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AT&T squeezes wannabe iPhone upgraders

You can have an S. For a price

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AT&T will charge current US iPhone 3G customers a hefty fee for the privilege of upgrading to an iPhone 3G S before their two-year contracts are up, and American owners of the soon-to-be-second-rate 3G model are none to happy about it.

AT&T has announced new pricing for existing iPhone 3Gs, plus rates for the upcoming iPhone 3G S, scheduled for release on June 19th. Pricing for the new phones are in line with what the telecom giant charged for the 3G, and pricing for the 3G has dropped:

  • iPhone 3G S will cost $199 (16GB) and $299 (32GB) for new and qualifying customers.
  • iPhone 3G will cost $99 (8GB) for new and qualifying customers.
  • The 16GB iPhone 3G will be available for $149 while supplies last.

That seems fair - and in the case of the iPhone 3G, a good deal.

Unfortunately, if you're already an iPhone 3G owner with a two-year service plan with AT&T, the terms are not as favorable.

On Apple's buyiphone website, current iPhone owners are greeted first with the cheery announcement that they can now reserve an iPhone 3G S and that "As a valued AT&T customer, AT&T can offer you an early iPhone upgrade with a new 2-yr commitment and an $18 upgrade fee."

Eighteen bucks? Okay, that's annoying but tolerable. However, the site then goes on to list the upgrade fees:

  • $299.00 — 8GB iPhone 3G (black)
  • $399.00 — 16GB iPhone 3G S (black or white)
  • $499.00 — 32GB iPhone 3G S (black or white)

Add to that the required $30 per month data plan, the aforementioned $18 upgrade fee, another $18 for a "One-time AT&T Upgrade Fee," plus the over-and-above charges for text messaging (200 messages per month, $5.00; 1500 messages per month, $15.00; unlimited messages, $20.00), and existing AT&T contract holders are facing the withdrawal of a serious chunk of change from their checking accounts.

iPhone pricing on Apple's website

Want to upgrade your in-contract iPhone to a 3G S? It'll cost you

And then there's the fact that during yesterday's unveiling of the iPhone 3G S, it was announced that AT&T wouldn't support the new phone's MMS messaging until "later this summer" and that no mention whatsoever was made of when or if AT&T would support internet tethering - although news comes today from Engadget that an AT&T spokesperson has said that tethering was coming at some time in the future. When and at what price, however, is still unknown.

iPhone owners are not happy. Over at @twitition, for example, an online petition was launched early this morning, asking Twitterers to weigh in on the proposition that "AT&T should give existing customers the same rate for the new iPhone 3Gs that they do for new customers. New customers or not, another 2-year contract is being made." As of two o'clock Pacific Standard Time, the petition had over 1,700 signatures (Twitnatures?).

(Another Twitition, by the way, demanding that "O2 should offer existing iPhone customers a reasonable way to upgrade to the iPhone 3G S. They should also stop ripping us off for tethering," is even more active, garnering 2,500 signatures in its first 12 hours of existence.)

The discussion is hot and heavy over at MacInTouch, as well, with some posters resigned to the fact and others - like the one who said that "My wallet just snapped shut" - less sanguine.

We realize that a contract is a contract is a contract and that AT&T isn't in business to subsidize early retirement for existing iPhone 3Gs, but we are puzzled by the fact that buyiphone makes no mention of AT&T's standard $175 contract-cancellation fee.

Something tells us that this brouhaha will generate even more heat, especially for those "valued AT&T customers" who bought their iPhone 3Gs soon after its release last July and will now have to pay through the proverbial nose to upgrade to the latest and greatest iPhone 3G S.

However, remember that back when the original iPhone's price was dropped from $599 to $399 two months after its release, Steve Jobs wrote an open letter announcing that Apple would provide a $100 store credit to the iPhone's earliest adopters.

In that letter, he said, "We want to do the right thing for our valued iPhone customers." Perhaps lightning might strike twice in the same place.

Or not. ®

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