The New iPhone May Save You Money—If You Don't Buy One

If you’re thinking about getting that new 3G iPhone, you might want to hold off a few more months and see what happens with the other carriers. BusinessWeek has an article about how AT&T’s aggressive subsidizing of the iPhone will have a negative impact on handset makers and carriers, because it’s going to force them to increase subsidies and reduce service fees. Translation: good times for the consumer bold enough to stay off the iPhone train.

Another way to retain users is to offer lower service prices. In fact, here’s one way competitors may have a leg up on AT&T, which has raised service prices for iPhone buyers as it tries to recoup the higher subsidy cost. “The operators are going to get very aggressive with pricing in the second half of the year,” says Walter Piecyk, an analyst with Pali Research. “We could see 30% to 40% price cuts in the industry, [possibly led by Sprint]. If people are paying more for gas, saving $50 a month for wireless will be compelling.”

“The iPhone’s Impact on Rivals” [BusinessWeek]
(Photo: Getty)


Edit Your Comment

  1. WiglyWorm must cease and decist says:

    Ah, yes. Consumers stupid enough to hop on the new “cheaper” iPhone are going to force subsidies on other iphone like gozmos.

    Great. Though they’ll probably make up their added costs the same way apple makes the iPhone cheaper: upping the cost of bolt-ons.

  2. WiglyWorm must cease and decist says:

    sorry for the double comment. Meant to add “Too bad AT&T themselves don’t have a decent iphone competitor”. It a GPS enabled full keypad either touchscreen or stylus controlled phone running windows mobile too much to ask? Evidently so.

  3. Geekybiker says:

    Sprint has three touch phones running windows mobile. two of them available through sero.

  4. induscreed says:

    i have said this before and I will say this again , This will work for an exisiting AT&T customer.

    You buy a new connection with an iphone – 199
    You activate the iphone through Itunes – 2year contract
    You call in to cancel this account and pay the ETF – 175

    Take the SIM out of your existing AT&T phone and put it on the new iphone.

    So for a total of $374 you own an iphone and no contract.

    Added benefits – Sign up for Media Unlimited data plan for 19.99- So you dont have to spend the $30 for the “new” iphone data plan.

    Cons- No visual voicemail.

  5. MeOhMy says:


    It a GPS enabled full keypad either touchscreen or stylus controlled phone running windows mobile too much to ask?

    You mean like the HTC Touch “Cruise” model? The only problem is that Windows Mobile is its own worst enemy. Supposedly WM7 is a complete ground-up rewrite so hopefully that will improve things.

  6. henrygates says:

    I looked around AT&Ts site and didn’t see anything about a media unlimited plan for $19.99. Their cheapest data plans seem to run $30.

  7. acknight says:

    @induscreed: I believe it was announced that the new iPhone 3G will be registered in-store, not through iTunes from home anymore.

  8. induscreed says:

    Yeah so….you go to the store, you activate it, go legit completely, then come back and cancel in a few days, when they say its a breach of contract, gladly pay the ETF.

    You are still paying less than what I paid for the 1st gen.

  9. JustThatGuy3 says:


    They haven’t announced the iPhone ETF yet, but rumor is that it’s well about $175, more like $400, but pro-rated over the life of the phone.

  10. induscreed says:

    @henrygates: I think it’s called the mediamax unlimited.It costs 19.99. It can be used on an iphone, blackberry,smartphone, any cheapo At&T nonsmart phone. If you dont go crazy with downloads or laptop tethering At&T will be none the wiser.

  11. mdoublej says:


    Or you buy the iPhone, get the contract, and pay the bill every month, instead of trying to weasel your way through life.

  12. Carl3000 says:


  13. h0mi says:

    “So for a total of $374 you own an iphone and no contract.”

    Plus first month of service. Otherwise if you try to cancel, they will want the phone back.

