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AT&T loosens its iPhone 3G S upgrade policy

Carrier has come around and will now offer some existing iPhone 3G customers a better upgrade price for the new iPhone 3G S.

AT&T received harsh criticism from some customers who wanted to upgrade to the new iPhone 3G S but discovered they would not receive the best upgrade price. However, the company on Wednesday changed its tune.

Saying it has been "listening to their customers," AT&T is changing its policy to allow customers who are eligible for an upgrade in July, August, or September to upgrade starting on Thursday at what it calls the "best upgrade pricing." The upgrade eligibility tools won't reflect the change in policy until Thursday, the company said.

If you qualify for the best upgrade pricing, you will pay $199 for the 16GB model and $299 for the 32GB model--these are the same prices AT&T will charge new customers signing up for a two-year contract. If you don't fall into either of those categories, you may be eligible for what AT&T calls its "early upgrade pricing": $399 and $499 for the 16GB and 32GB models, respectively.

Previously, early iPhone 3G adopters would have had to pay the "early upgrade pricing"--which had some customers upset.

AT&T will examine several factors to determine eligibility (PDF) including the amount of money you spend a month. For example, if you spend more than $99 a month on services, the company said you are more likely to be eligible for an upgrade after 12 to 18 months.

While this change is good news for those customers who want to upgrade, it does mean that they will have to go to a retail outlet and hope for an iPhone. AT&T has already sold all of its pre-order stock and said orders after June 12 will be processed in the next two weeks.

You can also try an Apple retail store if you're lucky enough to live close to one. If not, AT&T says you can order the iPhone from Apple's online store.

If you already pre-ordered the iPhone 3G S and find that you're now eligible for the lower price, don't worry, you'll be taken care of. AT&T said it would adjust the price of the phone when you pick it up from the store it was ordered from. If you bought it online from AT&T, it will issue a credit.

If you pre-ordered from Apple, it will issue a credit for the difference.

If you still don't qualify for the iPhone upgrade pricing, but really want to have one, you can buy a 16GB model without a contract for $599 or a 32GB model for $699.

Earlier on Wednesday Apple released iPhone OS 3.0. CNET also has a review of the new iPhone 3G S.