Many whom own a cellphone know the frustration of only receiving discounts on purchases when signing a new service agreement. According to Rita Chang of AdAge, over 5,000 people have signed a petition via twitter to offer subsidized prices to existing AT&T iPhone users for the new iPhone 3GS. The new iPhone 3GS is selling for $199 to new customers, but is selling for $399 to existing customers locked in a contract.
Will this buzz make a difference?
Although I agree with the frustration that current customers should be offered a rebate or incentive to trade up, I understand the economics behind the higher price. Having worked in Telecommunications for 5 years, these companies offer more affordable prices at the beginning of a new contract because it is more of an incentive to join their service. Companies make money on their customers for paying their bill over the life of the 2 year contract and would take a hit fiscally if they were to provide the same incentives to existing customers. I know this is a hard concept to grasp, but the economics around it make sense.
Consumers should have the ability to buy whatever phone they want at a reasonable price, but in this industry when you buy, think twice of the next rumored gadget.
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