Why iPhone is locked to AT&T in the U.S. ?

[elistan]

Based on some favorable comments about Three in another thread, here are their plans:

Subsidized with 24-month commitment:
500 minutes, 5000 texts, 1GB data: £30/month
iPhone 4 16GB: £99
Total 24 month cost: £819 ($1257 USD)

Sim-only:
300 minutes, 3000 texts, 1GB data: £15/month
iPhone 4 16 GB from Apple UK: £499
Total 24 month cost: £859 ($1318 USD)
Costs more, and you get less service. (But more freedom to cancel anytime you'd like.)

 

[iMacDragon]

The actual usage allowances don't exactly match up, but overall the costs don't seem all that much different. That's less than six dollars per month difference.

One thing forgetting there though, many like to upgrade their iphone every year, which buying outright makes a lot easier and more cost effective to sell/buy each year.

And yes, the pricing is not necessarily cheaper, but it should be close, and you're then free to move between carriers if another has a better offer.

Eg, tesco have this month got a rolling monthly £10 contract that gives 500 minutes, unlimited texts and 500mb data/month. add that to a £500 phone and it's only £740 for 24 months, and getting even more inclusive benefits.

 

[anjinha]

One thing forgetting there though, many like to upgrade their iphone every year, which buying outright makes a lot easier and more cost effective to sell/buy each year.

And yes, the pricing is not necessarily cheaper, but it should be close, and you're then free to move between carriers if another has a better offer.

Eg, tesco have this month got a rolling monthly £10 contract that gives 500 minutes, unlimited texts and 500mb data/month. add that to a £500 phone and it's only £740 for 24 months, and getting even more inclusive benefits.

Tesco uses O2's network, right? Just pondering my options for when I move there.

 

[iMacDragon]

Tesco uses O2's network, right? Just pondering my options for when I move there.

Yeah, they use o2 network, the £10 offer is only till beginning of next month though I believe, then goes back to usual £15 for new signons. still a decent value tariff though.

 

[elistan]

One thing forgetting there though, many like to upgrade their iphone every year, which buying outright makes a lot easier and more cost effective to sell/buy each year.

Hmm, interesting point.
I have no idea what used iPhones go for on the second-hand market. But let's assume that a £499 iPhone 4 16GB can be sold for £299? So it costs the consumer £200 per 12 months upgrade handsets.

Combine that with O2's SIM-only plan I mentioned above and we have:
Handset cost over two years: £400
Service cost over two years: £480
Total: £880.
Which does compare favorably (about £40 cheaper) to the 24-month contract price. But on the other hand, with the contract route the customer ends up still owning a phone that the above scenario assumes gets sold, so to be fair how about we say the 24-month contract customer then sells their two-year-old handset for £199. Total two-year cost would then be £720, the cheapest option yet. But the customer would be stuck with the same handset for two years. (Not a bad thing, IMO, but YMMV.)

 

[iMacDragon]

Indeed, there's many ways to consider things, no one way of doing things fits everyone, at least with the system here we get the choice about it.

Me, I'm one of those who has so far owned every since generation of phone, the first two cost me ~£100 or so per year only to own ( bought for 280, sold for 190, bought for 400, sold for ~280 iirc ), though how much you get back can vary, overall depreciation over a year for phone in good condition seems to be ~£100-150 range per year though so far, especially if unlocked.

Though for my own view, I've not even been on contract so far, I've been using free inclusive data allowance that buying o2 PAYG iphones in last few years have given, so my actual call costs have only been £40 for last couple of years!

But they've now stopped doing this, so will have to work out what I'm doing next.

 

[kdarling]

Thanks to everyone who took the time to look up rates. I know it's difficult to find the info sometimes

Prepaid non-contractual monthly plans are also available in the USA. In fact, they're the fastest growing segment of users these days, with the economy the way it is.

Question: do some of you jump carriers that often? Us older folk tend to take a longer view, and realize that a two year contract isn't really that long in the overall scheme of life, especially if we (think we) get something for it.

 

[anjinha]

Thanks to everyone who took the time to look up rates. I know it's difficult to find the info sometimes

Prepaid non-contractual monthly plans are also available in the USA. In fact, they're the fastest growing segment of users these days, with the economy the way it is.

Question: do some of you jump carriers that often? Us older folk tend to take a longer view, and realize that a two year contract isn't really that long in the overall scheme of life, especially if we (think we) get something for it.

It's not just about being able to jump carriers often but the fact that you can do that pushes them to have better prices. For example, in the U.S. a lot of people are with AT&T for the simple fact that AT&T has exclusivity on the iPhone. Since in most other countries that isn't the case and most people don't have phone contracts carriers have to compete with better prices/services. It only benefits the customer.

