AT&T Improves and Clarifies iPhone Upgrade Eligibility

With the release of the iPhone 3GS, AT&T has clarified and changed some of the most confusing policies around which existing customers qualify for the cheapest upgrade prices. Many existing iPhone 3G customers can now pay $199 or $299 (16 GB or 32 GB) for a new iPhone 3GS – the same as a new AT&T customer. Before 17-Jun-09, they were told it would cost them an additional $200.

TidBITS editor Rich Mogull wrote about these policies and his analysis of how they work last week in “Call AT&T for the Best iPhone Upgrade Price,” 2009-06-15. The condensed version is that AT&T said most subscribers who had a subsidized phone, whether an iPhone 3G or otherwise, under a 2-year plan would likely be eligible for the cheapest upgrade between 12 and 18 months into their contract period.

The latest change is that iPhone 3G owners who would be eligible for new-customer pricing in July, August, or September 2009 will be offered that lower upgrade price starting 18-Jun-09. AT&T will update whether a customer is eligible or not in that person’s account on that date as well.

In the announcement, AT&T revealed what Rich and others had inferred: the more you spend, the sooner AT&T will sell you another phone at below its cost. In the release, AT&T says that subscribers who spent $99 or more per line per month are the people who are eligible between 12 and 18 months in a 2-year contract.

While this change still doesn’t explain some of the scenarios Rich explored, it’s a welcome change for early iPhone 3G buyers who already pay AT&T a lot of money per month. Such customers felt that AT&T had already recouped the difference between what AT&T pays Apple and what the subscriber paid for the phone, and that the telecom giant was losing a lot of good will, along with another 2-year commitment, from its most dedicated customers.