Filed under: Analysis / Opinion, iPhone
How much will an iPhone cost you?
If you've held off so far, this week's new iPhone announcements may sway you to re-consider moving your phone service to iPhone. So what will this decision cost you? The phone cost is the least significant factor. Whether the 8GB iPhone sells for $200 or $400 subsidized or $400 or $800 unsubsidized only minimally affects your other out of pocket costs over two years.
Read on for the facts and figures that will help you make a decision.
The bare minimum contract price per month for iPhone service is $59.99 per month. That works out to $720/year plus taxes. It's "competitive" in that it offers similar minutes and SMS features to other plans out there. Best, you get "unlimited data" in that package, up to what I believe is 5GB per month. AT&T reserves the right to choke off excessive data usage although I've never heard of anyone with an iPhone plan ever getting cut off.
In addition to the minimum $59.99 plan, you can add on minutes, SMS packages and family plans, which can raise your costs up to and through $100/month depending on the minutes and features you need.
For those who are counting pennies but want to remain on the official side of AT&T iPhone plans, the $49.99 Pick Your Plan prepaid plan offers the cheapest official plan. You get just 200 minutes a month with unlimited data and 15-cent SMS messages. Your unused minutes roll over from month to month. For those of us who don't spend a lot of time on the phone, that rollover can build up very quickly.
You must ask for this plan specifically from AT&T. Getting it to work given Apple's current iTunes activation paradigm can be frustrating. Call AT&T, tell them what you want and ask them what social security number value to enter into iTunes so you will be offered this plan.
In the past entering 999-99-9999 worked because that is or was the AT&T official "no social security number was offered" entry (you have the legal right to refuse to hand over your SSN) but I've been told that that has changed over time. Never just make up a social security number to enter into the credit check. This is the plan I'm personally on and it took me several days and many hours on the phone with AT&T to get it going.
In addition to unlimited data, each of the official plans offers visual voice mail support. If you're willing to stray from official plans, buy your iPhone outright and apply activation and/or unlocking software, your options increase. At the same time, you lose visual voice mail and you lose Apple warranty support.
Apple has made it clear over the last year that it prefers not supporting iPhones that do not subscribe to an official plan. (Their business model relies on AT&T kickbacks from plan payments.) The wording on the iPhone Applecare page is vague and I've been unable to pin down any Apple service reps on an actual "buy but don't activate" policy. Likely, your iPhone becomes another iPod -- manufacturers defects and possibly 90 days of support.
Plan-free iPhones offer many options. As I've written about before on TUAW, activating your iPhone with an AT&T Pay As You Go plan provides you with a 3G compatible unlimited data-only iPhone for just $240/year. That's a really sweet deal for people who want to use the iPhone data features but don't want to pay a premium price for voice. (And yes, you can make calls with that plan for $0.25/minute or $1/day and $0.10/minute). The AT&T PAYG plan is fully iPhone compatible. You can receive calls, make calls and use both EDGE and (presumably, as of this week) 3G data connections.
To make this work, you must use third party software that activates your iPhone. This is not the same as unlocking. Your iPhone remains locked to the AT&T network but uses the plan associated with the SIM card you insert into the iPhone. The software creates an activation record on the iPhone, letting you bypass the Emergency-Calls-only screen. TUAW readers are using this approach to swap their SIMs back and forth between their cell phones, so they can use the iPhone with their already existing personal and business plans.
Unlocking allows iPhones to use SIMs from non-official providers. For users in countries without official iPhone service, this has been the only way to use the iPhone at all. In the US, unlocked iPhones allow you to use your unit with compatible SIMs such as those from T-Mobile. Unlocking remains legal in the US and unlocked iPhone units are officially sold (with Apple's blessing) in France at a premium price.
Word on the streets says that the new iPhone firmware remains just as activate-able and unlockable as the previous generation. If so, your financial choices remain flexible. You can buy from AT&T/Apple or go with one of the backdoor activation/unlocking solutions.
The next big thing coming down the iPhone (and iPod touch) line is VoIP. We've already seen Fring, a SIP-based client that offers voice-over IP phone connections to both online services like Skype and offline land line phones. In my tests, I fringed to both, while experiencing variable call quality and delays. Apple has stated that iPhone users are welcome to VoIP themselves over WiFi but not over the AT&T network. Between VoIP and email, you reduce or eliminate your need for both minutes and SMS. Move out of the range of WiFi though, and you'll have problems receiving calls
So there are your options. You can pay full nick for plans that start at $60/month with a 24 month commitment and possibly get a subsidized iPhone. You can go prepaid starting at $50/month, without commitments or subsidies. Or, you can hacktivate, unlock, or go VOIP. The iPhone is there and the choice is yours.
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Reader Comments (Page 1 of 2)
Kaepora said 12:42PM on 6-08-2008
I'll buy one when it comes with no contract/plan attached.
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Andy said 9:23PM on 6-08-2008
So...never?
Xavier Watson said 12:49PM on 6-08-2008
Seriously, I am SOOO excited to get the new one! I've been holding out until now. (I had to get an iPod Touch to hold me over, though.)