  14. Pro-Pain says:

    @mdoublej: Spoken like a true rich asshat. Or maybe just an asshat…

  15. Tankueray says:

    @WiglyWorm: Doesn’t the AT&T (HTC) Tilt have all that? My 8525 has everything but GPS, I would never trade it for an iPhone.

  16. mdoublej says:

    I’m not rich, nor an asshat. This isn’t like trying to find the best deal on food, or save money on gas. If you want an iPhone, play the game with the rules they’ve set, for the price they want, or get something else. There are plenty of other phones out there at all different price levels. It’s the people like induscreed that try to go around the rules, that end up screwing things up for the rest of us. Why do you think Apple and AT&T have changed their procedures to activate the new iPhone?

  17. philipbarrett2003 says:

    My AT&T unlimited data plan that I use on an unlocked N95 (3G of course) is only $15 p/month. What gives?

  18. MeOhMy says:


    If you want an iPhone, play the game with the rules they’ve set, for the price they want, or get something else.

    While I agree with you in spirit, if your contract offers you the ability to buy out of it by paying an ETF and you take them up on it, you _are_ playing the game by the rules they set! If they don’t like it, they will (and did) change the rules.

  19. rjgnyc says:

    @mdoublej: No – don’t you understand. We have to stick it to the man by figuring out ways to get a phone we keep saying isn’t worth getting because there are so many better options. Plus everyone deserves to have a screen-touching gps-tracking music-playing photo-taking video-playing call-making omnidevice, so the fact that a company is restricting it to just one carrier screams systematic oppression.

  20. induscreed says:

    well..i guess the next time corporate america or Steve Jobs gets a hard on I’ll take your advice and bendover…

    I change cellphones every few months, I have always owned GSM phones and with the ability of being able to swap the SIM changing a phone is very unlifealtering(sp?), and I dont have a problem paying full price, (if At&T made it easier to do that i would, so I go the ebay and craigslist route) what i dont want is being locked in a contract.

    Just ingenuous ways of doing this without breaking the law.

    So they make you sign a 2 year contract, and there is an ETF if you dont want to deal with it.

    I am paying the 199 and the ETF, how is that weaseling my way through?

    What makes an iphone so different from another durable/non durable consumer good.. oh I forgot Steve Jobs..and sheeple like MDOUBLEJ….

  21. Pro-Pain says:

    @mdoublej: To figure out how to make more money off of us, that’s why. I absolutely LOVE it when big business gets outsmarted. They nickel and dime us, what’s so wrong about nickel and diming them back? Go underdog! I hate AT&T anyway. Don’t be a sheep. That is all.

  22. chrisjames says:

    I’m betting we’ll see longer mandatory contracts along with those upcoming cheaper prices. The “arms race” marketing model doesn’t always work in favor of the consumer. Not that consumers even know what’s being done to them anyway (see @mdoublej).

  23. cronomorph says:

    “It a GPS enabled full keypad either touchscreen or stylus controlled phone running windows mobile too much to ask?”

    I have an HTC Mogul and with the recent firmware it has GPS (which comes in handy when I’m in need of navigation aid and my TomTom is in my car), so it fufills what you’re asking for. I like it more or less, it’s quite useful, but it’s not intuitive. It’s functional but not smooth. It’s a mini-laptop for me, quick web browsing, e-mail, streaming stuff with Orb.

    I’m not holding out for Windows Mobile 7 coming out. Microsoft bought Danger (the makers of the Sidekick and it’s OS) and what I’m hearing is that WinMo7 might be a Vista-ized skinning of Danger’s OS, with some added Windows functions (like Office apps and syncing with Exchange and such).

    The problem with WinMo is that it started as a PDA OS and had phone features hacked in. WinMo7 is supposed to be a total rewrite of the OS, but wasn’t Vista suppossed to be that as well? Do we really have faith in Microsoft’s Mobile Services Division.

  24. kenblakely says:

    @mdoublej: @mdoublej: You’re just the kinda guy the mobile providers love: too stupid to get a good deal…..

