John Paczkowski

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AT&T Reconsiders iPhone 3G S Upgrade Tax


“Upgrade eligibility varies with each customer, but in general you will become upgrade-eligible the further you are into your service agreement. Customers can find out at or in one of our stores if they are upgrade-eligible. If you are not currently eligible for an upgrade but still want iPhone 3G S, we can offer you an early upgrade price of $399 (16 GB) and $499 (32 GB).”

— AT&T’s explanation of the iPhone 3G S’s early upgrade pricing

The outcry over the $200 premium some existing iPhone 3G users must pay to upgrade to the iPhone 3G S has caused AT&T to think better of the move. The carrier this morning extended the 3G S’s so-called “standard upgrade” prices of $199 [16GB] and $299 [32GB] to existing subscribers who would have otherwise qualified for those lower prices on or before the end of September.

From Walt Mossberg’s just published review of the 3G S:

“If you already own an older iPhone, you could pay $200 more to upgrade, depending on how far along you are in your two-year service contract and how much you spend monthly. But AT&T, stung by criticism in recent days, has just decided to offer the lower, new-customer prices at launch to iPhone 3G owners eligible for upgrades at any time up to Sept. 30 of this year, even if they were originally told they’d have to pay the $200 premium.”

A savvy move from AT&T (T). Though the company won’t please anyone with an upgrade-eligibility date of October and beyond, it will certainly silence the early adopters who’ve been so vocal in their criticism of the Apple (AAPL) 3G S Upgrade Tax. And those folks are likely the most lucrative, data-heavy users anyway.

UPDATE: Here’s AT&T’s statement on the change:

An Update for our Customers

Some customers have had questions about our plans and policies for iPhone 3G S, and we’d like to provide you with answers. We’d also like to announce a change to the date when some iPhone customers are eligible for our best upgrade pricing to iPhone 3G S.


Importantly, we want our customers to better understand our wireless device upgrade program. Like most U.S. carriers, we offer a variety of phones that we sell below our actual cost when customers agree to sign service agreements. In general, the more a customer spends with us, the quicker they become eligible for a price break on a new device. For example, iPhone customers who spend more than $99 a month per line with us generally are eligible for an upgrade between 12 and 18 months into their contract.

We also currently offer early upgrade pricing only for iPhone 3G S and iPhone 3G.

All of that said, we’ve been listening to our customers. And since many of our iPhone 3G customers are early adopters and literally weeks shy of being upgrade eligible due to iPhone 3G S launching 11 months after iPhone 3G, we’re extending the window of upgrade eligibility for a limited time.

We’re now pleased to offer our iPhone 3G customers who are upgrade eligible in July, August or September 2009 our best upgrade pricing, beginning Thursday, June 18.

If you’re one of the many customers who will benefit from this change, please note that our upgrade eligibility tools will reflect this change on Thursday, June 18.

We invite you to come to our stores beginning Friday during normal store hours, although please be aware that customer demand may exceed supply in some of our stores. You may also preorder online on June 18 at, and your iPhone 3G S will arrive in 7-14 days. Or you can purchase iPhone 3G S at Apple’s retail and online stores, as well as at other popular retailers.

If you’re one of the customers who benefits from this change, and you’ve already preordered from an AT&T store, we’ll adjust the price of the device when you pick it up. If you benefit from the change and you pre-ordered from AT&T online, we’ll send you an e-mail and issue you a credit.

If you pre-ordered an iPhone 3G S through Apple’s online store, your upgrade eligibility will be reassessed based on AT&T’s new upgrade policy for iPhone 3G owners. If you are eligible for the lower price, Apple will issue you a credit for the difference as applicable.