Interesting that so many "non-iPhone" customers are so keen to have their say - all a result of iPhone envy if you ask me!
Now onto the real issues...
Needless to say I'm outraged at O2's current policy. I completely understand the issues of subsidized handsets etc. and recouping the cost of the handset through the monthly charges, but O2's responses via their official twitter feed have only led to enflame the situation.
Point 1: O2 have stated that the reason iPhone 2G customers (of which I was one) were able to upgrade to 3G without a contract buy-out was because the 2G was not subsidized. Now just a reminder that the 2G was on sale for £279 (With inc@ 17.5%) on an 18 month contract. Now the 3GS is for sale at £274 (With VAT @ 15%) on an 18 month contract. So it follows that the 3GS is, like the 2G, not subsidized. I therefore put it to O2 via twitter that surely by this logic, 3GS customers would be able to upgrade to iPhone 4 this time next year, without a contract buy-out. O2's response read..."The 3GS is heavily subsidized by O2." When i pressed for more answers regarding this, my questions were conveniently ignored, despite questions either side of mine being answered! Clearly O2's "Masters of Twit" were stumped by this point!
Are we really to believe that the cost price of the iPhone 3GS to O2 is so much more than the cost price of the iPhone 2G?? So much that £279 for 2G = not subsidized, but £274 for 3GS = not just subsidized, but HEAVILY subsidized??
It appears to me that O2 have quite simply blown the bank to retain iPhone exclusivity and they are passing this on directly to it's customers.
Point 2: Name one other phone that carries a £200+ price tag on an 18/24 month contract? In fact, name one other phone that carries any kind of substantial price tag on such a long contract? There are none!! Thus it's clear: the iPhone is not simply another mobile phone! The price/contract situation is completely unparalleled so to now attempt to impose a blanket upgrade policy, saying that all O2 contracts adhere to the same rules smacks of moving the goalposts!
Point 3: AT&T are allowing iPhone 3G customers to upgrade without buyout once the reach the 12 month point of their current contract. Seems perfectly reasonable to me! O2 have certainly recouped plenty of their subsidy and then some from me over the last 12 months. Given that I'd be paying full price for the handset (£274), then none of my monthly payments over the next 6 months will be going to cover subsidy on the 3GS, because as stated above - it can not possibly be subsidized at that price! Therefore my payments over the next 6 months will still be paying back the subsidy on my 3G! Then in 12 months time, a non-buy-out upgrade to iPhone 4 where I am required to pay for the handset would again be perfectly reasonable! Many will state these 18 month contracts and then in essence 12 month contracts, however, this is not true. Such a model will ensure that O2 keep hold of customers as long as these customers keep coming back for the next iPhone. If I were to decide in 12 months that I don't want iPhone 4, I would still have to honour that final 6 months of the contract.
I suspect that O2 have filed accounts and given reports to shareholders etc that the acquisition cost of 3G customers last year will be absorbed over the next 18 months and this is what they're sticking to. As explained above, however, by O2's own admission the 2G at £279 was not subsidized, so therefore the 3GS at £274 must not be subsidized - unless there have been an inexplicable jump in the cost price of the iPhone to O2! So therefore, the next 6 month's payments would continue to pay back the subsidy on the 3G handset!
I'm sure that these points will not be addressed in any detail by O2 and some sort of blanket answer like I got earlier today with be the extent of their response, but I thought it pertinent to express this to fellow iPhone users in a similar position.
In closing, don't be lonely on launch day O2! Though there will be some hardcore fans who will begrudgingly pay the £450 to pay themselves out and buy the new handset, there will be an enormous amount of 3G users who will be unwilling to pay this enormous amount, especially now that they realise that in 12 month's time, another similarly enormous figure will be awaiting them! For the same reason, I suspect that a number of new customers will also be discouraged from taking on the iPhone 3GS, knowing that in 12 months time, they will be faced will this same debacle and enormous fee all over again!
Your attitiude is typical of someone who thinks the world owes you everything, you distort all the real facts to suit your argument with out doing any real research. These are the prices from the O2 website. 24 month contract @ £44 pm 3GS 16GB = Free and the 32GB 24 months = £96.
No distortion whatsoever - I've compared prices for the 2G, 3G and 3GS on the £35 a month tariff on an 18 month contract - so in fact, quite the opposite of distortion; I've been completely consistent!
The sooner the exclusivity deal with O2 ends the better. I have been pretty pleased with every other aspect of O2's services, but feel that existing customers are not getting a fair deal, especially after investing heavily in both of the previous incarnations of this phone. There's a week to go, could we hope for a little decency and common sense in that time. O2 please review!!!
The other point is that Apple clearly announced the same retail price points as in 2008: $199 and $299. AT&T are sticking to these price points.
Therefore Apple cannot possibly have increased the two wholesale prices to carriers by so much that the retail (subsidised) price is almost double that of the 3G models.
The last thing to note is that at the end of your contract, you are still locked to O2. So if you want to continue using your iPhone (as most people would), or if you pass the iPhone to someone else, it will continue to be a revenue generator for the network. I planned to give mine to my mum or dad, who would have to switch from Virgin Mobile/Orange to O2.
Unlike every other handset on the market, O2 have little risk of their customers buggering off in 18 months time to a different network, even if a great many might well stay for the next model and need subsidising again. The iPhone is designed for customer retention or further gain as the phones are passed on.
With network churn as it is, there is virtually NO contract customer in the country who doesn't have a handset subsidy: the vast majority get an upgrade or other deal when their contract is up. So passed-on, locked handsets like the iPhone are a guaranteed money spinner.