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AT&T Yields to Critics, Eases iPhone Upgrade Rules

Posted by: Stephen Wildstrom on June 17, 2009

After being pounded for a week by iPhone fans who want a discounted iPhone 3G S and want it right now, AT&T has retreated from its original upgrade pricing rules. But the only way for customers to figure out whether they will benefit from the change is to check their upgrade eligibility in their online AT&T account information.

att_logo.jpgUnder the revised rules, the lowest price of $199 for a 16 gigabyte phone and $299 for a 32 GB version will be available immediately to anyone who is scheduled to become “upgrade eligible” by the end of September. But upgrade eligibility is a complicated business. You automatically become eligible at the end of your two-year contract, but that would not help any iPhone 3G owners because that phone has only been sold for a bit over a year. (Customers who preordered at a higher price and are now eligible for the full subsidy will get a credit for the difference.)

But AT&T uses early eligibility to reward its best customers. Full eligibility, says a company spokesman, “typically occurs anywhere from 12 to 24 months into a two-year contract based on your spending levels, how promptly you pay your bill, and other factors. If you spend more, as iPhone customers tend to, you become eligible for an upgrade earlier. If you spend less, you become eligible later.”

iPhone 3G owners who become upgrade eligible in October or later may be able to get half of the full $400 subsidy, that is, buy an iPhone for $399 or $499. People who don’t qualify for any sort of subsidy, which would include those who bought an iPhone 3G recently, pay the full freight: $599 or $699. But again, checking your account status is the only way to know for sure what class you fall into.

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Reader Comments


June 18, 2009 02:49 AM

So the people that are trying to keep their ridiculous cellphone bills down are being penalized?


June 18, 2009 02:59 AM

ATT had better hope that Verizon never gets their hands on the iphone distribution rights as ATT will lose customers so quickly they will not be able to stem the free flow or subscribers from their lame good for nothing network.

Jerry Read

June 18, 2009 03:01 AM

I wouldn't suggest buying the new iPhone soon. Today the World had a chance to download the new 3.0 software. By the time the process was complete (approx 3 hours) half of the new so called"features" didn't work! This phone constantly let's you down when you need it the most! Maybe if I'm good and don't slam my iPhone into a wall in a moment of desperation Santa will bring me a new blackberry and I can get on with my life!!!!!


June 18, 2009 03:02 AM

This whole cell phone and contract business is a monstrous fraud. The cost of the cell phones vs price is inflated for popularity and the profit to the the cell phone manufacturer and the rip off phone companies is outrageous. Sadly, people keep buying into it. It's just stupid.


June 18, 2009 03:04 AM

Either way..its only ATT that makes profit. No current customer will be happy. With just a year into contract and paying at least US $ 85/month, ATT already recovered all the costs and made profit..asking 400 to 500 is still "greed"

unethical business and horrendous customer service at at&t

June 18, 2009 03:06 AM

I fellas! I have to give up my love for the iphone only because how unethical AT&T has got with its business practice. I am a premier customer and they have been giving me a run around for three days. Customer service is the most lousy compared to anywhere around the world. Even the supervisors are dumb and they refuse to read notes on a customer's account as a sane practice.

I have blogged about it. I switched to Palm Pre from Sprint and they treat you with respect. Read it before you make decision about your next cell phone service:


June 18, 2009 03:45 AM

Hey, ATT/iphony! News for you- no phone product is worth $399-$600 and upgrade IF you do this and IF you do that...BS! Keep your cheap, overpriced Chineese crap and die with it. I hear bancrupcy isn't so painful.

James Simmons

June 18, 2009 03:46 AM

Sounds to me like AT&T could use a little competition.

john Otemaa M.D.

June 18, 2009 04:37 AM

GET SMART APPLE. Hurry and get rid of AT&T.....So many people would get an iphone if they could get the 3GS at a reasonable price available to everyone NOW. Get rid of AT&T ASAP. This is my first volley .....and I will continue to fire E-mails about this to Apple until we see reasonable pricing available to all. Please everyone!! Follow suit.

Nathan g

June 18, 2009 06:00 AM

if you are delaying lauching on sep'09
customer can run out to another brand in the market now Nokia n97 is hot , why not early then that is better .

Don C

June 18, 2009 06:52 AM

The at&t system could not handle the influx of users if they opened it up to Verizon customers. I am currently a Verizon (Blackberry) user and love it. But I wouldn't mind having my IPOD, phone, GPS and book reader (I use a Palm TX) in one unit. But switching to at&t is keeping me from making the switch. Verizon has a Blackberry Tour coming out that critics are calling the best smartphone to date. July release.


June 18, 2009 06:56 AM

EVERY company has the same deal. AT&T is just nervours and decided to concded a little. READ your contract. It says NO upgrade pricing for 2 ydears. Why do people whine over not getting something they DON'T need. I don't understand it. No I'm not a fanboy. I don't currently own an iphone. I JUST ordered one. I watited b/c didn't like the features. I will WAIT for two years, then probably switch to Verizon if AT&T hasn't improved their network.

