Hidden Costs of the iPhone 3G

When Apple released the iPhone last year, it wasn't long before three major complaints surfaced about it.

1. The cost of the iPhone itself
2. The cost AT&T charged for the data plan
3. The speed (or lack thereof) of Internet/Web access

Apple quickly responded to the iPhone cost issue by slashing the price. The 3G model has the price slashed even further as the iPhone is now subsidized by AT&T. (Apple charges AT&T more per phone than AT&T charges the customer.)

The speed issue was one peculiar for a phone that relies so much on the Internet. Apple's excuse was that they used the slower AT&T Edge network because it had coverage in more cities than AT&T's 3G network. Hmm... other AT&T data-centric phones offered 3G, falling back to Edge when 3G was unavailable. I guess Apple didn't think of that. Anyway the iPhone 3G addresses the speed issue by using 3G finally. This is one of the things I was referring to when I've said that the iPhone 3G is most of what the iPhone should have been one year ago.

And then finally there's the data cost issue. AT&T hasn't solved that, they've raised the price by as much as 50%! Yes, the lowest cost iPhone data plan WAS US$20 per month and included a few hundred text messages. The NEW lowest cost iPhone data plan is US$30 a month and doesn't include ANY text messages.

Over the life of the iPhone 3G or at least the life of the mandatory new two year contract, that means at least an extra US$240 in data charges which pretty much covers the subsidized price difference between the iPhone and the iPhone 3G. Folks will still be paying the same for their iPhone and data plan, just part of it will be via monthly payments.

Smoke and mirrors... the new AT&T business plan.