An AT&T iPhone without a contract is still an AT&T iPhone

Intentionally or not, AT&T engendered a fair amount of confusion (and not a little drooling) this morning by saying that Apple's new iPhones would be available, at some point, without a contract for AT&T cellular service.

Understandably, some of the Web world took that to suggest that the phone might be "unlocked," i.e. usable on other carriers. Tech blog Valleywag, for instance, noted that the lack of contract would enable penalty-free switching to another wireless network, but it neglected to mention that you won't be able to take that iPhone with you.

The truth, however, is that while paying an extra $400 for an iPhone gets you out of committing to a two-year-contract, it doesn't get you out of having to use AT&T. That's a lot of money, more than double the current maximum cancellation fee of $175 for breaking a two-year deal.

So why is AT&T offering the option, or rather, promising to do so in the future?

"Some people just don't want to be hooked in," Gartner analyst Ken Dulaney said. "Maybe you want month-by-month because you think prices are going to go down."

Less charitably, maybe AT&T thinks it benefits from confusing the unlocking issue. Or maybe it just wants to call attention away from the harsh news: Although current iPhone owners and new customers are eligible for the discount, many AT&T customers who use different phones aren't. That means they'll have to pay $200 more for the iPhone 3G.

Ouch.

-- Joseph Menn

Photo by .bala via Flickr

Comments

[squarf]

The new Apple i-Phone will obsolete all other cellphones, and it is cheap at twice the highest price -- including any lock-ins to a phone service. It is a life-changer. Sales forecasts are woefully under-estimated. Furthermore, in this declining economy and increasing job uncertainty, the i-Phone is a must have... to show a brave face and being with it, technically and functionally. It is a must-have, an icon of the future. The apps that are being developed especially for the i-Phone are incredibly ingenous and useful. It reminds me of the front end of Xerox.

[Adam Turner]

Maybe AT&T just wants to take advantage of the iPhone hacking market. The weak US dollar means that an outright $US599 iPhone is quite attractive in other countries, where it can be easily hacked to run on a local network. Only a moron would pay AT&T extra to unlock the iPhone when you can do it yourself with one click. This is why Apple doesn't want them sold outright, as no-one is going to buy a cheap iPhone in the US and send it overseas if they have to sign up for a two-year contract. It looked like Apple had wiped out the grey market in imported iPhones, but AT&T has just opened the door again. On behalf of the rest of the world, thanks AT&T.

[iPhone User]

I have an iPhone, love it, and will buy the 3G iPhone. But why is it Europe gets unlocked iPhones whilst we get funneled into AT&T, probably creating such a bottleneck from the sudden spike in 3G usage that the network will crash and then only be as fast as EDGE. Ok, that's extremely unlikely, but these companies have a tendency to underestimate usage to save costs during construction. The truth is, no one truly knows how the iPhone 3G will work on the 3G network after 10 million people press the Sleep Button on theirs at 8:01am July 11th and scream onto the network...only to be in bumper to bumper bliss!!! Ha! Probably not, but c'mon FCC, get your @$$es in gear and open up devices! Let us choose where to use them. After all, we are buying them free and clear.

And I don't understand why you'd pay $599 for a 'contract-free' iPhone when you could do this: buy the 8 gig at $199, keep the contract for longer than 30 days, then cancel, pay the $175 to terminate your contract. For some reason, if you cancel before 30 days, you have to return the equipment or pay like $800 (exaggeration) for it, trust me, I know. But, after 30 days, you're essentially terminating your contract. $199+$175=$374 for your very own iPhone, free and clear of all contracts. Am I correct with this? Any thoughts?

The reason of course would be to go to T-Mobile to take advantage of the Wi-Fi hotspot at home that lets you call for free anytime anywhere for $9.99/mo. Places the calls over the WiFi, which the iPhone is ideal for. Although, AT&T got Starbucks...but will iPhone customers have to pay for this convenience? I'm sure we will.