AT&T Employee

June 18, 2009 09:24 AM

Ouch, these comments hurt!


June 18, 2009 09:40 AM

I left at&t after being a loyal customer for six years. I wanted to get the iphone 3g last year and they wanted me to pay full price which is stupid. They have the worst customer service in the wireless industry. Hopefully, VZ will get a deal with apple next year.


June 18, 2009 10:24 AM

Don't agree to a contract if you don't intend to honor it.

The materials alone in the iPhone cost around $200 (this is well documented by 3rd party research - look it up). There are a lot of additional costs involved in manufacturing and marketing the iphone (software development, marketing, research costs, transportation, packaging, legal costs, labor costs, technical support, warranty costs, etc.).

And Apple, of course, charges AT&T through the nose for the privilege of having the iPhone as an exclusive.

You bought an iPhone SUBSIDIZED heavily by AT&T less than a year ago, and you want a sweetheart deal now because, hey, you're iPhone owners.

satisfied AT&T iPhone customer

June 18, 2009 05:46 PM

I bought the original iPhone and will soon upgrade to the 3gs -- I have to say I love my I phone and have had nothing buy great service from Apple and AT&T / Cingular -- I'm a long time customer and have had verizon and sprint for business phones as well -- This phone has revolutionized the way I use my phone -- All cell companies have their issues but how they resolve them really defines their level of service and I must say I am a happy customer
Love the phone, Love the apps, and have had great consistant service --


June 18, 2009 11:54 PM

During the past 11 months, I have paid AT&T $1,938 dollars, which averages $176 dollars per month. This is a family talk plan, with 3 phones - one of them being the iPhone 3G which was purchased on launch day. I understand the whole subsidized thing, but being that I spend *over* two thousand dollars a year to AT&T, how can I not be eligible to get the iPhone 3GS. Based on thier website & after speaking with them on the phone - I'm unable to get the iPhone 3GS until the end of December. Heck, every single bill has been paid ON TIME, every time! AT&T has really pissed me off.


June 21, 2009 12:25 PM

@Jerry Read
You must not own an iPhone and are just attempting to push your inability to purchase one onto other people by way of bad word of mouth.

I used an iPhone 3G and am a registered developer so I got to use the 3.0 software for several months prior to its release -- not only was it stable then, the 3.0 GM release (e.g. the final release) was absolutely stable on mine and everyone I witnessed's devices. Not only that, but the iPhone 3G S works as well -- much faster and the camera is really good.

Everyone whining about upgrade eligibility makes me laugh -- you signed the contract, why are you trying to get out of it? You knew what you were signing when you signed it. If you didn't want to meet the commitment, you shouldn't have made it. Personal responsibility is a pain, I understand, but if you don't have any, you're just a big child.


June 23, 2009 01:46 AM

I don't really consider it: "Trying to get out of the plan." I consider it: "Willing to lock in for another 2 years of bleeding 100$/month for a mediocre amount of minutes (and data of course)."


June 24, 2009 02:24 AM

I have a original iPhone. I waited till now to upgrade, waiting for what the 3GS offers. I have 2 lines and have upgraded the other one 2 times, once on each contacted line. I am eligable for an upgrade on one line July 31st, next month. Now considering I have an unsubsidized iPhone, been with AT&T 10 years with no late payments you would think I could get a 6 week release to buy the iPhone at the regular prices! They are giving the iPhone 3G customers a break so why not give me one on a non iPhone contract 6 weeks early? I am sure I have paid for the other phones 3 times over! I do not get this! Giving a break to the 3G customers and not someone in my position is just plain ridiculous! The customer service at AT&T just says no! I have called them and explained my case and they just say there is nothing they can do!

For the people who for some reason say they hate the iPhone, you have to be kidding! I have used a Nokia N95, a Blackberry and a Storm and they do not come close! Granted the iPhone has been limited in some areas, but has made changes to include most features on the new 3gs! The ONLY problem with the iPhone is AT&T! If you hate Apple fine.....but you have to admit the iPhone is way ahead of its competitors, and now with the new iPhone will stay that way for a while!