I'll give you other examples too: next year I'm moving to London and I don't have a phone contract that I have to worry about canceling. And when I'm living there if I decide to come back home for a month I don't have to keep paying for service there because I won't have a phone contract. If I get a job that offers me phone service I can just stop using the one I have. If I happen to spend a lot of time in a place that has poor coverage with my carrier I can just get a SIM from another one to see if it's better. If my carrier has an outage in my area I can just go to the store and get a SIM from another carrier to use for the day.

Also, about prepaid in the U.S., AT&T doesn't allow prepaid data on the iPhone. You can install a profile to change that but it costs $20 for 100MB of data on prepaid.

 

[samab]

It's not just about being able to jump carriers often but the fact that you can do that pushes them to have better prices. For example, in the U.S. a lot of people are with AT&T for the simple fact that AT&T has exclusivity on the iPhone. Since in most other countries that isn't the case and most people don't have phone contracts carriers have to compete with better prices/services. It only benefits the customer.

I'll give you other examples too: next year I'm moving to London and I don't have a phone contract that I have to worry about canceling. And when I'm living there if I decide to come back home for a month I don't have to keep paying for service there because I won't have a phone contract. If I get a job that offers me phone service I can just stop using the one I have. If I happen to spend a lot of time in a place that has poor coverage with my carrier I can just get a SIM from another one to see if it's better. If my carrier has an outage in my area I can just go to the store and get a SIM from another carrier to use for the day.

Also, about prepaid in the U.S., AT&T doesn't allow prepaid data on the iPhone. You can install a profile to change that but it costs $20 for 100MB of data on prepaid.

The worldwide launch of the iphone has proven many of your arguments to be wrong.

(1) The most obscene iphone plan EVER announced --- was from Norway, in a country which is mostly on prepaid. The reason --- Norway has 2 national carriers. That's it.

The best iphone plans come from Hong Kong (Hutchison 3 HK is the iphone exclusive carrier but the city has 6 carriers), UK (which until last year had 5 national carriers), US (which has 4 national carriers). The worst iphone plans come from Norway (2 national carriers) and Canada/France (3 national carriers).

(2) You don't have ETF's, let alone pro-rated ETF's in Europe --- so of course, you have to pay off the rest of your contract even if you move to London next year. Americans can get out of their contract relatively cheaply with pro-rated ETF's. In the US, consumers pick their network coverage first --- that's what responsible adults should do anyway.

(3) Many European countries have iphone CONTRACT data allowances starting as low as 100 MB. You are talking about how the US doesn't offer cheap prepaid options and Americans are talking about how these idiotic European contract iphone data allowance are.

 

[rectifiability]

As others have said, the reason it's only on AT&T is technological-- AT&T is the only carrier now whose 3G is compatible with the iPhone's radio. Though of course this was moot at release, since the original iPhone had EDGE that worked fine with T-Mobile (still does, in fact.)

What is strange is that the device is locked. I have a feeling that this is Apple's way to control the market. You already have folks working for exporters who line up at NYC Apple Stores each morning and buy the maximum number of iPhones possible. There's a big international market for iPhones, and the newest handsets tend not to be available in all but a handful of countries. Right now those gray markets are serviced by, presumably, Western handsets with jailbroken software unlocks sold by exporters. Were there no nominal carrier lock in the first place, this would just make it easier for the exporters and harder for Apple to control its international presence.

Yes, I know it seems as frustrating and silly as when DVDs and Blu-Rays employ region coding-- it's something that's ultimately transcended by those who want they want and can pay for it, but I'm not sure multinational technology companies are going to stop their attempts to circumvent this anytime soon. They likely also have very real liabilities and legal obligations whenever they enter a market elsewhere, anyway. cf. Apple's modification of the iPhone to play by China Unicom's rule (no wi-fi), despite the tens of thousands (millions?) of unlocked foreign iPhones already floating around the gray market.

 

[anjinha]

The worldwide launch of the iphone has proven many of your arguments to be wrong.

(1) The most obscene iphone plan EVER announced --- was from Norway, in a country which is mostly on prepaid. The reason --- Norway has 2 national carriers. That's it.

The best iphone plans come from Hong Kong (Hutchison 3 HK is the iphone exclusive carrier but the city has 6 carriers), UK (which until last year had 5 national carriers), US (which has 4 national carriers). The worst iphone plans come from Norway (2 national carriers) and Canada/France (3 national carriers).

(2) You don't have ETF's, let alone pro-rated ETF's in Europe --- so of course, you have to pay off the rest of your contract even if you move to London next year. Americans can get out of their contract relatively cheaply with pro-rated ETF's. In the US, consumers pick their network coverage first --- that's what responsible adults should do anyway.

