Consumer Law

The new iPhone?when half-price costs 40% more

By Richard Alderman

by Richard Alderman

I just bought a new iPhone 3G.  Great device, no complaints about the phone. But the signs at the store boast ?Twice as Fast?Half the Price.? This claim is based on the fact that the new 3G iPhone has faster connection times (a claim I cannot verify or dispute) and costs $199. The prior iPhone cost $399. Simple math?half the price. I had previously purchased the more costly phone and agreed, this was a great deal. Until you actually pay.

After I purchased my new phone, I had to enroll for AT&T service at the store. I asked why I couldn?t do it myself online as I had before, and the salesperson replied, ?You need to sign up for the AT&T two-year contract now because they subsidize the cost of the phone.? How, you ask, do they do this? By charging $15 a month more than they charged for the same two-year service agreement with the more expensive phone. In other words, over the length of the two-year contract, the new half-price phone costs $360 more in service fees. Subtract the $200 ?savings? in the cost of the phone and the net result is the new ?half-price? iPhone actually costs $160 more than the more expensive one ($559). My math may be wrong, but I believe that is about a 40% price increase over the old price or $399. Apple may be a great company with a great product, but they either can?t do math or are deceptively advertising.

Full post as published by CL&P Blog on July 28, 2008 (boomark / email).