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Let's clear something up, some basic maths for you

C

charliecc

macrumors regular
Original poster
Jul 24, 2008
207
0
I have read on many threads talking about upgrading from the 4 to the 4S because it's basically free, i.e. the upgrade cost is covered by selling your iPhone 4. Here are a few examples:

Upgrading doesn't cost much money. I paid 299 plus tax for the 4S and sold my iphone 4 on Ebay for 300, Buy it now, just yesterday. Upgrading cost me about $20 total.
Click to expand...

I am going to sell my IP4 for $300, that more than covers the price of the IP4S.
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The tariff you're paying is higher than standard and subsidizing your handset. Now, I'll have to add a disclaimer at this point as I don't know how SIM only works in the US, but I can't imagine it's not similar to the UK.

Let's assume I'm going to get the 32GB 4S on O2 (most networks are fairly similar), with a mid range tariff:

300 mins - Unlimited Texts - 500MB data - £249.99 for the phone - £31 a month tariff (18 months).

Let's say I sell my iPhone 4 to cover the cost of the upgrade, therefore cost of ownership over 18 months: £558

O2 have a SIM only deal:

300 mins - Unlimited Texts - 500MB data - £16.50

So if you keep your iPhone 4, cost of ownership is: £297

Therefore, to get your "free" upgrade to an iPhone has cost you: £261

Now, if we add £261 to the cost of the phone on that tariff, it's almost exactly the same as buying the phone off contract. The operators will always recoup the cost of the handset with an inflated tariff.

I know most people already know this, but just wanted to point it out to the people who constantly use this as a justification for upgrading when it's a completely flawed argument.

EDIT: Looks like the US does work in a completely different way and I was wrong. The lack of competition in the industry is a disgrace. You should all be complaining about this.
 
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That's what I was going to say. No monthly tax in the U.S. for solely owning a subsidized iPhone. Obviously, it's much different in the U.K.
 
Bryan Bowler said:
That's what I was going to say. No monthly tax in the U.S. for solely owning a subsidized iPhone. Obviously, it's much different in the U.K.
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I think you are misunderstanding me, perhaps it's the use of the word tariff. I'll try and explain a little in American. Apologies if I'm wrong about the call plans over there.

If you walk into a US operator store and ask for a call plan without a phone, I'm assuming it'll cost you less than if you ask for a call plan with a phone. Is that correct?
 
charliecc said:
I think you are misunderstanding me, perhaps it's the use of the word tariff. I'll try and explain a little in American. Apologies if I'm wrong about the call plans over there.

If you walk into a US operator store and ask for a call plan without a phone, I'm assuming it'll cost you less than if you ask for a call plan with a phone. Is that correct?
Click to expand...

it costs the same regardless of whether you get a subsidized phone or not.
 
charliecc said:
If you walk into a US operator store and ask for a call plan without a phone, I'm assuming it'll cost you less than if you ask for a call plan with a phone. Is that correct?
Click to expand...
Nope, same price.
 
We don't have "tariffs" on plans in the US as far as I'm aware. Everyone pays the same, doesn't matter if you've got an iPhone 4S bought subsidized under a 2 year contract, or a first gen iPhone that you bought off your friend and you're activating without a contract.

Seems we do things different here in the states. Thanks for trying to make your q more "american" for us.
 
Eddyisgreat said:
You have to pay a monthly tariff on the phone?

Not in the states.
Click to expand...
Bryan Bowler said:
That's what I was going to say. No monthly tax in the U.S. for solely owning a subsidized iPhone. Obviously, it's much different in the U.K.
Click to expand...
You're both missing the point. You are not getting the phone for $199... you're paying $199 and the remaining $400 (?) as a hidden cost in the tariff/call plan. That is what the OP is alluding to.

Psychologically you feel great, but when you look at the value of minutes/texts/data you quickly realise that you're overpaying to, in essence, subsidise the phone. You have ridiculously expensive contracts to cover the cost the carrier alleges it is paying on your behalf.

It's all a marketing illusion. The difference is that in many countries it is readily apparent, whereas in the US it seems that everyone foots the bill for each other's subsidy.
 
christyn said:
it costs the same regardless of whether you get a subsidized phone or not.
Click to expand...

jsh said:
Nope, same price.
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Exactly, which is why this makes sense in the states.

Because I keep my iPhone, say, 3G in production for 4 years, I pay the same regardless.
So if we plan on keeping service for an additional two years and are due for an upgrade, it's a no brainer to get the subsidized phone, especially if you can get it essentially "free" by resale.
 
charliecc said:
If you walk into a US operator store and ask for a call plan without a phone, I'm assuming it'll cost you less than if you ask for a call plan with a phone. Is that correct?
Click to expand...

We're going to pay the same whether our phone was subsidized or not. Only benefit is not being locked into a contract. And so to reaffirm, I got a 'free' upgrade to the 4S! :D
 
calb said:
You're both missing the point. You are not getting the phone for $199... you're paying $199 and the remaining $400 (?) as a hidden cost in the tariff/call plan. That is what the OP is alluding to.

