AT&T gives ground on iPhone 3G S upgrade pricing

By , Computerworld |  Personal Tech, AT&T, iPhone

AT&T Inc. relented to customer complaints today and said it will offer its "best upgrade pricing" for certain iPhone 3G customers who want to buy the iPhone 3G S starting on Friday.

In a letter AT&T sent to customers, the carrier said "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 Friday, June 19." Computerworld received the letter but it had not been posted on the AT&T site as of 3:30 p.m. ET today.

AT&T said details about the price change would be posted on its upgrade eligibility Web site on Thursday. "We've listened to our customers -- and hope our response helps answer some of your questions and concerns," the AT&T letter said.

The move came in response to complaints from furious iPhone users about AT&T's plans to charge an additional $200 to upgrade to the iPhone 3G S if they haven't fulfilled most or all of their two-year contract with the carrier. More than 14,000 people have "signed" a Twitter petition calling on AT&T to sell the new iPhone to current users for the same $199 and $299 prices it charges new subscribers.

AT&T did not detail the upgrade savings in actual dollars for all customers, but referred to a Web link that was not included in the e-mailed statement.

That change means current iPhone owners who would not have been eligible for AT&T's best prices on the device until September now qualify for the lower rates. Instead of paying $399 for the 16GB iPhone 3G S, they can now buy it for $199; and instead of paying $499 for the 32GB model, they can get it for $299.

The letter offered a partial explanation of the pricing policies at AT&T.

The AT&T statement said, in part:

"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 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."

The brouhaha over the pricing led to an outcry of complaints from AT&T customers, and prompted one corporate crisis expert to warn last Thursday that AT&T had "48 hours" to resolve the issue.

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