No-Commit iPhone Priced To Fail

— -- If you believe a published report, AT&T is about to (finally) make good on its promise to offer a "pay-as-you-go" iPhone, sold without the usual requirement for a two-year service contact. Commitment phobia, however, comes at a high price.

Here are details of the rumored deal, supposed to become effective next week:

Drop by the AT&T store, plunk down $599 or $699 and you get an 8 or 16GB iPhone, sans the usual two-year service contract. This "no-commit" pricing is only available to existing AT&T wireless customers and activation is not required at time-of-sale.

Under AT&T's current pricing, basic iPhone voice and data costs $69.95-a-month, with text messaging an additional $5-$20 monthly, depending on how many messages you expect to send.

Let's say you buy an 8GB iPhone at the subsidized price of $199 with the required two-year service plan. If you cancel service on day 31 of the contract, the early termination fee is "up to $175" according to AT&T's Web site. The $199 phone plus $175 for early termination adds up to $374, which is $225 less than the $599 "a la carte" price for the same iPhone.

Unless AT&T offers a discount on service if you buy an iPhone at the non-subsidized price, I cannot imagine why any sensible person would pay $599 or $699 for an iPhone if it could be avoided.

Some customers, however, might not be able to get a discounted price. If you have not owned your current AT&T phone long enough to get a discounted upgrade, the no-commitment price might be the best deal you're offered.

For example, a phone that is stolen shortly after it was purchased at the discounted price might only be replaceable at the no-commit price. (AT&T does not offer iPhone insurance).

One way to avoid paying the no-commit price might be to pay the $175 early termination fee and see if AT&T will then let you then sign up as a "new" customer. Otherwise, the crime victim might have to get a new account using someone else's name, credit, and Social Security number to avoid the no-commit pricing.

Maybe AT&T really doesn't intend to sell (m)any at those prices. Maybe no-commit pricing is just a way to impress their regular customers with how much buying a phone with a two-year commitment "saves" them. Yes, that's very impressive.David Coursey is an iPhone user who likes avoiding long-term service contracts. Contact him at www.coursey.com/contact.