AT&T has 48 hours to answer iPhone pricing complaints

[aristobrat]

My feeling is that at&t is making them charge such inflated retail prices (just like at&t has gained a lot of other say in Apple's iPhone decisions). The 32 GB iPhone certainly doesn't have $200 more in hardware than the 32 GB Touch. Just think, would anyone sign-up for a 2 year contract with at&t if Apple set the retail price at $299 or even $399? I think at&t is leaning on Apple to charge prohibitive prices, just so people are forced to sign the 2 year contract.

$599 = Apple's price for the iPhone 3Gs (AT&T)
$549 = Palm's price for the Palm Pre (Sprint)
$519 = RIM's price for Blackberry Storm (Verizon)

Apple looks just about as "more expensive" here as it is with any of its products (compared to the competition).

 

[uberamd]

My feeling is that at&t is making them charge such inflated retail prices (just like at&t has gained a lot of other say in Apple's iPhone decisions). The 32 GB iPhone certainly doesn't have $200 more in hardware than the 32 GB Touch. Just think, would anyone sign-up for a 2 year contract with at&t if Apple set the retail price at $299 or even $399? I think at&t is leaning on Apple to charge prohibitive prices, just so people are forced to sign the 2 year contract.

Well it is a phone after all. Why have the phone without a contract? Makes no sense. Apple makes a good amount of money off their products, and the demand is there. For them to change the way they operate to cut their profit margins for negligible benefit is pointless. Apple has a large team of people who determine pricing, so no matter what some person here thinks, chances are you're wrong.

 

[jhCanuck]

The iPhone's Achilles' Heel: its carriers

Very odd for a forum hosted by MacRumors, that so many posts appear to be pro-AT&T and anti-Apple...

apparently some people commenting here believe that if a certain policy has been in place for a number of years, it is futile to question the policy or to desire something better. (I guess they didn't vote for Obama).

I used to own a Nokia... good sturdy basic phone. Its features did not change significantly for years. Having a two-year service contract did not matter, applied to such a phone.

But the iPhone is different. We now know there are going to be significant changes at least once a year. A two-year contract (or in Canada, a mandatory THREE year contract!) does not match this product. There ought to be a reasonable way for consumers to upgrade, should they wish to do so.

It does not matter what policies have prevailed in the past. (Just because women could not vote at one time, or because slavery was legal, does not mean that such injustices cannot and should not challenged.) Cell Phone owners need a Bill of Rights... to protect themselves against overly-greedy carriers.

In Apple's case, the iPhone's Achilles' Heel, so to speak, is AT&T in the U.S. and Rogers/FIDO in Canada. Thousands of iPhone owners are being alienated by the unenlightened business practices of these carriers.

If these carriers refuse to "wise up" then it will be up to Apple to pressure them further by opening up distribution of the iPhone. AT&T is not even supporting some of the features offered by the new iPhone 3G s "until
later this year" (at increased prices?) At least, Rogers/FIDO will support MMS and tethering from day one of new OS release, at no extra charge.

For consumers who face intransigent carriers, there remain such desperate measures as "jailbreaking" their iPhones or deliberating damaging their current iPhone models and seeking a replacement under the "out of warranty" clause (at a discounted price). (Not all kinds of damage are acceptable however... read the fine print.)
But let's hope that such acts of consumer rebellion are not required....
all that is asked of carriers is fairness, flexibility and transparency...

Subsidizing an iPhone to the tune of $200 and then charging upwards of
$2,400 on a two-year contract in service fees... is the kind of deal that
Shakespeare's Shylock would have made... doing a small favor and then demanding his pound of flesh: legally, of course, as a contractual obligation.

 

[Interstella5555]

Perhaps my perception is way off because I frequent a Mac Forum where people like to come to complain, but why does it seem like SOME iPhone owners (and perhaps Mac users in general) feel they are owed something special?

This is how it has worked for phone subsidies as long as I can remember. Perhaps its Apple's fault because they create such a desire to have the latest and greatest that people can't help but not have it.

Any maybe it's my dealers fault for having such good weed that I can't say no. Really?????

 

[kas23]

Now this Twitter thing. This means all of us current custs paid $100 too much. If this passes with att, there are going to be tons of returns to Apple, which is charging 399/499, where ATT will now be charging 199/299. Mine will be one of the returns.

Don't worry about this Twitter thing. It's never going to lead to anything.

 

[marksman]

OK, so we are not actually paying the subsidy back over X amount of months, but are getting a subsidy for being loyal customers by committing for 2 years, correct? By this logic, we should then receive this full ""discount" just by committing again for an additional 2 years (therefore showing our loyalty). But, again, this is clearly not the case.

Look, I'm in the "you signed a contract, live with it" camp. I'm just trying to sift through all these purely speculative views to try to make some more sense of this situation (because it's confusing).

