Upgrade to iPhone 4? Five reasons not to...yet

Editors' note: This post was updated at 11 a.m. June 10, 2010, to correct the information about the unlimited data plan for existing customers, which they can choose to keep when upgrading to the iPhone 4.

Last year, I upgraded to the iPhone 3GS (from the 3G) without much deliberation. It was obviously a decision made against my better financial judgment. But this is not new. I, and generally those who buy Apple products, do that a lot.

Apart from the fact that I was a year younger (and therefore that much less wise and patient), it was also because the 3GS was significantly faster than the 3G, and it has a compass. For the former, if you have experience with both versions of the phone, you'd surely agree with me. About the latter, it's personal, as I tend to have no idea which direction I'm headed. Literally, of course.

This year, on the other hand, mulling over whether I should upgrade has given me a neck pain. The new iPhone 4 indeed offers some exciting new features. I am sold on the new screen; my co-worker Eric Franklin, who reviews computer monitors, said it "totally blows him away" (though he has never actually seen the device). I'm also sold on the new design and the front-facing camera. (Believe it or not, I am not too keen on the gyroscope.) In short, I am not going to argue why I want to upgrade.

Instead, here are the reasons I can't see rushing to upgrade just yet.

1. No unlimited data with tethering.

As it's been widely reported, starting June 7, AT&T killed the once-mandatory unlimited data plan for the iPhone. Instead you can opt for the 200MB or 2GB plans that cost $15 or $25 a month, respectively. Of course you'll have to pay extra if you go over the limit.

This, however, only applies to new subscribers. Existing iPhone users, like me, are grandfathered in. However there's a catch: you won't be able to use tethering, which requires a limited data plan plus another $20/month.

AT&T says that tethering will be made available together with the iOS 4 (iPhone OS 4.0). It's ironic, however, that it won't be allowed on phones with existing unlimited data plan. Not a good deal.

Now, most people are actually doing fine with just 200MB or 2GB a month, but savvy users could easily exceed that, even a few times over, especially if they tether.

A lot of iPhone owners use the phone's 3G connection to download apps, music, and podcasts, as the cellular connection allows for downloading files that are 20MB or less. If you do this or stream YouTube videos regularly, you will quickly see that your monthly ration of 200MB or even 2GB is far from enough. I didn't check mine, but I have friends who average 4GB or 6GB a month.

(Even though AT&T has disabled tethering starting with iPhone OS version 3.0.1, those who stay with version 3.0, which I do, can still use this feature. You can also have your phone jailbroken to use tethering, via a free third-party app, without AT&T being able to do anything about it.)

2. You won't miss much.

This only applies to owners of the iPhone 3GS. Your iPhone will be able to fully enjoy version 4.0 of the iPhone OS (now called iOS), the biggest benefit of which is multitasking. Yes, you'll miss the front-facing camera, and hence FaceTime, but it will be a while before there are apps/services that fully take advantage of this.

Also, FaceTime is most appealing, for me personally at least, when you can video-chat on the go via a cellular connection. However, at least in the beginning, the app will only be able to run using a Wi-Fi network. And even when it can be used with a 3G connection, this will directly affect your data plan. The lack of unlimited data plan makes this a feature that you wish you didn't have when you see the bill at the end of the month.

What I sure will miss, however, is the A4 chip that's slated to offer a significant boost in performance. But nonetheless, the iPhone 3GS is already pretty snappy. I can live with that.

3. One more year and you can get the iPhone elsewhere.

AT&T has been the exclusive iPhone carrier in the U.S. for a while now, and that's ending soon. Within a year there will be other service providers who carry the iPhone, and this hopefully will result in better service. Incidentally my contract with AT&T will also expire in a year.

It's also my hope that if the iPhone is made available to more carriers, there will be no need to lock it. This has already happened in many countries where the locking practice is banned.

Frankly the practice of locking really defeats the purpose of the GSM technology, which allows you to switch from one phone to another just buy swapping the SIM card, giving you the freedom to use local carriers when you travel out of country. This is the sole reason why I picked AT&T in the first place, just to find out later that I was wrong.

Note that you can keep your phone number when you move to a new service provider.

4. Another two-year contract is unthinkable.

Starting June 1, AT&T hiked the early-termination fee for the iPhone from $175 to $325. That's about how much you have to pay if you decided to end the two-year contract early. This move from AT&T basically means, "Well, we know our service is terrible, but we'll try everything we can to keep you with us anyway. So here's another cup of Kool-Aid."

Seriously, I just can't see how I can tie in with AT&T for another two years. Don't get me wrong; I've been a very loyal customer. I got my first cell phone way back in 2002 and have been with AT&T--which then became Cingular Wireless, which then became AT&T again--since.

The problem with a two-year contract is that generally, geeks change their phones about once a year. This means with a two-year contract, there's no way I can get the benefits of being a loyal user, which includes getting a phone for free or at the discounted price. I've bought all of my phones from AT&T at their full prices.

Now if AT&T offers the upgrade to the iPhone 4 with just a one-year contract, I might consider it, just because I have one year left on my existing contract. The main reason why a two-year contract is unthinkable is actually because of reason No. 5.

5. AT&T's service is honestly terrible.

I know this is subjective, as the service quality varies from one location to another. However, for me and many of my AT&T-using friends in the San Francisco Bay Area and New York, call quality has been terrible. Service is spotty. Calls have been dropped at really awkward moments. I even missed picking my friend up at the airport because the text message he sent took seven hours to get to me. When I use the 3G connection, many calls go straight to voice mail, which is then not available till much later.

Over the years, I always had faith that someday AT&T's service would improve, but now the benefit of the doubt has run out.

Even Steve Jobs isn't so sure about this. During a recent interview at the All Things D conference, Jobs said he was told by "high-confidence people" that "a lot of places are getting a lot better [service] certainly by the end of summer." When asked what happens if that doesn't turned out to be true, he replied, "Well then they won't. We'll see."

I guess after eight years, I've had enough. And for those who want to move to AT&T to get the iPhone 4, you've been warned.

So I might end up getting the unlocked iPhone 4 from abroad and wait for my contract to end before I can move to another service provider. By the way, even though the iPhone 4 uses micro-SIM, you can easily cut your existing SIM to make it fit.