June 24, 2009 02:33 PM

Wow, all this because of waiting?
We really have become an instant gratification society, haven't wwaShat we want we want now!
Look, I tried a Blackberry Pearl and found the screen impossible to navigate ( seemed you generally viewed only a portion of the full view at a time so who knew what the heck you were looking at?), but my biggest problem was that anytime I've dealt with Verizon, they lie. Over and over they have lied to me about sooooo many things. I had their fios Internet ( by the way- it never stayed connected either, and yet it was located under the ramp of my driveway, for my neighborhood), we had their fiber optic TV, telephone for the home, and yes, I tried the Blackberry (I'm a Realtor), and they did nothing but lie about each service, each plan, each contract, rate, etc. Everything everytime came out to be so much more/ different then promised. At first, I thought it was the sales person's error. Then, the next time, a fluke. Then, a series of comedic mistakes. But then they weren't even keeping their promises about correcting them if I could show them the contract, etc. And sometimes when they would promise to straighten billing rates out, they would end up higher than before.
Too many times I would end up with some robotic sounding employee reading from a script over the phone whose one and only goal was to not let me quit my service. I am polite to an absolute fault and cannot hang up on someone. So I'd get stuck on the phone for an hour listening to them repeat the same insulting, scripted arguments for why I needed to stay with Verizon. The whole Verizon experience was rediculous, but I've heard so many other stories from friends that I just have to figure that the company policy, as goofy as it sounds, is to smile and lie.
Now, I am on the 'National Do Not Call' list. Last week I was in my frontyard watering when a car pulled up. Two young Verizon employees jumped out looking for me. They weren't canvassing the neighborhood, no, Verizon sent them straight to my door soley. These youngmen had no idea I'd quit Verizon's 'bundle of services' just last November. They were sent to my address to try to sell me the service. Now that's scary! Scary that Verizon are such Nazis. When I explained to them what was going on and what my experiences had been, the driver told me a similar story from another women he had spoken to ( dissing his own company) and then told me a story of his own to boot!
Now, my one and only disappointment, I thought, also, was the AT&T thing. In the past, I had used them and consistantly had dropped calls right in the middle of working a deal. Not good for business. Very embarrassing to have your call drop right in the middle of negotiations. But, I REALLY wanted an iPhone, and after the Blackberry fiasco ( won't go into details-I'm sure you've heard enough about my feelings for Verizon), my husband bought me one for Mothers' Day 2008.
I have to tell you, my family will probably bury that thing with me. I'd look too un-natural without it in my hand. I LOVE it!!! And AT&T must have fixed the problem with dropping calls, cuz' it just doesn't happen. And, I don't know about customer service, I find a great AT&T employee and make sure to use that same one each time, but really, generally after purchase, you're mainly dealing with Apple from then on. I do know however, AT&T has never once lied to me, ever. We've been customers collectvely for years.
So, let me ask you? The other smart phones out there, seems like they all are trying to be the iPhone. Do I need to even ask the question?
And, do any of them have the great tech support, the website, the education, the Apple Store type set up or Genius Bar type help? Can you truly do even a fraction of the amazing things that you can with an iPhone? Are there a companies behind these other phones that are constantly, and I mean the way Apple's,growing, adding, developing, and listening?
I can go and update my iPhone, for free. Who says that Apple has to update my phone after purchase? I can go and check out new apps, and again, there's a long list of them that are free. I can download music, and yes, every Tuesday they put out a free song for downloading. They don't have to.
I find all of this to be amazing. Plus, my email comes to me just about anywhere that I am, and I can almost always find a spot where I can send from. If all else fails, I can text instead if necessary.
You really aren't going to find a product that can touch the iPhone. All the others can run as fast as they want, they haven't come close to catching up yet.


June 27, 2009 07:03 PM

I am an ex verizon/at&t/sprint customer, i have had multiple blackberries(crap), an iphone, and an iphone 3g. All of these companies and there phones suck, the apple has some of the worst reception i have ever encountered. Blackberries are hard to use, and the screen shows like a quarter of the screen. I am now a t-mobile customer, and it is insane how good they have gotten over the years, they have amazing customer service, much more reasonable prices on plans, and, the winner by far, the g1, this phone is open source, it costs far less, has amazing reception, is lightning fast on the internet, has a better camera... and...uhh, it was number 1 last year. the iphone cannot compare, sorry, but at&t sucks. i pay 39.00 a month plus 20 for unlimited text, and a 30 dollar data package coming to 90 dollars a month, every single time, no extra fees or surcharges, or any crap like that. And, they are a national plan now, nut just a metro line, and they have reception in my home town, something i could not say for verizon or AT&T. The iphone, in my book, is noe onger worth talking about....$599..are you %#*@ing serious


June 29, 2009 07:01 PM

The partnership between AT&T and Apple has grieved many would-be and current iPhone owners. With the latest upgrade offer, some people were placated but the price of switching to the new iPhone remains prohibitive for some. Do you think that Apple can continue with its success by staying in this restrictive partnership with AT&T? Are they hurting themselves and cutting off potential increases in customer numbers?

We're trying to get a debate going about the future of Apple on our blog, especially after this latest iPhone 3G S release. Please check us out:
We think you and your commenters would have a lot to add to our discussion!


August 4, 2009 03:28 PM

I have been a bellsouth/cingular/at&t customer for 20 years and never missed a payment. I like AT&T because of my rollover minutes. However, I've never had a data package--didn't need one--but I recently became a spinning instructor and need an iPod. Perfect solution--upgrade my cell phone to an iPhone, get internet and an iPod and a cell phone in one unit. ooops--not eligible for an upgrade for 9 more months. Can't do that long without an iPod so I'll buy one now and switch to a Blackberry and a different service when my contract is up. So, AT & T, you lose and iPhone purchaser and a longtime customer--that's GREAT business strategy.


August 31, 2009 05:41 PM

can i get a free upgrade even though i just got a new phone

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BusinessWeek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, Douglas MacMillan, and Spencer Ante dig behind the headlines to analyze what’s really happening throughout the world of technology. One of the first mainstream media tech blogs, Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.



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