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Dear AT&T, What’s the Real Cost of a $699 iPhone?

Sophie The other day I jumped into the pool, fully clothed, to save my daughter who had gotten in over her head. Unfortunately, I hadn't removed my iPhone from my pocket before doing so.

I don't tell this story to brag–everyone reading this would have done the exact same thing. I only mention this because I want to make it clear that this wasn't one of those situations where someone drops their iPhone in the toilet while they're drunk at a party.

The good news is that I had Apple Care for my iPhone 3G. The bad news is that getting it wet–no matter how noble your purpose–isn't covered. The best Apple could offer me was to repair my iPhone for $200.

Next, I called up AT&T. I had only bought the iPhone about 6 months ago, so I didn't qualify for any kind of upgrade. I said I was more than willing to add two years to my contract to get the discounted 3GS price, but they wouldn't do it. They would, however, be happy to sell me the iPhone 3GS at the non-discounted price of $699.

So, if you're scoring at home, AT&T could have kept me happy by locking me into their service for an additional two years of profit to them! Instead, I'm in the market for a used iPhone and counting the days until my contract with AT&T is up. If the iPhone/Verizon rumors are true AT&T has convinced me that they're not interested in keeping my business.

There must be some convoluted bean-counter logic to all this, but I can't find it. Instead, I'll be patiently waiting until I can get onto a network where I can get more than one bar at my house.

Rich Brooks
Frustrated AT&T Customer

Happy Ending: Me–being me–had tweeted my iPhone's demise, and the cause behind it. At the same time, the company behind SimplyTweet, a Twitter iPhone app, was running a contest on Twitter. The grand prize? A $200 iPhone gift card.

I only heard about this because Tyler Strange (aka @attractiveideas) entered me in the contest, and I was selected!

Although I still couldn't upgrade to the 3GS I was able to trade in my wet 3G for a dry one thanks to Tyler and SimplyTweet. You can follow SimplyTweet on Twitter, as well.

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  • http://www.hurleysolutions.com/about.aspx Josh Hurley

    My Blackberry died a month ago, 3 weeks out of warrantee. ATT said it would cost $300 to replace. I than learned that they have finally started to sell insurance on the "smart phones." I mentioned that I would have signed up if they asked me. After speaking with a supervisor, I was able to get them to allow me to upgrade to a new phone at the 2 year contract price, even though I was only 55 weeks into my two year contract.

  • http://www.hurleysolutions.com/about.aspx Josh Hurley

    My Blackberry died a month ago, 3 weeks out of warrantee. ATT said it would cost $300 to replace. I than learned that they have finally started to sell insurance on the "smart phones." I mentioned that I would have signed up if they asked me. After speaking with a supervisor, I was able to get them to allow me to upgrade to a new phone at the 2 year contract price, even though I was only 55 weeks into my two year contract.

  • Nader Ali-Hassan

    Rich,

    The exact same thing happened to me. If the verizon rumors are true, I'm leaving AT&T.

    AT&T is going to learn the hard way that the lack of customer service when they are in a position of power (ie, the only carrier of the iPhone) will cost them customers in the future when their position is weakened.

  • Nader Ali-Hassan

    Rich,

    The exact same thing happened to me. If the verizon rumors are true, I'm leaving AT&T.

    AT&T is going to learn the hard way that the lack of customer service when they are in a position of power (ie, the only carrier of the iPhone) will cost them customers in the future when their position is weakened.

  • http://www.maineoutdoors.biz Don Kleiner

    Rich,
    I thought that wireless carrier and customer service were mutually exclusive terms. Did no one tell you?

  • http://www.maineoutdoors.biz Don Kleiner

    Rich,
    I thought that wireless carrier and customer service were mutually exclusive terms. Did no one tell you?

  • Shaun

    Unfortunately this policy is not exclusive to AT&T. I was with Verizon for many years and their policy is the same. The policy stinks no doubt but here is the bean counter logic. The wireless carriers subsidize a good portion of the the cost of the phone. In other words when you buy an iPhone for $199.00 with a new 2 year contract you are paying about 60% of the cost of the equipment. The carrier pays the rest. If you just got an iPhone 6 months ago and have offered to sign a new 2 year agreement you are really only agreeing to pay for 6 additional months not an additional 2 years on top of the 18 months you have left on your existing agreement.. At $50 a month you are essentially committing an additional $300 to the carrier. After you peal out the cost to provide the service the company has now lost money after subsidizing a new phone. A proposition that no bean counter would allow.

    Your circumstance is certainly a lot different from someone looking to upgrade for no other reason but to upgrade which is where the policy comes into play. It’s black and white for a reason. If the company gives you a new phone and denies someone with a similar story is that fair? Or do people start throwing their phones in the pool if they want to upgrade? In no way am I saying you would do that but there are people who would. Hence the policy.

    I know this is not going to be a popular response as the circumstances surrounding your phone certainly screams “give the man a phone” I hope it all works out for you in the end.

  • Shaun

    Unfortunately this policy is not exclusive to AT&T. I was with Verizon for many years and their policy is the same. The policy stinks no doubt but here is the bean counter logic. The wireless carriers subsidize a good portion of the the cost of the phone. In other words when you buy an iPhone for $199.00 with a new 2 year contract you are paying about 60% of the cost of the equipment. The carrier pays the rest. If you just got an iPhone 6 months ago and have offered to sign a new 2 year agreement you are really only agreeing to pay for 6 additional months not an additional 2 years on top of the 18 months you have left on your existing agreement.. At $50 a month you are essentially committing an additional $300 to the carrier. After you peal out the cost to provide the service the company has now lost money after subsidizing a new phone. A proposition that no bean counter would allow.

    Your circumstance is certainly a lot different from someone looking to upgrade for no other reason but to upgrade which is where the policy comes into play. It’s black and white for a reason. If the company gives you a new phone and denies someone with a similar story is that fair? Or do people start throwing their phones in the pool if they want to upgrade? In no way am I saying you would do that but there are people who would. Hence the policy.

    I know this is not going to be a popular response as the circumstances surrounding your phone certainly screams “give the man a phone” I hope it all works out for you in the end.

  • http://www.rickhoskins.com/ Rick Hoskins

    It's not AT&T fault at all. You sighed a 2-year contract you got your phone wet. Maybe you should of got an iphone insurance policy from State Farm

  • http://www.rickhoskins.com/ Rick Hoskins

    It's not AT&T fault at all. You sighed a 2-year contract you got your phone wet. Maybe you should of got an iphone insurance policy from State Farm

  • http://twitter.com/aace234 Aik Lariosa

    hmmmmm, do people think of how they would spend on the product and how they will be able to cut costs on it by using apps or software to maximize on them? we are using this time tracking app from tsheets and it does a whole lot of saving for us in terms of payroll, hope it helps.

  • http://twitter.com/aace234 Aik Lariosa

    i have been wondering for some time, ihope to use tsheets

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This entry was posted on Thursday, July 16th, 2009 at 11:25 am and is filed under Business Philosophy, Off Topic. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.