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 8 GB goes from $199 to $99. 3GS 16 GB to be $199 (same as old price for 3G 8GB) 3GS 32 GB 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 8 GB stays the same price. 3GS 16 GB costs about £50 ($80) more than the old 3G 16GB 3GS 32 GB 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 _Giga_Bytes of tethered access just for 3 or 4 days of usage and about 1 _Mega_byte 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???