[Domingo A. Trassens]

If you want the new iPhone 3G right now, you have to sign a two-year contract with AT&T and accept its conditions. To pay extra $400 is crazy. For my point of view, the best is to be patient... The segment of smart-phones is very dynamic. In short time you will have other options…

Domingo
http://www.comlab-corp.com
http://spaengclub.blogspot.com

[Zzz]

P.T.Barnum was wrong! There's more than one born every minute!

[runnen]

Ok, after looking through several news sites, I'm throughly confused.
I own an iPhone.
Does that mean if i buy a new 3G one it will cost $200?

[bugley]

jeez, people. it's a PHONE. it's not "life changing." it's not anything other than a stupid phone, and these companies have us whipped like dogs to think it's something we need. worry about something real, like our civil liberties, the crumbling economy, schools, highways, the climate...and on and on...

[me]

squarf you must be an idiot. it will cause all other cell phones to be obselete? lol wow learn things before you speak iphone fanboy.

[James]

Runnen: Probably: (most?) current iPhone owners seem to qualify for the lower price, so you can just move your plan to a new handset and extend the contract for two years.

The question then, of course, is what you'll do with the old non-3G handset? Will Ebay suddenly be swamped with second hand original iPhones - and will those all be staying with AT&T, or getting unlocked for other carriers?

[Plutoids]

Adam, I think the total cost would be 199+175+35activation+90first month fee = 499, you get a cool iphone without contract but it might be locked to att's network still untill someone figure out how to hack it.

[Amphetameme]

>Ok, after looking through several news sites, I'm throughly confused.
>I own an iPhone.
>Does that mean if i buy a new 3G one it will cost $200?

No, if you own an iPhone and have a contract that was within 18 months of initiation, you're likely stuck because if you haven't been there in that contract long enough. If you want to upgrade, you're going to be ripped off by AT&T/Apple to the tune of an extra $400 and you'll need to get an entirely new contract, more than likely.

Those of us who bought into the iPhone early and gleefully expected we'd be protect, either in the form of an upgrade plan or something sensible, are hereby shafted.

[Eric]

Here's my question-how many of us are rankled that we got all excited about a $200 iPhone 3G only to find out today that we have to pay $200 just because we were the unfortunate souls who upgraded our non-iPhone handsets too recently? Didn't Steve Jobs announcement make it sound like the $199/$299 prices were available to everyone? So why is AT&T doing a "haha, sorry, we lied!" hat trick? Personally, I don't care about the extra few bucks a month for a data plan-I can handle that. But this extra $200 price tag is going to lose them a lot of customers.

[Res08hao]

The guy who said it was just a phone is right-but. this latest phone is the beginning
of a new phenomenon of social connecting locators, chatting, messaging, emailing, web surfing, and oh yeah, phoning. Music over the air and new applications are going to make all other phones also-rans, including the blackberry.

If you read other phones specs, such as the bold, or the instinct, or the dare, they have a lot of features but they do not work well. The iPhone works perfectly.

Ask the man who owns one.

[Patrick]

>And I don't understand why you'd pay $599 for a 'contract-free' iPhone when
>you could do this: buy the 8 gig at $199, keep the contract for longer than 30
>days, then cancel, pay the $175 to terminate your contract. For some reason, if
>you cancel before 30 days, you have to return the equipment or pay like $800
>(exaggeration) for it, trust me, I know. But, after 30 days, you're essentially
>terminating your contract. $199+$175=$374 for your very own iPhone, free
>and clear of all contracts. Am I correct with this? Any thoughts?

You forget the initial activation fees and charges, if I'm not mistaking it's around $100 and some for the cheapest plan during the first month, also you get your credit checked wich could harm it, so basically you pay the extra money for the hussle free experience and it ends up being almost the same $400 extra, that is the way I look at it!!

[ken]

i want to buy iPhone... but i alrdy got a 2yr contract with att... so now if I buy a iphone without commitment for 499 or watsoever... do i need to pay 70$ monthly fee or can i continue with my existing monthly rental plan???