Will higher data plan costs hurt iPhone 3G sales?

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Nothing stirs the imagination like an major Apple product update such as the iPhone 3G. Weeks before its July 11 release date, people will talk excitedly about its new features, thrill to its touted benefits, and dream of the day they can finally hold one in their hands. Very little, it seems, can dim people’s enthusiasm.

Until the pricing information gets released, and the cold, hard sting of dollars and cents sets in.

AT&T released its rate plans for the iPhone 3G this week. The plans are essentially $10 higher than existing iPhone plans, and text messaging is no longer included. Messaging rates start at $5 per month for 200 messages and go up to $20 a month for unlimited texting. Or you can pay as you go, at a rate of 20 cents for each text message. The end result—even though the iPhone 3G costs less than its predecessor, you’ll wind up paying more in service charges over the life of your two-year contract with AT&T.

Those figures caused a few of us around the Macworld offices to pause from our anticipatory iPhone 3G yearnings and take stock: Are the changes promised by the latest iPhone worth the higher service plan rates. Below, you’ll find two arguments—one from an editor who’s had second thoughts and another from one who’s as gung-ho about the iPhone 3G as ever.

Counting the cost

It was Tuesday morning on the way to my sons’ preschool, when my youngest boy had a question for me. “Papa,” my son said, opening the door for his inquiry. He took a deep breath and asked, “When can I get new shoes?”

“You got new shoes three weeks ago. Let’s take a look,” I answered. We inspected his shoes, and to my surprise, they were in excellent shape. They’ve so far withstood the daily rigors of a young boy’s active feet, unlike his last pair of shoes, a gift from my aunt that had ripped seams after two weeks. “They look good,” I said. “We’ll keep an eye on them, OK?”

That’s when I decided that I wasn’t going to get an iPhone 3G.

The morning my son asked for new shoes happened to coincide with AT&T announcing pricing plans for the new iPhone. Because AT&T is subsidizing the iPhone 3G, it was widely assumed that monthly data plans would go up so that the service provider could recoup its costs. And now it’s been confirmed. I figure my rate would go up $15 per month.

I’m not complaining about the rate increase. I actually think it’s fair. I don’t talk on my mobile phone much—my mobile plan prior to my iPhone was a $20 Cingular plan with only 45 anytime minutes. For me, the iPhone is a luxury, and I mostly use my iPhone as an Internet device, so I think the faster speed that comes with 3G is worth a few extra bucks a month.

The main reason why I’m not getting an iPhone 3G is that I want (not need, but want) to spend my money elsewhere. I’m no expert on the economy, but it seems to me that prices everywhere are going up. My wife recently started a new job, after being unemployed for a couple of months. And my growing sons need new shoes, clothes, and so forth. I’m not struggling to make ends meet, but I’m not flush with cash, either. I feel like I need to be more judicious about my money.

Since the iPhone 3G announcement, I’ve been asking myself if it’s worth it. I realized that I can live with EDGE—faster is always better, but I’ve accepted the compromise. GPS sounds nice, but I can think of only one or two instances in the past year where GPS would’ve really helped me. No other major iPhone 3G hardware features (Flushed headphone jack? Black or white back?) have won me over.

With my current frame of mind, I’m thinking that the $15 per month is $60 after four months, about the time my two sons will need new shoes. Right now, I thankfully don’t have to worry about where that $60 is coming from in my budget. I like not having to worry.

So when July 11 comes, I’ll take a look at the iPhone 3G when it lands in the Macworld offices. I’ll maybe even stroll by the Apple Store to get caught up in all the excitement. But I’m not buying an iPhone 3G. It just isn’t quite compelling enough of an upgrade for me. I’m quite happy with the original iPhone.—ROMAN LOYOLA


Think of the future

Unless your workday is dominated by sampling the world’s finest food and drink, receiving hourly massages, driving really fast with impunity, or blowing stuff up, I have a better job than you.

I’m sorry to rub it in, but I just do. I work at home, get to plaster my opinions around with relative impunity, and, best of all, I get paid to play with the coolest toys made today.

Which is why I was somewhat nonplussed when, after offering to pick up an iPhone 3G on my way back from a week’s vacation, the boss replied, “Let’s ponder if you really need to get a 3G right now, especially since you can’t even get a cell signal at your house!”

Naturally, my first reaction was “Can’t get a cell signal at my house? What the hell does that have to do with it? You think I use this thing as a phone!?”

And then I thought some more, looked at the $15 monthly increase in the data cost ($10 for 3G that I’ll rarely use plus $5 for equally rarely used SMS) and considered the boss’ reasonable suggestion that it’s bad enough that I have two iPhones now and can’t receive or make calls on them except during my weekly foray from the house, but I’m now suggesting that I procure a third phone that’s more expensive and just as impotent. And, after careful consideration, I came to this conclusion:

Can’t get a cell signal at my house? What the hell does that have to do with it? You think I use this thing as a phone!?”

Let’s put aside the notion that I have a professional need for one of these things because I often write and speak about them and it’s incumbent that I have more than a passing familiarity with their workings. That may work for me, but it’s not going to cut it for you, oh well-fed, relaxed demolition race car driver, who is desperately looking for some justification for an iPhone 3G.

So, taking it to a purely personal level, what’s in it for me?


Forget 3G, forget the plastic back and metal buttons, even forget the flush headphone jack. To me, the iPhone 3G is all about location, location, location. And by that I mean the potential that comes with a phone that knows where it is (and accurately knows where it is, unlike the original phone that relies on sometimes unpredictable Wi-Fi and cell-tower triangulation) and can use that information to communicate with others and the world around it.

Some weeks ago I pondered the potential of the iPhone as money and GPS plays a huge part in that. I agree that a large slice of pie in the sky can be found within that article. But my best guess is that we’ll see plenty of terrestrial pie in the form of helpful GPS implementation not long after the iPhone 3G’s release.

So yes, I may not be able to make a phone call from my house. 3G will come to my neighborhood around the same time as cable TV and a city sewer (meaning the day before never). But I’m always under the watchful eye of an orbiting hunk of location. GPS on the iPhone 3G may have a small reach now, but I believe it’s a growing capability worthy of my investment.—CHRISTOPHER BREEN


Those are just two points of view—we’re sure you have thoughts of your own about whether the long-term cost of the iPhone 3G’s data plan is giving you second thoughts about buying a new phone next week. And we invite you to share those thoughts in the forum thread below.

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