Current iPhones Keep Cheaper Plan on Reactivation

About 2 weeks ago, I wrote a message to Tidbits speculating on the
relatively high sales tax that may be due at the time of sale of a
new iPhone. <<a href="/webx?14@@.3cc47132/22">Alan Forkosh, "iPhone 3G Actually $160 More Expensive" #23, 17 Jun 2008 3:37 pm</a>>. As you
may recall, if the phone is subsidized by the carrier, the state
charges the sales tax based on the unsubsidized price.

Now that AT&T has announced that the unsubsidized price will be $400
more than the subsidized price, the sales tax premium in California
will range from $29 to $35 (7.25% to 8.75%) depending on the sales tax
where you buy the phone.


Alan Forkosh Oakland, CA
aforkoshmac.com

Since you seem to be able to get clarification directly from AT&T, I
thought it best to ask you:

If I get a hand-me-down EDGE iPhone and activate it on my existing
AT&T account after July 11, does it reset the clock on my contract?
Right now, I'm eligible for an upgrade in August of next year, so I
figure if I can get my brother-in-law's old iPhone for free, I can
hold out 'til then to get the next model at a subsidized price. But
I'm worried that the old phone might push my elibility back to summer
2010.

People on this thread <http://forums.wireless.att.com/cng/board/message?board.id=apple&message.id=26811#M26811
 > at AT&T seem to think that activating a hand-me-down requires a new
contract extension. But it seems like none of the posters are actual
AT&T reps, and obviously none of them have firsthand experience
reactivating an old iPhone after July 11th.

If you can get the official word on this point, I'd love to hear it!

-Yoni

Yoni Mazuz on 7/7/08 wrote something to the effect of:

>If I get a hand-me-down EDGE iPhone and activate it on my
>existing AT&T account after July 11, does it reset the
>clock on my contract?
>
>People on this thread at AT&T seem to think that
>activating a hand-me-down requires a new contract
>extension. But it seems like none of the posters are
>actual AT&T reps, and obviously none of them have
>firsthand experience reactivating an old iPhone after July
>11th.

I'm certainly no AT&T official, but keep in mind there's a huge difference between the
iPhone 3G's *subsidized* contract and the original iPhone's *contract*.

With the original contract, it is simply a two-year agreement, but AT&T shares a
portion of that revenue with Apple. You've effectively paid any subsidy yourself with
the higher price of the phone. That's why existing iPhoners can upgrade at the cheaper
price.

With the new iPhone, as with non-iPhone subsidized phones, AT&T is paying the hardware
maker a fee at the time of the sale and making their money back over the life of the
contract. That's why you cannot just upgrade any cell phone to an iPhone 3G for the
rock-bottom subsized price of $199: if your existing contract is still paying off the
original subsidy, it might cost you more.

Per your question, activating an *original* iPhone (the Edge version), while it will
require a new contract, it's just a contract extension, not a subsidy; you're only
promising to stay an AT&T customer for two more years (which presumably you were doing
anyway), not getting any cheaper hardware for that promise.

For more, see John Guber's Daring Fireball blog:

   http://daringfireball.net/linked/2008/07/01/att-upgrade

But as always, confirm all this with AT&T before activate or sign anything. :-)

-- Marc

What about someone who has a soon-to-expire ATT contract, but uses a
Treo and is wanting to buy an iPhone. Should he buy before, or after
his contract expires?

I can't seem to find a clear answer to this one.

Thanks.

Scott Wyant

Well cool. I am, as you guessed, more concerned about my upgrade eligibility than my contract. I can live with extending my contract 2 years out, but I don't want to (and obviously don't see why I should have to) reset the clock on my eligibility for an upgrade, which is currently only ~a year away.

Some threads on a few other forums suggest that this will actually be the case. New contract, same upgrade date. Interestingly, when I talked to an AT&T rep on the phone, he told me that neither would be extended. Even if he's wrong, I imagine I'm in the clear on the upgrade date.

Hopefully my hand-me-down EDGE iPhone will serve me well until next August, when I can get a shiny new 32- (or maybe even 64-) gig iPhone Mark III.

Scott wonders...

> What about someone who has a soon-to-expire ATT contract, but uses a
> Treo and is wanting to buy an iPhone. Should he buy before, or after
> his contract expires?

Generally, you can switch handsets on an existing contract without
worry, if you already own the new handset, such as a used iPhone
purchased from a friend. It's the "upgrade eligibility" for
purchasing a new handset from AT&T at a discount that's making people
wait for the end of a contract.

If you'd like to buy an iPhone 3G, and you're not yet eligible to
upgrade according to AT&T's rules, waiting will save you $200. (If
you're very close, it's worth asking if they'll make an exception for
you.)

--
  Mark H. Anbinder | mhatidbits.com
  Contributing Editor, TidBITS | http://www.tidbits.com/

On Jul 11, 2008, at 1:19 AM, Mark H. Anbinder wrote:

> If you'd like to buy an iPhone 3G, and you're not yet eligible to
> upgrade according to AT&T's rules, waiting will save you $200. (If
> you're very close, it's worth asking if they'll make an exception for
> you.)

I'm told it's pretty common. But probably not during a troubled day 1.

   --John