iPhone upgrade excitement

So, for those of you who don’t know – in which case, may I say what a nice rock that is you’ve been living under – last Friday Apple released the third iteration of the iPhone (which is either called the “iPhone 3G S” or the “iPhone 3GS”, depending on when and where you look). The differences from its predecessor – faster, more memory, far better camera, compass – make it an attractive option to 3G owners (especially the weakerwilled of them); to those who stuck with their original iPhones, it’s a fantastic upgrade. I am one of these people.

For existing iPhone 3G owners though, there’s a snag stemming from the fact that the original iPhone – unlike just about every other mainstream mobile from the last few years – was not subsidised by the network carrying it: in the case of the UK, this was O2. The way this works for most phones is that the network pays a large portion of the phone’s cost, in return for the customer signing up to an n-month contract with them. As the Macalope puts it, it’s a loan with the repayments baked into the cost of the service contract. As a result, when the iPhone 3G came out last year, existing iPhone owners had no outstanding loan payments to make, so O2 quite rightly allowed them an early upgrade. This time around, iPhone 3G owners, who had bought their handsets at the lower “loan price”, were somewhat put out to hear that they would either have to wait out their contract (tedious), buy out their contract (expensive, at a minimum of £35/month × 6 months == £210), or buy the new phone on a Pay and Go deal (seriously expensive, at a starting price of £440.40 for the 16GB model). Cue enraged rants, online petitions, threats of defection to other networks and other general foot-stamping.

In response to (or possibly anticipation of) these complaints, O2 have put up an Upgrade FAQs page on their site, addressing the concerns of the irate iPhone owners and explaining why they won’t offer the same terms that they did when upgrading last time. This page, however, did not answer my most pressing question: what are the upgrade terms for upgrading from the original 2G iPhone to the 3GS? There is plenty of spiel about how “the original 2G iPhone was unique as customers bought the device outright” and “contract terms of iPhone 3G are […] the same as for every other handset we sell”, but nothing about upgrade terms from original iPhones. So I popped into the nearest O2 store and asked them directly.

My answer? Exactly the same as if I were upgrading from an iPhone 3G. I would have to wait out or buy out the remaining months of my contract, or pay through the nose to buy the phone outright.

Not entirely trusting this (or perhaps not wanting to), I headed over to Cambridge’s local Apple store and asked them the same question. Same answer.

In short, O2 are not offering early upgrades to 3G owners, for which they give perfectly valid reasons. They are also not offering early upgrades to original iPhone owners either, for which the originally stated reasons no longer apply. The only reason I can think of that applies is “because we can; because you signed a contract, and we know you’ll probably be staying with us anyway”. I honestly can’t see how this makes economic sense from O2’s perspective: there are no loan payments to recoup, and original iPhone owners will have an absolute maximum of seven months left on their contracts (I don’t believe there was a 24-month contract available for the 3G). Given that they are turning up asking to sign up for up to two years, turning them away and pissing them off in one smooth motion seems to be a very bad plan.

For some reason, I have to say I’m feeling remarkably sanguine about the whole affair. Sure, I’d love to have a beautiful new iPhone at a price that isn’t batshit insane, and I’d love to have it right now, but I wouldn’t have signed up to my original 18-month contract if I wasn’t willing to serve out an 18-month contract. So I’m not incensed at the prospect of waiting until September or October to get a faster, shinier phone with faster, shinier internet access, a faster, shinier camera and a compass which, while not noted for being fast, certainly looks pretty shiny. I’m just a little disappointed that O2 haven’t thought to – or have decided not to – extend the same courtesy to original iPhone owners this time around that they did before. There’s a possibility that this will change at some point between now and September, and that I’ll be able to upgrade, but I’m not holding my breath.

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