Psychologically you feel great, but when you look at the value of minutes/texts/data you quickly realise that you're overpaying to, in essence, subsidise the phone. You have ridiculously expensive contracts to cover the cost the carrier alleges it is paying on your behalf.

It's all a marketing illusion. The difference is that in many countries it is readily apparent, whereas in the US it seems that everyone foots the bill for each other's subsidy.
Click to expand...

It's a good point in areas where that applies, but the States is not one of those places...
 
wut?

Stopped reading after I saw £.

In the states, they basically recoup the cost through the data and voice plan over the 2 year contract. I think everyone here is well aware it costs them more than $300 in the long run.
 
Goldinboy17 said:
We're going to pay the same whether our phone was subsidized or not. Only benefit is not being locked into a contract. And so to reaffirm, I got a 'free' upgrade to the 4S! :D
Click to expand...

Yep, it's looks like you guys are right if that's the case. Wow, you have some sucky laws over there, if that happened over here, offcom (the the UK telecoms regulators) would be all over it for anti-competitive behaviour.
 
In the States, we pay the same rate plan ($ per month) whether we buy a subsidized phone from our carrier or we bring our own phone. We pay the same price whether we are in a contract or off contract too.

I don't think, what you posted, applies to people from the States. It hardly makes a difference if we are under contract or not, since we are paying the same price anyways.
 
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calb said:
You're both missing the point. You are not getting the phone for $199... you're paying $199 and the remaining $400 (?) as a hidden cost in the tariff/call plan. That is what the OP is alluding to.

Psychologically you feel great, but when you look at the value of minutes/texts/data you quickly realise that you're overpaying to, in essence, subsidise the phone. You have ridiculously expensive contracts to cover the cost the carrier alleges it is paying on your behalf.

It's all a marketing illusion. The difference is that in many countries it is readily apparent, whereas in the US it seems that everyone foots the bill for each other's subsidy.
Click to expand...

You're actually missing the point here. There's no difference in who pays what. Everyone pays the same. So if, as you said, "everyone foots the bill for each other's subsidy," then yeah, you really are upgrading for "free" if you can sell your old phone for the same price as the subsized new one.
 
They are correct.

The United States is crazy that way.

Example A:
You get a free iPhone 3GS from AT&T with a 2 year contract from AT&T. (AT&T subsidised ~US$500 to give you that phone for "Free")

Your monthly phone bill ends up being:
US$125 / month (900 minutes, 4GB Data, 1000 SMS)

That's pretty high.


Example B:
You decide you'll save money on your monthly bill, and you go and BUY a high end unlocked, unsubsidised smart phone for ~US$900.

Now you can make it up, by paying a cheaper monthly plan at AT&T right? So, you go there and AT&T's plan costs:
US$125 / month (900 minutes, 4GB Data, 1000 SMS)

Yeah.

That's how we roll in the US of A.

The 99% get ripped off to stuff the pockets of the greedy corporate 1% LOL
 
wordoflife said:
In the States, we pay the same rate plan ($ per month) whether we buy a subsidized phone from our carrier or we bring our own phone. We pay the same price whether we are in a contract or off contract too.

I don't think, what you posted, applies to people from the States. It hardly makes a difference if we are under contract or not, since we are paying the same price anyways.

Btw, this is not necessary:


That's just rude - especially considering you were wrong.
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Sorry, wasn't trying to be racist, I just thought my use of tariff my be confusing things if you use the term call plan.

Anyway, given what I've learnt here, if you're at the end of your contract and you can sell your 4 for the upgrade cost, you'd indeed be mad NOT to upgrade.
 
charliecc said:
Sorry, wasn't trying to be racist, I just thought my use of tariff my be confusing things if you use the term call plan.
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Don't worry about it - it didn't even offend me. I was just saying wording it like that might be a bit strong.
Anyway, given what I've learnt here, if you're at the end of your contract and you can sell your 4 for the upgrade cost, you'd indeed be mad NOT to upgrade.
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Yep, that's basically it. You don't even have to be at the end of your contract to upgrade either. AT&T, for example, gives upgrades every 12 months to some people (based on many factors), even though you might still have time remaining on your contract. They would rather lock you in another 2 year contract a little early.
 
charliecc said:
Anyway, given what I've learnt here, if you're at the end of your contract and you can sell your 4 for the upgrade cost, you'd indeed be mad NOT to upgrade.
Click to expand...

That is correct for the United States. Obviously, other companies may very well differ.
 
OP, I think you should get your facts straight before going around calling people "halfwits"

Where I cone from, halfwits are people that make claims on message boards even though they are misinformed and have no relevant evidence to back up what they are saying.
 
wordoflife said:
Yep, that's basically it. You don't even have to be at the end of your contract to upgrade either. AT&T, for example, gives upgrades every 12 months to some people (based on many factors).
Click to expand...

If that's the case, and you can't get cheap SIM only deals, why is the second-hand market for the iPhone so buoyant?
 
My cell plan now is the same as it was before I got an iPhone. The only difference in price is that now I also pay for data. I would be paying this same monthly price whether or not I was using a subsidized or unsubsidized iPhone. Because my personal needs do not require an unlocked/unsubsidized phone, I buy the subsidized one. Because it's cheaper.
 
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