Is the iPhone 3GS a rip-off in the UK?

(If you want to tweet this please use the tag #O2iPhoneRipOff)

Is it me or is the new O2 iPhone pricing policy looking like a bit of a rip-off?

First off, there is the cost of the ‘phone. At Apples WWDC it was announced that in the US;

3G 8GB goes from $199 to $99.
3GS 16GB to be $199 (same as old price for 3G 8GB)
3GS 32GB to be $299 (same as old price for 3G 16GB).

From O2 in the UK we get price rises rather than cuts. For example on PAYG;

3G 8GB stays the same price.
3GS 16GB costs about £50 ($80) more than the old 3G 16GB
3GS 32GB costs about £150 ($240) more than the old 3G 16GB

and on Pay Monthly tariffs where you need to pay for the ‘phone you’re looking at paying an up front cost of around £55 ($88) more for a 3GS 16GB than the 3G 16GB, and £145 ($235) more for a 3GS 32GB than the 3G 16GB was!!!

This price increase is also reflected in the £45 per month tariff where the old 3G 16GB was free, now you have to pay £87.11 ($140) for the phone.

You might think that the extra costs cover materials, well, to put those prices into context, the difference in price between the 16GB and 32 GB iPhone 3GS (so you’re getting 16GB of additional storage) is more than enough to buy yourself an entire 32GB Solid State Hard disk for a PC or Laptop.

There is also a rip-off in relation to Tethering; On pay Monthly tariffs “unlimited UK data and Wifi” is included in the tariff, but if you want to tether your iPhone you have to pay £15 per month extra for a 3GB limit, so if you pay monthly you get unlimited data in your plan, but if you want to tether you suddenly get a 3GB limit, how, exactly does that make sense? (If you wondering Pay As You Go customers can’t tether, O2 just don’t offer it to PAYG customers).

If you compare the price to O2s mobile broadband tethering actually works out worse value for money than the mobile broadband offering. With mobile broadband you pay the same amount for the same data allowance and you get free Wi-Fi, but with the iPhone you’ve already got free WiFi on the monthly contracts, so you’re either paying for WiFi twice or getting 3GB of data for a higher cost than they charge mobile broadband customers, which again just doesn’t make sense.

If that wasn’t bad enough; the iPhone tariffs that O2 offer their pay monthly customers have an 18 month minimum term, so if Apple stick to a 12 month release cycle pay monthly customers will always end up with a “contract buy-out” or “6 month hold-out” choice as has happened to the current iPhone 3G owners on O2.

Come on O2, sort out your pricing policy!!!

Update – cheapest tariff : To top it all for the Pay Monthly customers, if you don’t use the Wi-Fi from O2 or it’s partners, the pay monthly iPhone tariffs don’t even offer the best value for money over 18 months.

If you buy a Pay As You Go 16 GB iPhone 3G S and put it on a £19.58 per month 12 month minimum term SIM-only simplicity tariff and add the free unlimited web bolt-on you get 800 minutes talk time per month, 800 texts per month (1600 if you buy on-line), and over 18 months the whole lot costs £792.84. If you compare that to the £34.26 per month iPhone Pay Monthly tariff which offers 600 minutes talk time (200 less than the simplicity tariff), 500 texts per month (300 or 1100 less than the simplicity tariff), and unlimited web, you end up paying £801.66 over the 18 months.

Update – 12 month cost: If Apple do go for a yearly refresh cycle and you really want to upgrade, the PAYG iPhone + Simplicity tariff will cost you £674.36 over 12 months, whereas with the iPhone pay monthly contract you’ll still be locked in to paying £801.66 over 18 months.

Update – O2 trying to defend itself : Apparently, to O2, a “one month minimum term means you can turn it on and off when you like”, it’s just a shame I’d use tethering with my GPS for 1 day out every week or two which means I would pay for 1 month and 3 GigaBytes of tethered access just for 3 or 4 days of usage and about 1 Megabyte of data, and to them “iPhone tethering costs more as it uses a lot more data than traditional browsing on your iPhone itself” – Did they miss the bit of their own web site which says the iPhone tariffs already have “unlimited UK data and Wifi” as part of them???

9 thoughts on “Is the iPhone 3GS a rip-off in the UK?

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  1. Some nice points, but you’re comparing Apples with Oranges (ho ho) when you talk about tethering.