  25. Pro-Pain says:

    @chrisjames: I highly doubt they could get away with a longer than two year contract. I think we are safe there. I just can’t believe these phones are so expensive to manufacture that we even have to go through all this hassle to figure out how they are going to “subsidize” costs. Nuts.

  26. mdoublej says:


    So you would go and pay an ETF, and lose some of the functionality of the phone (the visual voicemail), just to not be under contract?

    Wow! You are outsmarting them!

    I’m not a fanboy or sheeple, and I hate the nickel and diming as well, but my point is that nobody is making you buy an iPhone or any other phone, so if you don’t like the terms, choose something else.

  27. MeOhMy says:


    Microsoft bought Danger (the makers of the Sidekick and it’s OS) and what I’m hearing is that WinMo7 might be a Vista-ized skinning of Danger’s OS, with some added Windows functions (like Office apps and syncing with Exchange and such).

    If it ended up being Danger OS without the ridiculous restrictions on developing software for that the Sidekick/Hiptop has, that actually wouldn’t be all that terrible :-)

  28. mdoublej says:


    Apparently, you’re too stupid to quote correctly (as in once).

    And if getting a good deal means signing up for a second line I don’t intend to use, canceling it and paying an ETF, and ending up with a less featured phone, that’s too stupid for me.

  29. weakdome says:

    @WiglyWorm: Verizon/Sprint HTC Mogul/ VX6800 has these things. And I can get nearly 2 days battery life out of it with moderate internet use and talk time.

  30. chrisjames says:

    @Pro-Pain: Why are we safe from that?

  31. induscreed says:

    At $374 it isn’t a bad price at all considering that I probably wont lose a dime when i ebay/craigs it in 4 months.

    Whats the big deal about visual voicemail, oh wow someone left me a voicemail, hey its got a slider, i can watch it play, i can LOOK at my voicemail…life couldnt get any better……SteveO’s the best.

    I dont think its a bad phone, its a slick implementation of what WinMO has not been able to do in a crash free, seamless way. Are there better phones available? sure..maybe..i hope so…

    What has the iphone done, its raised the bar for the competition…and I am looking forward to the touch diamond, the new sony ericsson(i forget the name)…to try out by the end of the year, and by then I would like to get rid of the 3G iphone. And as I go living my life feeding my gadget obsession I also like to be a smart buyer…
    why is this such a difficult concept to understand?

    But I still hope there are more people like you, I own Apple stock and I want the likes of you stand in line and watch my money spike.

  32. induscreed says:

    “I own Apple stock and I want the likes of you stand in line and watch my money spike”

    shoudlve read” stand in line waiting to buy the 3G iphone”…I didnt mean you should stand in line to watch my money grow….apologies

  33. DinoVelvet says:

    @mdoublej: Seems you object to consumers working the system to their benefit.
    Keep digging yourself deeper with flawed logic and misplaced righteousness, we love reading comments from techtards like yourself.

  34. xint says:

    I live in Puerto Rico.
    All local carriers have announce the availability of the iPhone with their plans.

  35. LogicalOne says:

    Or ATT could just drop contract provisions allowing early termination of the contract… Sign up for two years, ya gotta pay for two years.

  36. cronomorph says:

    @Troy F.:

    I have a friend who was a Danger engineer and now works for MS and he seems to be pretty happy (and not just from the signing bonus and pay bump) with how things are proceeding there. I try and cajole WinMo updates out of him from time to time but he takes his NDA’s pretty seriously.

    Funnily enough he has a company issued iPhone for the purpose of enemy research.

  37. mdoublej says:


    You obviously have it all figured out, though you have no idea what the ETF will be on the $199 iPhone. You really think it will be the same as for every other phone? What if it is $400, is $599 worth not having a contract?

    Rationalize it however you want, it’s still dishonest. You’re THAT guy, the one who has to try to get around everything, causing these companies to strike back with more drastic measures.

