeds, this isn’t quite a deal-breaker. The extra $10 for the 3G data plan isn’t what upsets me, although the $20 price point has always felt, to me, like a great value, and I think AT&T is making a mistake in its willingness to give up that perception. AT&T’s dropping of included text messages is what hurts, and it comes off as an attempt at fleecing their customers.
That said, it was smart of them to wait until after the “half the price” hype managed to stick before announcing the increased pricing.
- In my previous post, I failed to notice that the cost of the unlimited text option was $30, not $20. [↩]