AT&T Drops Ball With iPhone 3GS

iphoneThe internet is all a’buzz about the brand-spankin’-new iPhone 3GS announced today by Apple, but AT&T users are upset with how the carrier has prepared for its new device.  The new phone looks the same, but upgrades to the hardware and a soon-to-come iPhone OS have ushered in a boatload of new features, some of which AT&T won’t be able to provide when the phone launches.

Apple boasts the new iPhone’s ability to send multimedia messages through MMS (including pictures and video) and the new tethering feature which allows users to turn their iPhone’s in portable 3G modems for their laptops.

AT&T is still in the process of upgrading its system to allow for a greater flow of data from devices like the new iPhone, and features like MMS and tethering will likely not be available until they finish.  When will they finish? AT&T has arbitrarily said, “later this summer”, but that both features WILL be supported.  Eventually.

And as if that wasn’t enough to boil the blood of its subscribers (like myself), AT&T has set higher purchase points for those who already own an iPhone 3G.  While the new iPhone tops out at $299 for new subscribers, existing users could have to pay as much as $699 to upgrade. This is likely because AT&T offered a discount with a 2-year contract for the iPhone 3G, and allowing those users to upgrade their plans at another discounted price would cost them the difference.

In response to outrage over the charges, AT&T said that “an iPhone 3G customer in most cases can early upgrade at $399 [16GB] or $499 [32GB]”.  Still, $200 extra for a new phone and new contract?  I could understand a $100 boost (equal to the discount attained by purchasing the 3G at a subsidised price), but why $200?

Perhaps AT&T is anticipating the fact that Apple wants to move the iPhone to other carriers (such as Verizon) in the near future.  The extra $200 to switch from 3G to 3GS is more than AT&T’s $175 early termination fee, so at this point, its more economical to switch to Sprint and get the new iPhone-worthy Palm Pre (with a cheaper monthly plan also).

For me, the possibility of Apple developing an iPhone for Verizon in the near future is enough to give me pause on jumping on the new 3GS.  I need the 3GS.  I want the 3GS.  But at this point it may be a bad deal.  I may just have to settle with the new iPhone OS on my 3G, or bite the bullet and pay the extra $200 to get the 3GS, and I know many other 3G users in my position are thinking the same thing.

AT&T also announced plans to allow for pre-ordering of iPhones, and will have a separate line for pre-orders at its stores when the phone launches.  I doubt we will see the insane mad-rush of AT&T and Apple stores we saw last year when the new phone goes on sale.  The fact that it was as crazy as it was last year attests to the fact that Apple is drying up the “going to buy an iPhone” market.  A lot of those who were going to get one have bought one already, and my guess is a lot of 3G owners will not want to pony up $200 extra to get a 3GS.

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