    And for what it’s worth, I think visual voicemail is genius in at least the fact that you don’t have to listen to all the VM’s before the one you want to hear, to me that’s worth not cheating.

  38. Funny how phone companies lock phones to force customers into their contracts and now the AT&T/Apple deal is coming back to haunt them.

  39. Alluvian says:

    The main draw for the IPhone over these other devices to me is the new SDK. IPhone has grabbed a very large slice of the mobile ‘pie’ and that is likely to grow with the new prices and the new globalization of the phone. This large market all running one device (3g and Iphone1 will run all the same stuff) has grabbed the attention of a LOT of developers, and more will come as the market share increases.

    Windows mobile is harder platform to develop for since you don’t know the specs of the device you are developing for. I have not dug into either SDK to comment on which is easier to dev for.

    I see the appstore being the biggest draw for the phone in 6 months time or less.

  40. Frank Beamer's Goiter says:

    @WiglyWorm: Check out the Sony Ericsson W950 or W960’s. Similar price range, but just as good if not better features IMO.

  41. atuck says:

    @mdoublej: I gotta be honest man, I dont understand why this is upsetting to you. This practice doesn’t really effect you in any way. Why are you on a soapbox here?

    He has a choice about how he would like to purchase and use a phone, as do you. He’s not forcing you into another decision, why are you berating people for their decisions to essentially purchase an alternate data plan? Is the idea of a iphone without visual voicemail so very frightening that you insist that nobody buy one without it? Its a piece of technology, not some bizarre social contract. what are you talking about? You wouldn’t choose to do the same? WOW! Amazing! Great! I support your decision!

    There’s really no reason to be an asshole about it though, is there?

  42. mdoublej says:


    At the risk of offending your delicate sensibilities, and sounding like an asshole, here’s why I’m bothered.

    This website is full of bitching about big companies nickel and diming us. Someone comes on here and describes a way to do the exact same thing, but in reverse, and he’s a hero.

    This does affect me, and all of us, because every time someone figures out how to get around the rules, the rules get changed for all of us. And the changes are never in our favor.

  43. TxDr says:

    @mdoublej: You may be fine with stroking ATT’s mane, but many others want the phone but hate the rules required to use one. There shouldn’t be any problems when different routes are sought after to improve one’s own use for the phone. I for one am completely ok without visual voicemail, while you are not. You don’t see anyone else jumping all over you for your preferences of cellphone service. All I see are jackass comments from a fanboy when everyone else is just having a discussion about what they would like from their cell phone provider and how to go about satisfying it.

  44. induscreed says:

    if corportations can dupe you out of your rightful gains through loosely worded contracts(insurance industries come to mind..). this isnt even that…this plays by the rules…HOW IS THIS DISHONEST???’re right about the ETF assumption….the gains of my method do hinge on the how much the ETF costs…I will give you that…atleast youre not too bad at math….did you have to whip out the excel spreadsheet…or whatever it is Macs have…..i will go ahead and take the liberty of assuming you are a Mac User…because you are passionate about proving your point and obtuse….I tend to find a lot of macusers like that.

    I dont get why you feel so upset about this….and to each his own about choices… love visual voicemail..i love not being taken on a ride and the freedom of choice…..

  45. mdoublej says:

    @TxDr: All I see are jackass comments from a fanboy when everyone else is just having a discussion about what they would like from their cell phone provider and how to go about satisfying it.

    All I see are spoiled crybabies, that think they are entitled to whatever they want.

  46. gspdark1 says:

    Check out the LG Vu. Right now, it’s about $200-250, but the price will surely come down (by a lot, IMO) once the new Iphone is released. It has full touch capabilities. only con is that it’s not wi-fi capable.