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Dale said 12:59PM on 6-08-2008
There are two "set" of plans being offered right now. 1 from the Apple store and on the AT&T site when I look at my account. The Apple store has a $119.99 unlimited minutes plan now. When I logged onto my AT&T account, the unlimited plan is $99.99. I have screen shots, I just do not know how to post them here.
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Ryan said 1:31PM on 6-08-2008
Dale- just make sure that the data cost is in place with the ATT deal. From what i have seen the data is an "oh by the way" situation, and with Apple the full plan is detailed.
r
Colin Hoops said 1:02PM on 6-08-2008
I'm worried about that undercutting potential resale value of my current phone so that I can upgrade. Anyone else?
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Jakob Henner said 1:14PM on 6-08-2008
It's tough prices in the US.
I pay about $0.2/MB, $0.02/SMS and $0.12/minute with no additional fees or minimum consumption.
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filmfreakk said 1:19PM on 6-08-2008
Not sure if people know this, but you could add an iPhone data package to your existing voice plan. For example, I have a $9.99 secondary line in a family package, and am adding the data package for just $20 more a month, which works out to be $29.99 monthly for voice, unlimited data, and 200 texts.
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lolgamoff said 1:25PM on 6-08-2008
Thanks for this; I was just researching this yesterday. I'm on an unlimited data plan already, and I was curious to know my options when it came to the iPhone.
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Elliott B. said 1:26PM on 6-08-2008
I definitely hope they have some subsidized price for the new iPhone, has anyone seen if this has been rumored/confirmed?
The plans in my opinion are very good value for money. Having unlimited data is so useful and definitely worth having, and I am glad Apple and AT&T worked out a deal on how to sort that out.
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Bender Bending Rodriguez said 1:35PM on 6-08-2008
But that might be a $600 device that gets you a $200 credit toward AT&T, iTunes Store or a mail-in rebate, so it only costs you $400. Either way, we are paying for it. I just hope that AT&T, who has stated recently that they there network is getting congested and they are not making enough money off data, doesn't up the unlimited data rate plan with a logical excuse of "well, the 3rd-party apps, the extra data use from 3G on the iPhone, and the investment we put into getting 3G down this past year requires a hike in the price."
I like to think that the non-optional $20/month for unlimited data across all iPhones is what will keep the price low.
Bender Bending Rodriguez said 1:27PM on 6-08-2008
"Word on the streets says that the new iPhone firmware remains just as activate-able and unlockable as the previous generation."
That appears to be the case with what I've seen in v2.0. Apple and AT&T don't have the need to lock keep it off other networks anymore as they are in most of the countries that the iPhone was being sold to from the US and if you want 3G in the US on a GSM phone your only rel choice—unless you consider one of the small regional networks—is AT&T. Besides T-Mobile not having a 3G network up across the US, they also use an incompatible radio band for the uplink in the 1700MHz range. And, of course, Sprint and Verizon are incompatible networks altogether.
I suspect that Apple's inability to push profit sharing across most nations means that they will be pricing the iPhone in the US at a price that makes it pointless to ship to a grey market arenas in other locales.
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ZinkDifferent said 1:46PM on 6-08-2008
"Word on the streets says that the new iPhone firmware remains just as activate-able and unlockable as the previous generation."
Fascinating statement, considering that no one of consequence has the *real* new firmware to be released tomorrow. Yes, the firmwares from the SDK has been leaked numerous times, and the usual posse of kids have been patting each other on the back of how jailbreakable and unlockable it was within 24 hours of release - yet they seem to have missed all the security and code signing built-in to the code, which hadn't been activated yet, and which they may find to a bit more of an obstacle come next week.
As it stands, Apple is quite capable of locking down their firmware, they just chose not to do it, as the posse of useful idiots has helped them penetrate markets they were not in, at the time.
There may be some hacked early firmwares that the usual suspects will manage to load on first generation iPhones with, original bootloaders, but that will be about it (which is also the reason why Apple will release a second coming of the first generation iPhone, equally locked down, and cheaper).
ZinkDifferent said 1:39PM on 6-08-2008
So, essentially, Erica is regurgitating past posts without bothering to update her information, or even providing useful information - well, as long as she gets to grind her axe on TUAW time, I guess, the world is okay.... :-(
To wit:
- First of all, the new iPhone II may come with a separate, or changed plan, to support the 3G service.
- Additionally, the majority of her 'advice' hinges on unlocking and jailbreaking your iPhone - a task which might be just a tad more difficult with iPhone II, since Apple now will need the useful band of idiots a lot less, and thus iPhone II may find itself quite difficult to hack for her posse - rendering the entire 'advice' null and void.
- It would have been nice if she had bothered to include how many minutes (and SMS) the base plan at $59.99 comes with (450 minutes, 200 SMS, and 5,000 nights/weekend minutes).
- her pet plan, which takes multiple hoops to jump through, only 'saves' $10 a month (yes, $120 a year), but includes 250 minutes less, and no SMS. At 15 cents an SMS, if you use the same 200 SMS messages, you'd pay $30. Suddenly you're $20 over the basic plan - not really a saving, now is it? To equal the $10 difference, you would be allowed to send just 65 SMS messages.
