I Don’t Typically Do This

by Martin Gordon

The iPhone 4S Upgrade Conundrum

Ben Brooks has a post up describing the situation most of us are in: despite being loyal AT&T customers for at least the past four years (thirteen years in my case), we aren’t eligible for the full discount on the new iPhone 4S.

Instead, AT&T offers a smaller subsidy for those close to the full discount date, but not quite there yet. Ben, along with most people who bought their iPhone 4s on Day 1, aren’t eligible until November 18th. In my case, I’m not eligible until March 10, 2012 as a result of family members having used upgrades recently. If you have upgrades available on other lines in your family plan, the upgrades are pooled and can be used for a phone on any line, so you can use one of those to get your shiny new iPhone 4S and you can stop reading now if you want.


The full subsidy for an iPhone 4S is $450 and the smaller subsidy is $200. For a lot of people, the early termination fee of $325 minus $10 for every month you’ve been under contract is less than the difference between the two subsidies, meaning that it makes more sense to pay the ETF and start a new contract with AT&T. Unfortunately, AT&T has policies in place to prevent this from being an option. First, there is no way to pay the ETF without canceling your account. Second, if you do cancel your account, you have to wait 90 days until you’re considered a new customer. If you open a new account before the 90 days have elapsed, AT&T will just reactivate your old account.


Since the small subsidy is only $200, one might be tempted to just pay the no-commitment price for the iPhone 4S and save the upgrade for the next iPhone. For the iPhone 4, the unlocked price and the no-commitment-but-locked-to-AT&T price are the same, so it made more sense to buy the unlocked iPhone. I tried to see if the same is true for the iPhone 4S, but I couldn’t find the pricing for the unlocked iPhone 4S. I started a chat with an Apple rep who told me that there would be no unlocked iPhone 4S at launch.


Now that Sprint is joining the fray and Verizon has the iPhone 4S at launch, it’s curious that AT&T is going to such great lengths to inconvenience their customers. Taking a longer-term view of things, and assuming that the iPhone 5 pricing will leave us in the same boat, here are the options available to us (these are numbers for 16 GB models; add $200 for two 32 GB models or $400 for two 64 GB models):

  • $640 - Switch to Sprint or Verizon, then switch to the other or back to AT&T for the iPhone 5 and paying a $240 ETF. Probably not worth it.
  • $650 - Switch to Sprint or Verizon and get half-subsidy pricing on the iPhone 5.
  • $850 - Pay no-commitment pricing, and then get the full-subsidy for the iPhone 5.
  • $900 - Pay the half-subsidy pricing, re-up for two years, and then get the half-subsidy pricing again on the iPhone 5.