  47. diesel828 says:

    @mdoublej: Yeah, we are entitled to whatever the hell we want when we pay for it. If someone buys an iPhone, they should be able to do whatever the hell they want with it. If someone wants to buy an iPhone at the subsidized price and is willing to pay the ETF, so be it. What do you care if people are trying to get around the system? You’re such a baby… “Boo hoo, all these rule-breakers are causing the companies to enforce new and unfavorable rules for me.” Maybe you’re the one that should stop being a crybaby. If you don’t like it, go elsewhere.

  48. dmexs says:

    @induscreed: I’m with you, I don’t see the logic in mdoublej’s argument, but at the same time I would have chosen to maintain a basic level of courtesy in my responses (I read most of the conversation). I guess that’s what the anonymity of the internet affords you, the convenience of conversing like a true asshole. Right or wrong, you can still be civil about it.

    Please continue, I’d like to hear more about what you know or expect of “mac users”.

  49. infoclipper says:


    Your math confuses me.

    Let’s assume the ETF *is* $175 (although there’s no evidence of that

    You then advocate paying the ETF and the $19.99 Media Unlimited plan
    rather than paying the $30 sanctioned iPhone plan, which will, of
    course, deactivate the iPhone-only features such as Visual Voicemail.

    Discounting the voice minutes, which you’d presumably have either way,
    since you are advocating this for existing AT&T customers, let’s look
    at how this stacks up over 2 years:

    So the 2 year contract way:
    $199 + ($30 * 24) = $919

    Your way:
    $199 + $175 + ($19.99 * 24) = $853.76

    $919 – $853.76 = $65.24

    So you are saving an overwhelming $2.72 a month over the 24 month
    period, and in exchange have a phone that is crippled.


  50. hopelessdeskmonkey says:

    @mdoublej: So somehow you think that the rules were originally designed to benefit the consumer? You really are an asshat. If Apple wasn’t so restrictive about all their products (not just the iPhone) people wouldn’t delight in circumventing their futile attempts to totally lockdown everything they touch. It will be interesting to see how anti-trust investigators for the EU view Apple’s restrictive terms in the next couple of years. Oh yeah, maybe you forgot that Apple doesn’t always play by the rules either; enjoy your dogfood, asshat.

  51. rjgnyc says:

    Just curious, but does anyone here have cable? The iPhone setup is the same as a cable box setup. You pay for some service (phone or cable), they sell and/or loan you the tool to receive the service.

    I can’t just call Optimum online and say I want to buy an HD box from them without signing up for the service. This is the same thing and it boggles me that people feel so entitled to an iPhone (at the same time, again, feeling like iPhone users are cultists/idiots who pay too much to use Apple products/better options are available/etc) that they believe they are above a contract they would have to agree to in order to use it.

    An iPhone is not an inalienable right. Let’s save the moral outrage for something like food or the right to live somewhere or something that at least is a little less vapid than the ownership of a most of you would loathe to purchase anyway.

  52. Pro-Pain says:

    @hopelessdeskmonkey: He’ll figure it out one day when he slides down the other side of the rainbow he’s on. I will never understand how some people simply escape reality. I find the whole concept amazing actually. I want bliss too :(

  53. rabiddachshund says:

    @mdoublej: Who said anything about a second contract?
    Also, stop being a douche.

    @induscreed: Interesting, but then who would you have service with?

  54. induscreed says:


    OK, I am assuming you are already an At&T customer, and donot want to signup for another 2 years when you avail of a 3G Iphone. So to keep your existing contract with no renewal and just end up with a 3G Iphone handset which you can freely use on ATT’s network(sans visual vmail), for the price of $374 you would do this.

    The 374 also assumes an ETF of 175(if AT&T raises it, you’ll have to run the numbers to see if its still profitable)

    Now if you plan to do this to use in the US w/o At&t , I think TMobile is the only other GSM network provider,in which case you will have to wait until someone figures out how to unlock the 3Giphone(which I am sure will happen sooner than later).

  55. Pro-Pain says:

    @mdoublej: Wow. Just wow.