    Even when used a lot, the iPhone doesn’t eat up anything like the amount of data that an average tethered laptop does. You can’t do heavy data-usage stuff on the iPhone like online games or file transfer. It doesn’t do much in the background, so your Twitter app, IM apps, and so on aren’t constantly polling the network.

    If o2 gave iPhone owners unlimited data through tethering, the amount of data used would be massive – it would seriously hurt their margins.

    Note, too, that your iPhone data usage isn’t affected by the 3Gb cap – it’s only tethered usage that counts towards it.

    And while you say that you’re already getting free WiFi access, you’re only getting that on your phone – not on your laptop. And data pulled via WiFi doesn’t count towards that 3Gb cap. To put that into context, unlimited WiFi via The Cloud for your laptop would cost you £9.99 per month.

    If you’re the kind of person that would use 3G access on your laptop only occasionally, this isn’t a good deal for you – get a PAYG mobile broadband stick from someone like 3 and use it when you need to.

  2. @Ian

    My main problem is that O2 advertise the tariff as having “unlimited UK data and WiFi”. It doesn’t advertise “enough data for an iPhone usage pattern”, and it doesn’t advertise “What we think you’ll need”, it clearly advertises *unlimited* UK data and WiFi.

    If they advertised a, say, 1GB cap for the ‘phone tariff and allowed you to buy extra then fine, but to offer an unlimited service and then make you pay again for access to a limited version of that service when the service is accessed via the same device is just wrong.

  3. Hi Al,

    First of all, I’d like to say that this is a great article, providing a lot of helpful information to people looking to get a new iPhone 3GS on Friday.

    You have stated that the iPhone with the £19.58 per month Simplicity tariff is the best way to go. I know that the first year for the unlimited web bolt on is free, and then its is a further £9.99 a month. Do you know if this is the same service that iPhone users on a contract will get? Are there any caps, etc?

    Also, you have said that it would be possible to upgrade to the new handset in 2010. How does this work?

    I am considering purchasing a pay & go 16GB iPhone 3GS on Friday, and am trying to work out the best option as I don’t really use more than £10 a month on my current pay & go phone. What would you suggest?

    Thanks again for your help

  4. Look, why not just face up to it – the iPhone is a great price if you live in the U.S., but in the U.K., it’s a rip off, and that’s that! And besides, 3G is crap in the U.K. anyway! Perhaps if you live in London, maybe it’s OK, but elsewhere – no way! So what’s the point of a faster phone if the network bandwidth sucks? Don’t be a sucker – make do with OS3.0, and save yourself some money – go and live it up for a weekend instead.

  5. Isn’t this UK price difference due to the weakened pound? Surely O2 have to buy the iPhones in dollars and as such the price will have gone up from last year. The reason the price hasn’t changed for the existing models is probably due to O2 having a fixed price large order in at the start?

    Blame the economy, not O2!

  6. My main issue that makes the iPhone a rip off in the UK is the lack of SMS/text message usage in the tariffs.

    The maximum amount of texts O2 customers can use without being charged on contract is 500. I send up to 1000 texts a month which can be included on other mobile phone tariffs for £30 or less!! (£34.26 iphone). The only way around this is to buy the iPhone 3GS on PAYG instead of contract where I can pay £20 a month for unlimited texts. However the rip off here is the 32GB 3GS costs a whopping, shocking £538.30!!! I can’t afford to just spend that much on a mobile phone, no one I’ve ever known can/would either.

  7. Hi There,

    I managed to work this out as well. I am currently on the o2 Simplicity 19.58 tariff, and have the ‘unlimited’ (200mb really) browsing bolt on included. considering I will be at uni and at home I will use the wifi there :-).

    Recycling my n96 for £200 I will be able to get the iphone for 338. 338 + 20*18 = £698, the total cost over an 18 month period, assuming no extra charges. This is £8 more expensive than the equivalent tariff on the 18mth contract, but you are not tied in :-). Hopefully using a few discount codes I will be able to save a bit, but to me, having the freedom to change is worth it. ATB, H123UK

  8. Serves you right!. If you bow to these morons, you have no recourse nor reason to moan. Were you FORCED at gunpoint, to sign the contract?… thought not.

  9. “All you can eat” should MEAN “All you can eat” as far as data goes. As for SMS messages, everyone knows the carrier channels that send them are ALWAYS carrying data, whether or not SMS are being sent – THAT is a disgusting ripoff!.

    Mobile companies want to have their cake, whilst being given another one, fifteen times the size, to eat… and they expect you to give them cake on demand, too.

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