What's the ruckus about the S$600 early upgrade fee for the iPhone 3GS?
Damian Koh | Jul 07, 2009
SINGAPORE--I don't understand what the big hoo-hah is about SingTel levying an S$600 early upgrade fee for the iPhone 3GS which will be available in Singapore this Friday. Now, before you send in the hate mail, let me say it here that I'm neither a SingTel subscriber nor an iPhone 3G owner.
My rationale: The iPhone 3GS is just another phone and should rightfully be treated like one.
When you buy a mobile phone from a telco operator, you sign a two-year contract and get subsidized prices for the device in return. After fulfilling at least 12 months of the tenure, you will be eligible for an upgrade to a new handset. Break the contract anytime and you pay a penalty. This telco-customer agreement should be something everyone is familiar with. Why complain now when you've signed on the dotted line, giving your implicit consent to abide by the rules of your current contract one year ago?
Now back to the iPhone 3G. The smartphone was launched in Singapore on August 22, 2008. This makes it less than a year to the new iPhone 3GS going on sale this July 10. In this case, those who got the iPhone 3G at launch will have just missed the one-year mark by slightly over a month, which will entitle them to a lower upgrade fee instead of the current S$600. According to SingTel, if the first batch of iPhone 3G owners waited till they reach the 12-month mark, they need pay only S$300 for the upgrade. But the telco operator told us that those who bought their iPhone 3G in August 2008 can also get this "advance" upgrade fee before their contract reaches 12 months.
The S$600 fee isn't a small sum of money, that goes without saying. But iPhone 3G owners were aware that when they purchased the iPhone 3G, a written clause in the contract specified that early termination anytime during the two-year tenure for the iPhone 3G is S$800. That's a sum which is even harder to swallow, though most people seem to have conveniently forgotten it.
Who would have known that Apple would release a newer iPhone so soon, right? So the buffer here is that SingTel is offering a trade-in value of S$300 and S$400 for the 8GB iPhone 3G and 16GB iPhone 3G, respectively. This means you are essentially forking out S$300 and S$200 (of the S$600 levy), depending on which model you own.
The early upgrade fee of S$600 applies for existing iPhone 3G users who have fulfilled at least six months of their two-year contact. This means anyone who has purchased the handset before early January this year is eligible.
As a guide, SingTel's Web site lists the penalty for terminating a two-year equipment contract between the first and 24th month to be S$481.50. Below is a comparison table of re-contracting/upgrading and early termination fees for the three telco operators in Singappore.
| SingTel | StarHub | MobileOne | |
| Recontract or upgrade | Customers who have fulfilled at least 12 months of the 24-month contract need to pay a fee of $100 for a new handset purchase. (iPhone is an exception) |
Customers who have fulfilled at least 12 months of the 24-month contract need to pay a fee of $100 for a new handset purchase. Customers who have fulfilled 21 months of their contract do not need to pay the recontract fee. |
Customers who have fulfilled at least 12 months, but less than 20 months of the 24-month contract can upgrade their handset with an additional fee of S$100. Customers who are on high-end plans can recontract without paying the S$100 fee. |
| Penalty fee for early termination of two-year contract | Between one and 24 months: S$481.50 (iPhone is an exception) |
Less than six months: S$500 Between six and 12 months: S$400 Between 12 and 18 months: S$300 Between 18 and 24 months: S$200 |
Early termination fees range between S$300 and S$500 depending on the contract that was signed at the time the handset was purchased. |
By allowing a handset upgrade before the typical 12-month period, SingTel is already making an exception (at a cost) for the iPhone 3GS. So why are people complaining? You win some, you lose some. That's a relationship we all understand. As usual, I welcome healthy debate in our Talkback section.
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Talkback
Luftwaffe says...
Yes it's indeed quite a big sum to pay to upgrade to the 3GS. However, I totally agree with Damian koh's article. The penalty for early termination is really a norm for all telcos as shown in the table above.
Jul 08, 2009 11:08
Yes it's indeed quite a big sum to pay to upgrade to the 3GS. However, I totally agree with Damian koh's article. The penalty for early termination is really a norm for all telcos as shown in the table above.
Jul 08, 2009 11:08
georgelai28 says...
One would never understand the ruckus unless one really understands Apple's and hence iPhone's unique place in the global technology market, iPod included.
Jul 08, 2009 11:34
One would never understand the ruckus unless one really understands Apple's and hence iPhone's unique place in the global technology market, iPod included.
Jul 08, 2009 11:34
Devlin says...
Speaking as someone who has had my fair share of unlocked smartphones, even at $600 US the iPhone 3GS is a bargain (I'm referring to the unsubsidized price of the 16GB) considering everything it can do. The only reason I opted to pay $400 (partial subsidy through AT&T) is because even if I paid full price the iPhone isn't offered unlocked nor will Apple or AT&T unlock it for you. Now, I'm not sure if Singapore is one of the markets where an unlocked iPhone is offered but if it is then I suggest the complainers take a look at the price of a completely unsubsidized model. Not only will that open your eyes to the bargain you're getting, it'll also help people realize the prices advertised by carriers do no reflect any given phone's true cost.