(3) Many European countries have iphone CONTRACT data allowances starting as low as 100 MB. You are talking about how the US doesn't offer cheap prepaid options and Americans are talking about how these idiotic European contract iphone data allowance are.

(1) How do you know the reason the Norwegian plans were so bad is because they only had two carriers? Norway is expensive in general, not just in phone plans. And the U.S. having the best iPhone plans is just not true. U.S. iPhone plans start at what, $55 for voice+texts+data? In most places in Europe you can get something starting at €10 if that's all you need.

(2) And at this rate the U.S. won't have ETF's either. People abuse them so much that Verizon and AT&T already raised their smartphone ETF's to $350. And you know what? I don't care that we don't have ETF's here because I don't use phone contracts.

(3) Link? I can't speak for every European country but all the ones I've been to had decent data rates. Not only that but I could just go to any carrier store and buy a SIM for a decent price to use with my iPhone. When I went to the U.S. AT&T tried to sell me a SIM for $100 or a new phone with a SIM already in it. Then I had to mess with some stuff just to get data to work on the iPhone because AT&T won't let it.

 

[ToroidalZeus]

One thing forgetting there though, many like to upgrade their iphone every year, which buying outright makes a lot easier and more cost effective to sell/buy each year.

Not necessarily. AT&T offers you a yearly upgrade as long as you spend $99 on a single line or more. So even though you sign a 2 year contract, your not actually spending 2 years with the same phone.

Purchasing an iPhone 4 16GB from O2 requires an 18 or 24 month commitment.
http://shop.o2.co.uk/promo/iphoneindex/Pay_Monthly/4
Sample plan: 300 minutes, 500 MB data, unlimited texts, 24 months.
Monthy cost: £30/month. iPhone cost: £199.
Total cost over 24 months - £919. ($1410 USD.)
(O2 will unlock the iPhone, but the customer is still required to honor the commitment.)

If you bring your own iPhone to O2, they'll sell you a SIM-only plan with no commitment.
iPhone 4 16GB cost from Apple UK: £499
http://shop.o2.co.uk/tariffs/simplicity/iphone/1_month
O2 sample plan: 300 min, 500 MB data, unlimited texts.
Monthly cost: £20/month.
Total cost over 24 months: £979. ($1502 USD.)
(I'm actually surprised it costs more, given what I was reading in this thread.)

To compare to a typical AT&T US plan:
iPhone 4 16GB: $199
450 minutes: $40/month
200MB data: $15/month
200 texts: $5/month
Total cost over 24 months: $1639 USD (£1067.)

The actual usage allowances don't exactly match up, but overall the costs don't seem all that much different. That's less than six dollars per month difference.

EDIT: Here is the math I did a while back. Factoring in the subsidized yearly upgrade, AT&T is noticeably cheaper.

AT&T $115 mo for unlimited minutes, text + mms & 2GB of data + 199 for iPhone @ 24m contract price.

o2 £70 a month for unlimited minutes, text & 2GB of data but mms is still pay per use, phone included @ 24m contract price

Now here is the kicker, AT&T allows early upgrades without any penalty.

So after 1 year with the yearly iPhone upgrade;

AT&T is $115 (month fee) x 12 (months over 1 year) + $199 (iphone cost) = $1579

vs.

o2 £60 (monthly fee) x 24 (because you have to pay off your full contract) + £10 (bolt-on so 2GB is equal compared to AT&T) x 12 (months over 1 year) = ~$2487

 

[Wicked1]

Welcome to America where we pay for things we really do not need, or we spend money on stuff just because the other person has it

I am not sure there are other Carriers like T-Mobile who use GSM in the USA that could handle the data the iPhone uses, I had T-Mobile on a BB and it was terrible in NJ.

Verizon and Sprint use different technology so they would need their own type of phone with diff chipsets.

 

[mpossoff]

One thing forgetting there though, many like to upgrade their iphone every year, which buying outright makes a lot easier and more cost effective to sell/buy each year.

And yes, the pricing is not necessarily cheaper, but it should be close, and you're then free to move between carriers if another has a better offer.

Eg, tesco have this month got a rolling monthly £10 contract that gives 500 minutes, unlimited texts and 500mb data/month. add that to a £500 phone and it's only £740 for 24 months, and getting even more inclusive benefits.

That's why an iPhone is a great investment. I sold my unlocked 3GS for $350. Early upgrade costs $432 with tax. So my i4 cost me $80 out of pocket.

I'm positive by the time the next iPhone comes out I'll be able to sell this i4 and buy a new one with early upgrade for minimum out of pocket.

I'm a satisfied att customer so contract extension doesn't mean anything.

