Because they subsidized the price of your iPhone. If you purchased your iPhone in 2009, you’re guaranteed to be eligible when iPhone 4 drops because AT&T is bumping upgrade dates up to 6 months.

EDIT: in other words, you agree to sign on for X amount of months and they drop the price of the phone. If you upgraded now, they’d be out of the money you agreed to pay them.

They sell you a phone for $500 free and clear.
Or they sell you a phone for $100 and make up the difference by committing you to a year or two of monthly service.

It’s worse with an iPhone because you can’t go to another cell carrier, AT&T has the strong hand.

@jpwilson25 No, you are not guaranteed eligible if you bought your iPhone in 2009. The rule is that they’ll give you the upgrade price if your contract expires any time in 2010. The contracts are for two years. Therefore, only those who bought their iPhone from Dec 31 2008 and earlier are eligible.

Also, your contract is usually set for 24 months but your upgrade eligibility date can occur much sooner than that… usually after 12–18 months if you’ve been with them for a while.

I believe you can dial *639# on your iPhone and AT&T will send you a text with details on your upgrade eligibility.

@MrItty You’re partially right I think (and I was totally wrong)—it’s not whether your contract expires in 2010, but whether you’re eligible for an upgrade in 2010.

My contact technically runs until June 2011 but I’ve been made eligible since my upgrade date was November 2010. They’re basically just hacking 6 months off your upgrade date if you’re able to upgrade in 2010.

EDIT: For the record, I was not on contract until I purchased the 3GS in late June 2009.

@jpwilson25 I was under the (mistaken?) impression that “eligible for upgrade” == “account expires”.

In any event, my 2 year agreement started 6/26/2009. I just dialed that number you gave, and got a text back saying that I’m eligible to upgrade, but I’ll have to pay a $18 fee in addition to the upgrade price of the iPhone 4.

@MrItty The contract you sign is for 2 years but most people are able to upgrade after 12–18 months (thereby renewing the 2 year contract). I guess for those people, the subsidy has been covered. This is taken from a post on Engadget today:

…the company has pulled ahead any existing iPhone customer who’d previously had an upgrade date in 2010 so that they can get the best [...] pricing on the iPhone 4.

@jpwilson25 on the one hand I want to thank you for the correction and information. On the other, I want to curse you for making me think about whether or not to upgrade. :-P

Wait. I hadn’t upgraded my phone for 2 years after I became eligible, so i got over $200 in discounts for upgrading. If I had upgraded right away I would only have gotten $50 worth.

I’m not clear about something here. Even if we are eligible for the early upgrade, we still have to end up paying $200–300 (depending on how many gigs) for the new phone right?

If I had known that they were going to drop the price of the 3G all the way down to only $100 I think I would have waited. That’s less than the price of an iPod Touch, incredibly. I’m not quite sure when they dropped it that far but it was quite a while ago.

@Buttonstc That’s correct. The $200—$300 is the discount renewal price. To buy a phone without the renewal price will cost you an additional $200 on top of that.

Thanks. That’s what I thought. I’ll most likely wait till the complete end of my contract (in Dec.) and hope the price will drop a little ?

Prob. not but it doesn’t make much sense to me to do it sooner.

But, it’s a vicious cycle. According to an article in Consumer Reports, when ones contract is up regardless of whether you renew your contract or not, a portion of your monthly fees (approx. 7–8 percent) still goes toward phone subsidy. So you’re either subsidizing another phone of yours or you’re subsidizing someone elses.

It’s not as if they’re going to lower your monthly charge if you decide to keep using your old one. The subsidy is permanently built in.

When you think about it that way, it makes little sense not to get something for your subsidy payment.

Anyhow, from what I’ve read so far, I really don’t find anything that compelling about the 4G that I MUST have it. I felt the same about the 3GS. The majority of improvements touted in the commercials were due to software not hardware improvements.

@Buttonstc Even more amazing is that they’re going to drop the price on the 3GS to $99 on June 24th. It’s only the 8GB model but I just checked and the 16GB has already been dropped to $149… and the 32GB is $199. Knock another $50 off for the refurbs.

If the S is only 99, then how much will the regular 3G go for?

If they drop it to $50 that means it would be barely worth it to try to sell mine used even tho it’s in excellent condition. Not a scratch on it.

Bahhh.

@Buttonstc No hardware upgrades? Are you kidding? The battery life, form factor, noise cancelling microphone, HD video, real actual camera not to mention much much faster processor?

I’m all fanboi over this phone, I think even more than the original.

I should have been clearer. The commercials to which I referred were for the 3GS. And for that model, video stuff aside, the majority of the attributes mentioned in those commercials were available due to the software upgrade from what I could tell.

Afaik, there have not yet been any commercials for the 4G, so I’m perfectly willing to take your word for the specs on this one.

And I will most likely upgrade to it but not until my contract completely ends as I’m loath to continue paying a subsidy for nothing. But I’m not in a big rush to do it even tho I’m currently eligible and the $18 fee would be waived.

BTW. I’m not clear on what you mean by ” “real actual camera”.

As opposed to what on the 3G? I’m a little confused.

@Buttonstc 5 megapixel camera + flash (plus the crazy futuristic front camera for video chatting), as opposed to the toy camera of the previous models.

OK. yeah the flash does make a big diff. And if it really is 5 MP that would make a significant difference.

But I’ve seen a couple of websites devoted to iPhone photography with some awesome pics on them. A photographers skill can make up for a lot.

But for the average person who tends to take snapshots from way too far back, the extra MPs will enable much better end results after cropping.

I would get it for those attributes alone.

You can always buy the phone at retail price. It will not be considered an upgrade if you buy it elsewhere.

@jpwilson25 it’s the iPhone 3G that’s dropping to $99. the iPhone 3GS is dropping to $149 and $199 for 16Gb or 32Gb, respectively.

http://store.apple.com/us/browse/home/shop_iphone/family/iphone?mco=MTgxMDQ3Mjk

@MrItty Here ya go… Engadget

The 3GS 16GB and 32GB models at those price points are only available while supplies last and the 3G will be discontinued (and subsequently replaced with an 8GB 3GS as the low end). Apparently Walmart is already selling the 16GB 3GS for $97.

@jpwilson25 goddamnit. I’ve far exceeded my completely-incorrect-statements quota for this thread. Thank you, again.