  56. indydrew says:

    Why all the negative iphone spin on here the past few days. The past 2 posts about the ipone on here have been just plain crap? What gives, Gawker cant pay you guys enough to get an iphone?

  57. Ariel.Sanders says:


    As and English teacher I love to read the post on this site, but today you all have outdone yourselves.

    “Stroking Manes”, “Bending Over”, “Asshats” and “Douches”…theres some highly intelligent clandestine homoerocticism goings on. I experimented back in…oh nevermind.

  58. cornholic says:

    @Ariel.Sanders: I hope you aren’t really a English teacher. I’m horrible at spelling, but I’m sure you spelled “homoeroticism” wrong. Just a note that if you try to make fun of others, make sure your own flaws are well hidden.

  59. jonny0204 says:

    here in the UK at least this new iPhone 3G is cheaper than the original.

    However we pay shit loads of money for petrol, the stuff u call gas, so it balances off, maybe anyways.

    It’s over 2 dollars 30 cents i think, converted roughly, at the station outside my house for 1 friggin litre of unleaded petrol :o

  60. Mr. Gunn says:

    philipbarrett2003: shhh. Nokia doesn’t want anyone to know about their “secret” smartphone that has had WiFi, GPS, 3G, a bigger and more high-res screen, a 5MP camera, and an OPEN OS that anyone can develop apps for that run locally(i.e.,fast) and which also works with all the same websites that the iphone does.

    It’s a secret. They’re not advertising it because they don’t want anyone to know about it.

  61. Mr. Gunn says:

    indydrew: Perhaps it’s because it really is a bad deal for the customer?

    MediaNet unlimited is $15 for anyone, except iphone users. Any other phone can be easily unlocked by entering a simple code on the keypad. Other phones can use free java apps written by anyone, not just the developers that have been blessed by the hand of Jobs and distributed solely through itunes, for a price.

    That’s just a couple reasons why it really might be a bad deal for the customer.

  62. wesrubix says:

    The logic doesn’t make any sense. AT&T increased its PDA data plan to $30/month. I fail to see how we will save money. Poor analysis from source.

    Thanks for sharing though, Consumerist.

  63. robbiemd says:

    Why not just grab an unlocked iphone from overseas in a month ( all iphones are manufactured with the same band capability regardless of the country they’re going to per apple rep today.) In the US, T-mobile’s 3G will be using 2100Mhz. If the phone doesn’t work with Tmo immediately, it soon should with all the brainpower working to iron out the hack. There is already a VOIP app that can then be installed and used with the T-mobile Hot spot @home wifi add-on feature (unlimited calling through wifi) You should be able to take your 39.99 Tmo plan, add hot spot for 9.95, and a text package and come out well ahead than if you saddled yourself with an ATT plan. For all those screaming how unfair it is to ATT, I promise to never use my phone for web browsing….I just need an apple compatible PDA with push email and I’m not paying more for an outdated ipod touch to get it!

  64. bocasundance says:

    Here’s a Video on YouTube that describes the iPhone pricing scheme better than any other online story I’ve found so far.

  65. metalhaze says:

    If you sign the ETF and get out of contract can you still access the application store and the iTunes store from the phone?

  66. metalhaze says:

    @bocasundance: That was one of the stupidest friggn’ videos I have watched in a long time.

    Really? You were able to sit though this shit? Wow…Congrats to you sir.

  67. JonathanV says:

    If you buy it from the Apple Store, I fail to see how AT&T will be able to charge a ‘full price’ for the phone.

    Cellphone contracts have a no-fault 30day optout. If you *really* wanted to, you should be able to sign up for the contract, activate it for $30, then cancel the contract before day $30 and only pay a pro-rated contract usage.

  68. Dyscord says:

    So AT&T charges $30 for the data plan? And this is JUST the data? I know Sprint’s cheapest plan for the Instinct is $70…