Marc

 

[samab]

(1) How do you know the reason the Norwegian plans were so bad is because they only had two carriers? Norway is expensive in general, not just in phone plans. And the U.S. having the best iPhone plans is just not true. U.S. iPhone plans start at what, $55 for voice+texts+data? In most places in Europe you can get something starting at €10 if that's all you need.

(2) And at this rate the U.S. won't have ETF's either. People abuse them so much that Verizon and AT&T already raised their smartphone ETF's to $350. And you know what? I don't care that we don't have ETF's here because I don't use phone contracts.

(3) Link? I can't speak for every European country but all the ones I've been to had decent data rates. Not only that but I could just go to any carrier store and buy a SIM for a decent price to use with my iPhone. When I went to the U.S. AT&T tried to sell me a SIM for $100 or a new phone with a SIM already in it. Then I had to mess with some stuff just to get data to work on the iPhone because AT&T won't let it.

The worldwide launch of the iphone makes international comparision much simpler. It is only fair to compare official iphone plans --- not some MVNO plans. Otherwise, Americans can talk about their MVNO plans from 7/11 or people mis-using their T-Mobile USA $6 WAP plan to tether their iphones.

Of course the recent raise of ETF in the US is making consumers worse off --- but in comparison with the rest of the world, the US is still better off with pro-rated ETF's.

There is no doubt that prepaid data prices in the US is not really great --- but Americans don't care about it because they preferred contracts.

You don't care about contract prices --- only because you can't get decent contract prices with reasonable pro-rated ETF's.

 

[qckslvrsiete]

This looks like a stupid question.

But in Asian countries like Hong Kong, China, Singapore, Thailand etc, people typically choose from hundreds of models of handsets of any brand, and even phones not even officially released in that country.

They then spend a few bucks on a SIM card and is free to dump the card and switch to a different carrier the next day, for the cost of the SIM card only. These prepaid or non-commitment postpaid SIM cards come with many different options of data/voice text for different demands.

People simply don't have to buy a cell phone from a carrier. And it's free of any commitment. (There are Best Buy in the US, but there is no difference from buying an iPhone at Best Buy or from a carrier)

iPhones sold in those countries are also officially unlocked.

Why the US carrier can force you to have a two year commitment, if you simply want the handset?

What happens if you are a frequent world traveler and do not like the international roaming charges? What if you simply want your iPhone and want to insert a local SIM card whichever country you go to, for reasonable local rates? That's simply impossible in the U.S.

Capitalism.

 

[anjinha]

You don't care about contract prices --- only because you can't get decent contract prices with reasonable pro-rated ETF's.

No. I don't care about contracts because I like the ability to change carriers when I want to, and not have to be tied down. Even with an ETF I would still choose plans without a contract. I like that I pay 20€ one month and if I still have credit the next month I don't have to pay anything. I like that if I lose my job I don't have an expensive phone plan to worry about (or a $300 ETF). I like that if I go travel for a month I don't have to keep paying for my cell phone service back at home.

And I never compared MVNO plans. All the rates I mentioned are from official iPhone carriers.

 

[samab]

No. I don't care about contracts because I like the ability to change carriers when I want to, and not have to be tied down. Even with an ETF I would still choose plans without a contract. I like that I pay 20€ one month and if I still have credit the next month I don't have to pay anything. I like that if I lose my job I don't have an expensive phone plan to worry about (or a $300 ETF). I like that if I go travel for a month I don't have to keep paying for my cell phone service back at home.

And I never compared MVNO plans. All the rates I mentioned are from official iPhone carriers.

That's because you are not living in the major countries that has big first world wages and you are buying a luxury item. People in UK and France that are in the G7 should be able to afford mobile contract contracts but they don't do contracts --- precisely because it's not affordable to them.

Don't blame Americans who sign a mobile contract without blinking an eye because they can afford to.

Samething with travelling. Blame Vodafone who operates in 20-30 countries but charge a king's ransom on their own subscriber who roams on a sister network.

If you have to constantly monitor mobile tariff prices --- it just means that they are overcharging you in the first place.

 

[NightGeometry]

That's because you are not living in the major countries that has big first world wages and you are buying a luxury item. People in UK and France that are in the G7 should be able to afford mobile contract contracts but they don't do contracts --- precisely because it's not affordable to them.

That's just quite funny.

I thought I avoided 18 / 24 month contracts because I didn't want to be beholden to the network, I now realise that it's because I can't afford it. I feel much better for knowing that.

 

[SLC Flyfishing]

I was recently in Indonesia and Australia with a friend who uses an iPhone (from AT&T), I don't think he was jailbroken. He just bought SIM cards wherever we went and had service all over the place.