You missed the entire point of what I said.

They offer the subsidy as an enticement to get and keep customers with their service. If you choose not to take advantage of that, that is your choice, it is a dumb choice, but yours none-the-less. The subsidy still goes to pay for the phone. Saying that they should give a discount for people with out subsidized phones would mean the marketplace dictates they need to do that. They don't need to do it, so in this case they have their cake and eat it too.

People with a legitimate complaint would be those without subsidized phones who also have two year contracts but have the same monthly rate. Yet those are not the people stupidly complaining here. The people complaining are the ones that got the maximum possible benefit. The people with the worst deal say nothing, but those with the best deal cry like petulant children. It speaks to a massive and larger than thought ignorance of people and how the world around them works.

As others have noted all US cell companies that are not prepaid have worked this way for a long time now. Unless you are just getting your first cellphone, acting like AT&T is just choosing to screw you is fundamentally dumb and ignorant.

 

[marksman]

isn't one of the paramount principles of business "the customer is always right"?

No it is not. That is a dumb way to run a business. Especially in 2009 where the typical customer is trying to game you as much as possible. The notion that the customer is always right went out the window a long time ago, because the reality is the customer is quite often wrong.

 

[mkoesel]

This happened to me.

...

I did not reply or even go back to the store and fight. I felt like I got it ordered and confirmed in Apple's site, so I left it alone. Now this Twitter thing. This means all of us current custs paid $100 too much. If this passes with att, there are going to be tons of returns to Apple, which is charging 399/499, where ATT will now be charging 199/299. Mine will be one of the returns.

Interesting story - thanks for sharing. At first I thought you were just ranting all OT-like, but you got to your point at the end. And it is a good one. However, Apple would surely fall in line and offer their phones at the $199/$299 price also. Otherwise they'd sell zero. And then they'd issue a refund to those who bought it at the higher price because it would be a lot cheaper than dealing with the returns.

Sorry you had the bad experience with the AT&T store. Unfortunately that sort of cluelessness is not uncommon at AT&T stores.

 

[Eddyisgreat]

But the iPhone is different. We now know there are going to be significant changes at least once a year. A two-year contract (or in Canada, a mandatory THREE year contract!) does not match this product. There ought to be a reasonable way for consumers to upgrade, should they wish to do so.

It does not matter what policies have prevailed in the past. (Just because women could not vote at one time, or because slavery was legal, does not mean that such injustices cannot and should not challenged.) Cell Phone owners need a Bill of Rights... to protect themselves against overly-greedy carriers.

I hate to tell you this, but because mobile service is private enterprise and not government provided, it is not your right to have a cell phone. You not getting an iPhone for 400 dollars off != Slavery and != Women's rights. Talk to the FCC/Canadian equivalent if you feel like you are being wronged, but you'll have to come up with a better argument. ATT's business model is two years. There are providers that have one year contracts, or like you, three years. Thats just how it is.

Besides , you speak like the iPhone is a disposable RAZR (hehe). Does your hardware stop working after one year? Nope. My 1st gen iPhone is being sold today and works PERFECTLY, and because I take great care of my stuff its going for roughly the same price that I paid for it from ATT (200 dollars refurbished, but unlocked on tmo!). Should be capable of running 3.0 with no problems and any apps in the near future. You really , seriously think you are entitled to a new phone every year because its the iPhone huh? Unbelievable.

 

[uberamd]

Sorry you had the bad experience with the AT&T store. Unfortunately that sort of cluelessness is not uncommon at AT&T stores.

They are paid on commission after all, and they try to game you as much as they can. They charge $45 for 2GB SD cards, lol.

 

[Scallywag]

Why are you people still bitching about this?????

You'll get your subsidy when you're up for a contract renewal.

It's that simple. Otherwise At&T loses money. They know that most current iPhone users are up for renewal next year, not now (which is why I think next years iPhone will bring some really significant improvements.) They'll need to bait us back into contracts with something.

Subsidies exist to attract NEW customers. You all are existing customers. You are complaining that AT&T won't eat a ton of profit just to satisfy your need to have the newest piece of crap that Apple releases. Think about that for a minute.

Please understand that brand loyalty gets you nothing from Apple. To them, we are iTunes accounts that add to their bottom line, nothing more. Sorry, but Apple and AT&T are companies that are legally obligated to shareholders to MAKE MONEY, NOT GIVE AWAY PHONES AT A LOSS. They are not a charity.

Do you go and complain when a car dealer won't sell you the newest and hottest model car at 1/3 the price when there's of line of customers willing to pay full???

No.

Until we are up for contract renewal we'll get no subsidy, nor should we. It would be a disastrous business decision. Why is that so hard to understand???

 

[aristobrat]

But the iPhone is different. We now know there are going to be significant changes at least once a year. A two-year contract (or in Canada, a mandatory THREE year contract!) does not match this product. There ought to be a reasonable way for consumers to upgrade, should they wish to do so.

