Mike Wilks' Blog

The release of the new iPhone 3GS seems to have stirred up a hornets’ nest of controversy around the O2 contract and pricing.

The phone itself seems to be a bit of a stopgap release to me. Sure it is faster, has a better camera and has a few new features like a compass but there is nothing game changing. The really good stuff is in the 3.0 OS which will be available to previous iPhones. I can’t help thinking that this is not the must have upgrade that the 3G was from the original iPhone. Personally there is nothing much there to make me want to rush out and upgrade, especially given the O2 “upgrade policy”.

Now I understand that I signed up to an 18 month contract when I upgraded to the 3G but this does appear to be lost on many. That said O2 and Apple had set the precedent by allowing early upgrades to the 3G. The reasoning for allowing the upgrade last time but not this is that the original iPhone was not subsidised. Even accepting all this the O2 position of  having to buy out of your contract seems extreme. If the pricing for buying out of your old contract is really the number of months remaining multiplied by your monthly costs then why would anyone do that? You may as well sign-up to a new contract as it would be the same price and you still get the use of the minutes, texts and data on the old contract and have a new phone. I cannot understand how Apple and O2 didn’t see this storm coming (and maybe they did) – a 12 month product refresh and a contract of a different length was always going to cause problems!

I can’t really get too excited about the whole upgrade fiasco as there is nothing in the new phone I really want – it might be different if there was. What does really annoy me is the tethering charges. As I understand it O2 are going to allow iPhone tethering but will charge a bolt-on of exactly the same price as their 3G data plans. Now I could live with this if they didn’t describe the iPhone data as unlimited. I think I saw the O2 twitter account say that the reason they were charging for tethering is because it uses more data. Now leaving aside the discussion about whether tethering uses more data per se or just allows you to torrent and usenet it is clearly not the case that the iPhone data is unlimited. I cannot understand how the ASA and others have not slapped O2 and every other telecoms provider hard for this whole unlimited farce. Unlimited cannot have a limit by definition and it doesn’t matter whether you call it Fair Use, Acceptable Use, Excessive Usage  or anything else – it is still a limit.

The other thing I find funny about this whole situation is the fact that it makes Pay as You Go look so attractive. I haven’t checked the maths but various people are claiming that Pay as You Go is cheaper then signing a contract with the obvious advantage of not being locked in. If this is true then O2 may not care right not given they are still getting the revenue but they will start to care as soon as their exclusive ends. The fact O2 has an iPhone monopoly in the UK is probably the route of most of these issues and will no doubt be solved when there is some competition. When O2 started to push the 24 month contracts on iPhone so hard I thought it may be a clue to when there exclusive might end but now I am less sure because of the lack of early upgrades. If there were an end to the exclusive in sight I would presume O2 would look to tie in the existing users by extending their contracts by way of upgrade.

Anyway I am just going to wait out my 3G contract and then either continue on a rolling contract or explore jail-breaking and another network.