iPhone 3G Upgrade Details: Important Info For New and Current iPhone Owners

Since the launch of the iPhone 3G yesterday, several details, some rumors and some confirmed, about AT&T service plans for the iPhone 3G when it arrives. Details like how it will be activated, pricing differences for new vs existing iPhone owners, and possible penalties have been flying around and are getting a little hard to keep track of. Here's a look at everything we know about purchasing the new iPhone 3G in July.

Subsidized vs. Unsubsidized?

The first thing that comes to mind about buying the new iPhone when it comes out is it's price. Steve Jobs said at the WWDC keynote that the iPhone 3G would cost just US$200 for the 8GB model and $300 for the 16GB model. Recently AT&T publicly stated that their revenue-sharing business model they had with Apple for the first iPhone is being discontinued. Instead, it is suspected that AT&T is subsidizing the cost of the new iPhone to get it down to that price.

However, it is possible that the new $200 price may not apply for all customers. In the memo, it is also hinted that the iPhone may be sold unsubsidized in some cases. AT&T stated in a recently uncovered internal memo to retail managers within the company that:

"However, not all customers will be qualified upgrades. AT&T has not determined the price of the 3G device for non-qualified upgrades."

This could be taken to mean that the iPhone may be sold unsubsidized without a contract, but this would be contrary to information stating that a contract is required with purchase of the device.

Do I have to give them my first generation iPhone to get the rebate?

No. You keep it. There are rumors however that this could be the case in Europe.

Activation will be performed in store only
Likely to deter individuals from purchasing the phone and unlocking it, AT&T has decided to only allow in-store activation of the iPhone 3G. This is contrary to the current at-home activation performed by iTunes at the customer's leisure. We asked for confirmation from AT&T's Mark Siegel on this matter, and his response was:

Activation will be done in the store and not at home.

Many customers have expressed concerns that this method would significantly slow the purchase process, especially on July 11th. While it does seem to be a step backwards, if AT&T is subsidizing the iPhone 3G as rumored, requiring in-store activation improves the likelihood that the phones will stay on AT&T's network.

Customers must sign a two year contract and select a data plan at the point of purchase. Both Apple and AT&T stores will "un-brick" the purchased phones after signing on the dotted line.

What this means if you are an original iPhone owner:
The memo also stated that:

When the 3G device launches, all active postpaid customers in good standing with a 2G iPhone will be eligible to receive the qualified upgrade pricing for a 3G device regardless of service tenure. (Customers that would not otherwise be eligible due to tenure will be made eligible at launch).

If you already have a first generation EDGE iPhone that you purchased June of last year up through May 27th of this year, you will be eligible for the subsidized price for the iPhone 3G, as long as you sign up for a new two-year contract that adds the new 3G data plan. Customers who purchased their iPhone after May 27th can trade it in for an iPhone 3G and get a partial refund.

Do current customers have to pay $20 or $30 for data?
AT&T said during its iPhone 3G Conference Call on Monday that current iPhone owners would be "grandfathered in" when they upgrade to the iPhone 3G and would still only pay $20 for unlimited data and 200 SMS messages. However, after asking AT&T's Mark Siegel about grandfathering, he told us that:

"There is no grandfathering."

So the bottom line from AT&T is that current iPhone owners will have to pay the $30 fee for unlimited data, just like everyone else. Bummer.

What this means if you're a current AT&T customer, but not an original iPhone customer:

You may or may not get the subsidized pricing. It will depend on how long you've had an AT&T contract, how long it's been since you've upgraded an AT&T handset, etc. The price for an iPhone 3G for those who don't qualify has not yet been determined. You'll still have to activate the new iPhone in the store with a 3G data plan and voice plan like everyone else.

What this means if you're new to AT&T:

If you pass the credit check, you can get the device for the new lower price. Prepaid and Pick-Your-Plan will not be available. You'll still have to activate the new iPhone in the store with a 3G data plan and voice plan like everyone else.

Available Service Plan Details/Rumors
An unlimited 3G data plan will cost $30/mo, instead of the $20/mo for EDGE. With this new "iPhone plan", unlimited data, email, and visual voicemail will be included. Unlike the current iPhone which comes with 200 SMS messages a month, there will be no SMS messages included with the iPhone 3G's plan. 200 SMS messages will run you an extra $5, with larger quantities available.

Cancellation policy
From the memo:

To cancel service within the first 30 days, the customer must return their equipment to the place of purchase (no exceptions). If the customer cancels service after 30 days, they will be charged the ETF. The customer is not required to return the device to cancel after 30 days.

The EFT is several hundred dollars.

Late Activation Penalties?

Another rumor is going around that AT&T is considering charging a penalty for not activating a device within 30 days of it's purchase. This is somewhat confusing, especially given rumors that activation will be required on-the-spot.

Availability
Unlike the first generation iPhone, it will be required that all customers activate their iPhones in the store. Also, with the first-gen. device, Apple's website listed Apple Retail Stores, AT&T Stores, and the Online Apple Store as places where the device could be purchased, but Apple has since removed the Online Apple Store from the list, making us suspect that it will not be available for ordering online.

It should be noted that most of the above information is not confirmed, and is subject to change. Neither Apple nor AT&T have sent out an official press release confirming any of this information, so they should be considered rumors.

Total Cost Of Ownership
Because the iPhone 3G will almost certainly require a $30 data plan, as opposed to the current iPhone's $20 plan, many users have complained that the total cost of ownership for the new phone will be more than the first iPhone, despite its $200 price tag. Gizmodo did some quick figuring of the iPhone 3G relative to the first gen and two other 3G smartphones offered by AT&T:

So while the iPhone 3G is more expensive than the first, it's still handsomely priced for an AT&T smartphone.

[via TUAW:1, 2, 3; MacRumors, Gizmodo]