A UK Perspective - Weighing iPhone 3G’s Cost | iLounge Backstage

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A UK Perspective - Weighing iPhone 3G’s Cost

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By Bob Levens

Contributing Editor
Published: Friday, June 27, 2008
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When I read that Apple’s iPhone 3G was going to be made available on a contract-free O2 Pay & Go tariff in the UK, I thought that perhaps I would finally climb aboard the iPhone train and discover whatever I had been missing.

But after a little ‘research’ and number crunching, it appears that as an option to the original iPhone on an O2 contract, things don’t seem to be that much cheaper. I won’t go again into the details as to why I want to avoid a contract—I already have commented on this—but cost wise, the Pay & Go tariff appears to be almost as expensive as an iPhone on a contract.

O2 let the cat out of the bag regarding the Pay & Go tariff earlier this week, by mistake it would seem, as the page was taken down quickly, shortly after we reported on it. It was online long enough for me to get some figures to work on. Looking at the 16GB iPhone 3G, O2 wants £359.99 ($715) on the Pay & Go tariff with six months unlimited browsing and Wi-Fi with an option to continue after the six months for £10 ($20) a month. On top of this, there is a minimum monthly “top-up” of £10 upwards which gives an allowance of X number of minutes, depending on which of the many tariff packages you opt for—calls, texts or a mix of both. I personally find the O2 tariffs confusing. If you use 18 months as a period to add the cost up, it works out to approximately £659.99 ($1,311). It could be more if you decide to add one of the O2 “Bolt-On” packages; for example, £10 a month for the calls, then £7.99 ($16) for texts, then £10 for unlimited browsing/wi-fi - that’s £27.99 ($56).

For the same model of iPhone on the £30 ($60) a month contract, the phone would cost £159 ($316) and with 18 months at £30 a month the total cost of ownership would come to £699 ($1,389). That’s only £39 ($78) more than on the Pay & Go option.

From calling into my local O2 store today, it seems that the iPhone 3G on the Pay & Go package will not be available until September. I wonder if by then O2 will have had a rethink and changed the tariffs again due to lack of interest?

Or maybe I will have had a rethink and will have opted for a contract. We’ll have to see. The prices certainly aren’t going to get me to queue for the launch, that’s for sure.

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Comments

1

Surely, that’s the point. If anything, contracts should be cheaper than PAYG, not more expensive. If you buy the same services on each, then those customers on contracts should get a slightly better deal, as they are guaranteed revenue for the network, so they can afford to give them more minutes / texts.

Posted by Gareth on June 27, 2008 at 10:21 AM (PDT)

2

I made a calculator at http://homepage.mac.com/tmhoyle/iphone

There is no minimum monthly topup - you’re misunderstanding how PayG works in the UK.. in fact you can buy the phone and use it for pure data for 6 months and it’ll cost you nothing but the cost of the phone.  The plans are for the ‘free’ minutes to try to coax you into topping up regularly… all providers do this.  It’s actually a very simple pricing structure (at least compared to the US with all its taxes and fees).

I also wouldn’t take much heed of what the O2 stores say btw. - my own store said they’d be available on the 11th for example, and someone on another forum was told only the 8gb would be sold at launch.

Posted by Tony on June 27, 2008 at 11:04 AM (PDT)

3

Let me explain how the topups work, just to clear it up.

If you topup more than £10, O2 will ‘give’ you 50 free minutes.  You still have the £10 in your account - that’s worth 200 minutes (give or take), so you’re getting 275 minutes for the price of 200.

Similarly at that level you can choose to receive 300 free texts.  It’s a loyalty bonus, if you like.

If you haven’t used your £10 from the previous month and choose not to topup you still have it to spend, you just don’t get the bonus.

A wrinkle is that with the iphone data plan after 6 months you’ll already be topping up £10 a month to pay for that - so you’ll have the choice of any of the free minutes/texts automatically - thus reducing the overall price slightly.

Posted by Tony on June 27, 2008 at 11:18 AM (PDT)

4

Any clarification of the O2 plans is welcome of course, so thank you.

Gareth,
Totally understand that people are enticed into the long contracts by giving them XXX minutes and XXX texts. I am just not one of those people. I had contracts previously and I just didn’t use the minutes or texts. I was paying for something I didn’t need, hence my desire to basically pay for what I use even if it is at a slightly higher per minute/per text rate.

Tony,
I am on PAYG now so I understand how it works with T-Mobile. It has Web’N'Walk internet access “bolted on” - no more than £1 for a 24 hr period. If I don’t access the internet I am not paying.
It’s simple for me - I pay for top-ups as and when I need them.It has been explained by O2 sales advisors, on O2 phone helpline and in store, that if you fail to top-up after 6 months the phone number is disconnected. Now, if you remain ‘in credit’ but do not add anything more to your balance for six months will they still cut your number off?
Re the September date for P&G iPhone - I was surprised to hear this but I guess time will tell…

Maybe I am unique amongst mobile phone users but I just want to be able to buy an unlocked iPhone, put in my current T-Mobile Sim card and use it in a way that I am comfortable with…

Posted by Bob Levens in UK on June 27, 2008 at 11:53 AM (PDT)

5

Most PayG tariffs are like this - if you don’t use the phone for too long then it gets cut off (with T-Mobile it’s 90 days, Orange and O2 are 180 days).  Note that simply making an outgoing call call counts as ‘use’ for this - anything chargable that gets recognised by their system so they know the SIM is still in use.  This is to stop their systems getting clogged up with unused numbers over time.

Posted by Tony on June 27, 2008 at 12:56 PM (PDT)

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