O2 iPhone 3GS upgrade nasty

Apple have just introduced a new iPhone. I finally got around to buying one of these fairly recently on an 18 month contract (and my wife was so taken with it, we bought an iTouch for her on MY birthday – could not justify another iPhone subscription).

I knew when I signed that there was a good chance that within the 18 months of the contract, Apple would come out with an update. However, I noted that O2 had offered customers a very cost effective upgrade from the iPhone to the iPhone 3g when that was introduced and the general view was that they would do similar when and if a new iPhone appeared.

Sadly, current announcements indicate that they are not doing anything beneficial for existing contracts. They will have to pay off their
existing contracts (including unused air time – not just any subsidy including in the monthly charges) and take out a new contract. Great!

The latest version of the operating software for both the iPhone 3G and iPhone 3GS allows tethered computing i.e. use the iPhone as a “modem” to the high-speed mobile network for your laptop. However O2 want something like £15 per month for 3Gb and £per month for 10Gb (no rollover) – both give you unlimited WiFi as well. So,not much different from purchasing a mobile “broadband” dongle.

Think I shall wait.

Some people think this is just facts of life in these credit crunch times l whilst others think that this could damage Apple sales in the UK and Twitter users have been “signing” a petition to encourage O2 to offer upgrade options (nearly 2000 entriesat time of writing) – I signed.

Share
9 June 2009 – 22:31 | By kyber | Posted in Musings, Technology | Tagged , , , , , | Comments (1)
  • http://kyber.co.uk kyber

    Many have suggested that O2 would lose out if contracts were terminated early with the balance of a subsidy being paid off because O2 would not have received any airtime income. I have responded to one of the clearer posts on this as below:

    Well written, thank you for sharing. One point though that I am unclear on regarding your criticism of the “What about paying off the remaining subsidy on my phone?” option.

    Are you not assuming that the deal between O2 and Apple is that the subsidy is either fully funded by O2 at the outset (or at least over a period shorter than the full contract period)?

    If this is not the case, then possibly the arrangement between the two parties see payment to Apple over a period of time rather than upfront and thus the monthly payments would be split between a subsidy repayment and an airtime payment (rather like paying capital and interest on a mortgage) in which case O2 do not lose out if the remaining subsidy balance is paid off for them to settle with Apple as they have received air-time income and will continue to do so through a follow-on contract.

    I suspect that the financial arrangements between the two companies are far less simple than either of the two positions above. They are also confidential.

    I agree overall though with the sentiment of many that “a contract is a contract” – however, everything is negotiable and you never know, O2 might just change their position (and if they do, that may well mean more customers for your latest 3GS focused offerings). As you say though, no one really needs a 3GS.