iPhone 3GS, AT&T and Upgrading

iPhone 3GSSo, the internet (or perhaps, more specifically, the iPhone early adopters) are, to put it mildly, frustrated at AT&T following yesterday’s announcement of the new iPhone 3GS. Why? Well, three things come up: failure to have MMS in time for the launch, failure to have tethering in time for the launch, and the additional $200 on the price of the handsets for those who have less than 18 months on their current contract (that’s all iPhone 3G users!).

In addition to its dramatic influence on the design of handsets (including built in software), and the sale of additional applications and content, the iPhone has also in the last 24 hours demonstrated a new type of customer to the carriers of the world. These are the early adopter Apple fans who must have the latest phone. They’re vocal, as a quick trip to Twitter, or even the top iPhone and Apple websites & blogs will demonstrate, and they’re annoyed. What could have been a great day for AT&T (and, from what I’m reading, O2 in the UK is just as bad) has turned into a PR nightmare for them. AT&T in particular is being lambasted from all sides. People are annoyed about coverage, about the fact that they failed to deliver the two new network features (that most other iPhone network operators will have on time), and then they slap their “valued” customers in the face when they try to upgrade.

I’m not saying they’re wrong to require the 18 months before they offer the discount (if that’s the time the subsidy was amortised over, then that’s only fair). But, they could have handled it in a much better way. Especially when it is actually cheaper to cancel your contract, pay the pro-rated early termination fee (ETF), and then sign a new contract. Here’s a simple way they could have made this more palatable to the iPhone early adopter crowd:

Choose:

  • Pay the remainder of the ETF and sign a new 2 year contract;
  • Extend your existing contract by 24 months.

That’s not really a lot different to what they have done, but I think it would have come over as more palatable than just being hit with a $200 premium for the new phone.

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