- She also forgets to mention that on the 'cheap' plan, additional minutes over the 200 minutes will cost you 40 cents a minute. 25 minutes later, you're paying the same as for the basic plan, but getting shafted every additional minute, and SMS message, courtesy of Erica.
- she conveniently left off the $100 unlimited plan AT&T is now offering (thanks, Dale)
Let's face it, Erica doesn't care about saving herself, or you, any money with her advice (either that, or she fails at the use of a simple calculator as well) - she has her personal axe to grind further, regarding avoiding paying 'the man', and trying to stick it to Apple. If she;'s struggling to pay an extra $120 a year, then she has no business having an iPhone.
As it stands, cellular bills are a normal fact of life for pretty much anyone with a mobile phone - as such, the AT&T rates are not just competitive, but thanks to roll-over minutes, and the included unlimited data plan, they are actually cheaper than most of the competition out there.
For most people whose time is valuable (i.e. those with a job), jumping through the additional hoops, watching over your minutes, etc costs far more in your personal time, than the $120 you allegedly save - and if you ever let off your vigilance, you end up paying A LOT more with Erica's advice.
Caveat Emptor - and be warned of false prophets.
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ZeroCorpse said 3:02PM on 6-08-2008
Wow. Way to be a jerk.
Erica's post was new to some of us, and it's well-timed. I'm constantly amazed to see that there's always someone being a complete jerk whenever Erica posts.
Gee, I wonder why?
Look-- Maybe YOU can blow the money on an iPhone contract. I have no desire to do so. Why? Because I don't talk on my mobile that much, but I do like to keep one around. There's no reason I should have to pay that much for service on an iPhone when I currently pay $20 every three months and I usually have minutes left over. AT&T offers no plan for low-use iPhone owners. I'd like the unlimited data, but I don't need 1000 talk minutes per month, and I don't need messages either.
AT&T doesn't offer a plan for me. So I don't have an iPhone. I would like an iPhone, though. I have an iPod, and a cell phone, and I think it would be pretty handy to reduce the number of gadgets in my pocket by one.
But of course, in your mind, the iPhone is only for elite folks like you who can afford to throw away the money on minutes and features you'll never use. How dare you say she (or anybody) has "no business" getting an iPhone?
Since when did Apple product ownership require a certain social or economic class? I'm lower-middle class, work as an optician, and currently own a MacBook-- I guess I'm not elite enough to move into iPhone ownership, though. So sorry. I'll just go over here and twiddle my thumbs waiting for Apple and AT&T to make an iPhone for us middle-class, penny-counting peasants.
lane said 4:49PM on 6-08-2008
Dude, while your information is helpful, you don't have to be such an asshole about it! Erica has done wonders in the iPhone community and you seem to be very negative towards her for some reason. why not just quit coming to this site all together, you certainly won't be missed or accepted for that matter. Asshole!
Faslane
J said 7:43PM on 6-08-2008
ZinkDifferent = Misogynist, methinks?
Honestly, why don't you p1ss off and make a fool of yourself elsewhere. You're embarassing.
Big John said 2:04PM on 6-08-2008
This assumes that you don't have a cell phone to begin with. That's how it "costs" you $720 per year. I pay about $900 per year for a cell phone now, so by your logic getting an iPhone saves me $180 per year!
The cost of the phone and the ETF I would have to pay to Sprint are the largest cost factors. At this moment, it would cost me $700 to get an iPhone. That's as much as the yearly service cost!
I get the point of the article, but saying getting an iPhone will cost $720 per year and that the cost of the phone "only minimally affects" my bottom line isn't true at all.
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ZeroCorpse said 3:13PM on 6-08-2008
My cell phone:
$50 for the phone
$20 every 90 days for enough minutes for my needs
$1.99 per month for a ringback tone, just for fun
Approximately $154 per year.
This is enough for me, because I'm not constantly on the phone, I don't use text messages, and I don't need a bunch of extra features.
I would, however, like to have my phone and iPod be one gadget. I get sick of carrying around a phone in one pocket and my iPod in another. Why can't I have the option of consolidating my gadgets?
Because I cannot justify $60 a month for an overload of minutes that I'll never, ever use.
I'm willing to bet a lot of people would like a cheaper plan from AT&T. Not all of us are businessmen who live on the phone. Some of us are just professionals who need to have a mobile -just in case- we're out and need to call a cab, ask a question, or look up some information. Not all of us are Chatty Kathy dolls who can't live without gabbing with our coworkers and friends all the time.
AT&T needs to offer a smaller voice plan with unlimited data. I would pay $20 a month. I might pay $25 a month. I could even be enticed to pay $35 a month if the signal were strong in my apartment (a weakness for my current carrier) but $60 isn't justifiable.
That's doesn't make me unworthy of an iPhone. It makes me a different type of customer. Not everybody wants to order the steak; Some of us are happy with the salad.
AT&T offers no salad.
Big John said 11:55PM on 6-08-2008
Not entirely sure why you're replying to me. I agree with you -- there is no simple, cover all solution like Erica is trying to propose here.