There is a reasonable way for a consumer to upgrade. The price of the iPhone 3G/3Gs is $599. Consumers under contract aren't eligible to get the full subsidy discount (making the phone $199). Instead, they are eligible to get a reduced subsidy discount (making the phone $399). $399 is reasonable for the consumer because it saves them TWO HUNDRED DOLLARS off of the regular price and it's reasonable for the carrier, because the customer didn't finish their original contract (so the carrier did not recoup all of their subsidy back).

Subsidizing an iPhone to the tune of $200 and then charging upwards of $2,400 on a two-year contract in service fees... is the kind of deal that Shakespeare's Shylock would have made... doing a small favor and then demanding his pound of flesh: legally, of course, as a contractual obligation.

Do you have any actual facts to base that statement on, or does it "just seem wrong" to you? Personally, I get the feeling that you've done zero actual research on this subject and actually no nothing about the actual finances of wireless providers.

In Apple's case, the iPhone's Achilles' Heel, so to speak, is AT&T in the U.S. and Rogers/FIDO in Canada. Thousands of iPhone owners are being alienated by the unenlightened business practices of these carriers.

That statement furthers my feeling that you don't understand how carriers work. Even if the iPhone was sold by EVERY carrier in Canada/US, they ALL have the same subsidy model. So it wouldn't make any difference ... none of them will let you sign up for a two-contract, get a cheap iPhone on full subsidy, and then let you buy another iPhone next year for a full subsidy (unless your monthly service plan with this is expensive enough to recoup your subsidy early)

So back to your Obama thought, .. think different.

The only solution to this problem (IMO) is for Apple to sell iPhones directly to consumers for a reasonable price. Problem with that is Apple doesn't do what most people consider to be "reasonable" when it comes to price.

 

[uberamd]

Do you have any actual facts to base that statement on, or does it "just seem wrong" to you? Personally, I get the feeling that you've done zero actual research on this subject and actually no nothing about the actual finances of wireless providers.

Exactly, the cost of any other smartphone on the market with unlimited data would run roughly the exact same cost on AT&T.

 

[kas23]

Well it is a phone after all. Why have the phone without a contract? Makes no sense. Apple makes a good amount of money off their products, and the demand is there. For them to change the way they operate to cut their profit margins for negligible benefit is pointless. Apple has a large team of people who determine pricing, so no matter what some person here thinks, chances are you're wrong.

What do you mean by "why have a phone without a contract"? That's everyone's dream here. Not having a contract does not mean not having cellphone/data service. It just means you pay month-to-month and you have zero commitment. I don't see how the average customer would benefit from a contract. They exist to protect the carrier, not the customer.

As for the high retail price, I'm sure Apple would sell a ton more iPhones at $399 than they are going to sell at the full retail price. This would mean higher profits for Apple. We already have proof of this in 2 ways. First, is the price drop of the original iPhone. They likely weren't selling any at the $599 price. Second, look at the explosion in sales of the 3G compared to the original iPhone. Sales grew exponentially. This shows that people are a lot more willing to buy an iPhone at the $399 price rather than the retail price.

 

[jpl0539]

People should just be glad this isn't like cable company. We are at least able to keep our phones even though we are paying out ragious prices and fees for them. With god aweful Time Warner you pay for your wireless modems and cable boxes and then have to give them back when your contract terms are over.

 

[kas23]

Do you go and complain when a car dealer won't sell you the newest and hottest model car at 1/3 the price when there's of line of customers willing to pay full???

I agree with everything you said, but this is a really bad analogy. People certainly can buy the latest car at the dealership at a discounted price. All they have to do is trade-in their "old" car. This would greatly lower the price of the latest, hottest car they wish to buy. I think people would absolutely love to have the ability to trade-in their current iPhone model to get a discount on the new one.

 

[mkoesel]

apparently some people commenting here believe that if a certain policy has been in place for a number of years, it is futile to question the policy or to desire something better.

But many more seem to believe that money should be free.

(I guess they didn't vote for Obama).

I have a hunch that is correct in at least one case, yes. Obama certainly seems to like giving away free money, so I guess that explains the phenomena I notice above.

Say, maybe Obama will buy AT&T too? Then he can give away free iPhones and everything will be utopian.

There ought to be a reasonable way for consumers to upgrade, should they wish to do so.

There is a reasonable way for consumers to upgrade. They simply pay the early-upgrade price of $399/$499.

Cell Phone owners need a Bill of Rights... to protect themselves against overly-greedy carriers.

You have one. It is the blank piece of paper that you signed instead of signing the contract with AT&T. There. Now write whatever you want on that paper because you are now free to do whatever the hell you wish. Do you feel it? Yes, that is pure freedom baby! Now reach deep into your pockets, pull out some fists full of money and throw them into the air while froliking in the streets and yell:

"No more money! No more phone! No more evil corporate drone!"
"No government! No more Bush! No more people! Squish, squish, squish!"

