When June 29th comes around and the swarms descend upon AT&T/Cingular and Apple retail outlets, many users will be shocked to discover that their current Cingular wireless contracts are not eligible for the standard iPhone pricing (US$499 for the 4GB model or US$599 for the 8GB model), or may not be able to purchase the iPhone at all.
First of all, as separately noted, there will be no upgrade discount for the iPhone that brings the cost of the device below the aforementioned prices. Second, as we previously noted, Apple has now explicitly stated the iPhone use requires 2-year contract activation.
Here's where things get tricky. Generally, Cingular contracts have worked thusly in the pre-iPhone era: a two year contract is standard, though a one year option has been made available under circumstances. When a two year contract is in the last three months of existence (between 21 and 24 months), the user is eligible for an "upgrade." This means that said user can sign a new two year contract and receive an activation or upgrade discount on a new phone. However, in the case of the iPhone, it appears that this upgrade eligibility is what dictates the US$499/$599 pricing. In other words, you need to be eligible for an upgrade, or be signing a new contract in order to buy the iPhone at these prices.
To make things more complicated, a user may be eligible for an earlier upgrade date if they use a high-priced plan or have an added data feature.
Furthermore, there may also be an upgrade fee associated with the iPhone even if your current contract is eligible for upgrade.
Take the case of the personal account of one of our staff members. This particular account expires at the end of July. We talked to a AT&T/Cingular representative who said that this plan -- a standard, limited minute plan with the Media Basic package -- was indeed eligible upgrade, and could be extended by 24 months on the day the iPhone is released (canceling the remainder of the existing contract) in order to purchase the iPhone at US$499/$599 pricing. However, an US$18 upgrade fee would also have to paid at the time of purchase.
What is not clear as of yet is the following: Will customers who are on month, say, 13 of a 24 month contract be able to purchase the iPhone? If so, what price will they pay (presumably something higher than US$499/$599)? Will the remainder of their contract be canceled and replaced by a new 24 month contract, or 24 months simply be tacked onto the end of their existing contract? These are all questions that none of the dozen or so AT&T/Cingular store locations we contacted had answers for, but some were hopeful that such information would become available in days leading up to the iPhone's launch.
The bottom line is that if you are interested in making sure you can purchase an iPhone at US$499/$599 on the day it is released or shortly thereafter, you should contact your local AT&T/Cingular store or contact customer service (by dialing 611 on your AT&T/Cingular mobile phone) and inquire as to whether or not your current contract is eligible for upgrade status.