 

[uberamd]

As for the high retail price, I'm sure Apple would sell a ton more iPhones at $399 than they are going to sell at the full retail price. This would mean higher profits for Apple. We already have proof of this in 2 ways. First, is the price drop of the original iPhone. They likely weren't selling any at the $599 price. Second, look at the explosion in sales of the 3G compared to the original iPhone. Sales grew exponentially. This shows that people are a lot more willing to buy an iPhone at the $399 price rather than the retail price.

Well shoot, you better give Apple's sales teams a call and tell them they are doing this all wrong! Trust me, they have the real numbers, they are charging to maximize their profit. Like I said, nobody here knows how Apple should sell their products better than Apple's teams.

 

[kas23]

The only solution to this problem (IMO) is for Apple to sell iPhones directly to consumers for a reasonable price. Problem with that is Apple doesn't do what most people consider to be "reasonable" when it comes to price.

This would seriously hurt at&t's customer base and I'm sure the exclusivity contract prohibits Apple from doing so. If Apple sells the iPhone for low with no 2 year contract commitment, then people will not be obligated to sign the 2 year contract. No one in their right mind would then commit for 2 years. AT&T would lose greatly since millions of customers would not be "locked-up" (as a 2 year contract basically equals money in-the-bank) and would be free to leave at any moment.

 

[aristobrat]

I don't see how the average customer would benefit from a contract. They exist to protect the carrier, not the customer.

The only consumer benefit to a contract that I can see is when the carrier significantly discounts the price of the phone for the consumer.

I thought it was absolutely crazy for AT&T to force original iPhone owners into a 2-year contract. AT&T provided NO MONEY up front to the consumer. What they did was pay Apple for every month that a customer with an original iPhone had service (which I think is the only reason Apple dropped the original iPhone to $399). So it wasn't like AT&T was shelling out a lot of money up front and needed a contract to make sure the consumer stuck around for 24 months.

Second, look at the explosion in sales of the 3G compared to the original iPhone. Sales grew exponentially. This shows that people are a lot more willing to buy an iPhone at the $399 price rather than the retail price.

The lower the price of the iPhone, the more sales growth. They're predicting that the $99 iPhone 3G might double the market.

But this is Apple. No way they're going to lower the cost of their "regular price" when people are still demanding their product. Le Sigh™

 

[yg17]

What do you mean by "why have a phone without a contract"? That's everyone's dream here. Not having a contract does not mean not having cellphone/data service. It just means you pay month-to-month and you have zero commitment. I don't see how the average customer would benefit from a contract. They exist to protect the carrier, not the customer.

Contracts benefit the consumer. They make expensive phones affordable. I would not own an iPhone if I had to pay $600 up front for it. Even the cheap Motorolas and Nokias that are free with a contract and don't do anything except make calls and send texts cost a couple hundred bucks

 

[kas23]

Well shoot, you better give Apple's sales teams a call and tell them they are doing this all wrong! Trust me, they have the real numbers, they are charging to maximize their profit. Like I said, nobody here knows how Apple should sell their products better than Apple's teams.

I'm not saying they are doing things "wrong". I'm saying that, within their exclusivity agreement with at&t, they are likely not legally allowed to do certain things. It would be naive and short-sighted to think that the iPhone's pricing structure is being decided solely by some team at Apple. They are in a partnership. Not only does Apple have to do right for themselves, but also for AT&T. Please see my above post for a better explanation about what I mean.

 

[mkoesel]

I think people would absolutely love to have the ability to trade-in their current iPhone model to get a discount on the new one.

It would be nice, but offering such a service would increase the prices of the phone slightly just like it increases the price of the cars slightly.

Of course you are always free to trade you phone in on ebay in exchange for money. And then you can trade that money plus some of your other money for a new phone. Problem solved.

 

[uberamd]

Contracts benefit the consumer. They make expensive phones affordable. I would not own an iPhone if I had to pay $600 up front for it. Even the cheap Motorolas and Nokias that are free with a contract and don't do anything except make calls and send texts cost a couple hundred bucks

How true that is! Look at non-contract pricing on cell provider websites. Like he said, the most basic devices still cost a ton of money. The features-to-cost of the iPhone is very reasonable. To me anyway.

 

[kas23]

Contracts benefit the consumer. They make expensive phones affordable. I would not own an iPhone if I had to pay $600 up front for it. Even the cheap Motorolas and Nokias that are free with a contract and don't do anything except make calls and send texts cost a couple hundred bucks

That is the only way they benefit the customer - by triggering a subsidy. But, what if the manufacturer decided to sell the cellphone at a reasonable retail price? How would the contract benefit the customer then?