It is simply a matter of weighing in on what is more important: a cheaper phone at the expense of a two year contract or a somewhat more expensive one that lets you use it with any carrier you prefer. I personally would like to see Apple offer an unlocked iPhone in the US so that the moment my contract with AT&T ends I don't have to put up with their poor customer service anymore.
Jul 08, 2009 11:49
Speaking as someone who has had my fair share of unlocked smartphones, even at $600 US the iPhone 3GS is a bargain (I'm referring to the unsubsidized price of the 16GB) considering everything it can do. The only reason I opted to pay $400 (partial subsidy through AT&T) is because even if I paid full price the iPhone isn't offered unlocked nor will Apple or AT&T unlock it for you. Now, I'm not sure if Singapore is one of the markets where an unlocked iPhone is offered but if it is then I suggest the complainers take a look at the price of a completely unsubsidized model. Not only will that open your eyes to the bargain you're getting, it'll also help people realize the prices advertised by carriers do no reflect any given phone's true cost.
It is simply a matter of weighing in on what is more important: a cheaper phone at the expense of a two year contract or a somewhat more expensive one that lets you use it with any carrier you prefer. I personally would like to see Apple offer an unlocked iPhone in the US so that the moment my contract with AT&T ends I don't have to put up with their poor customer service anymore.
Jul 08, 2009 11:49
ackabr says...
I think the reason why people are ruffled is the manner that Singtel has come across. While other providers like AT&T and even the HK provider have catered specially for current iphone 3G users, Singtel has adopted to stick to its "rules & regulations". If you are using the rationale as "it's another phone" your argument is solid, but customer loyalty relies on more than 'facts and figures' the uproar clearly shows that Singtel does not do any market research and this lack of engagement with their customers have resulted in such negative feeling towards Singtel. Any comments?
Jul 08, 2009 11:51
I think the reason why people are ruffled is the manner that Singtel has come across. While other providers like AT&T and even the HK provider have catered specially for current iphone 3G users, Singtel has adopted to stick to its "rules & regulations". If you are using the rationale as "it's another phone" your argument is solid, but customer loyalty relies on more than 'facts and figures' the uproar clearly shows that Singtel does not do any market research and this lack of engagement with their customers have resulted in such negative feeling towards Singtel. Any comments?
Jul 08, 2009 11:51
tanalvin says...
If you want to be on the cutting edge, then be prepared to bleed heavily every time something new comes into the market. A contract is a contract, regardless of whether it is an Apple product or not. If you choose to break the contract, then the stipulated penalties apply. If you can't afford to pay up, at least you can upgrade to the iPhone OS 3.0 first and bear with it for a month or so.
Perhaps Apple fans should just grow up a bit first. (flame away)...
Jul 08, 2009 13:42
If you want to be on the cutting edge, then be prepared to bleed heavily every time something new comes into the market. A contract is a contract, regardless of whether it is an Apple product or not. If you choose to break the contract, then the stipulated penalties apply. If you can't afford to pay up, at least you can upgrade to the iPhone OS 3.0 first and bear with it for a month or so.
Perhaps Apple fans should just grow up a bit first. (flame away)...
Jul 08, 2009 13:42
williamgklee says...
I don't work for Singtel and never really like Singtel. But here is my view,
All contract come at a price. Its just that iPhone's contract is more expensive. But come on, its a free market. Nobody can force you into signing the contract if you don't want to. If we take a look at the 16GB iPhone 3G at the time of its launch. A contract set cost you like $508 if you are on iFlexi Value while a non-contract set if you get it from the open market is like $1200 or more at that time. A non-contract 16GB iPhone 3G still sell for slightly over $1000 now. So if you sign a contract with Singtel at that time and sell off your phone immediately, won't you make a decent profit of at least $700????!!!!
So I think the penalty of $800 for early termination of contract is pretty fair.
Now given the high penalty cost of the contract. Early re-contract penalty of $300 for the early adoptor is fair too.
Again, nobody forces anybody to upgrade and pay the $300 penalty. Current iPhone 3G owner can choose to use their phone for another year till their 24months contract is up before upgrade your phone. By then you can go for the 4th generation iPhone.
Of course you will miss the fun of owning a new phone now!!!!
Jul 08, 2009 15:33
I don't work for Singtel and never really like Singtel. But here is my view,
All contract come at a price. Its just that iPhone's contract is more expensive. But come on, its a free market. Nobody can force you into signing the contract if you don't want to. If we take a look at the 16GB iPhone 3G at the time of its launch. A contract set cost you like $508 if you are on iFlexi Value while a non-contract set if you get it from the open market is like $1200 or more at that time. A non-contract 16GB iPhone 3G still sell for slightly over $1000 now. So if you sign a contract with Singtel at that time and sell off your phone immediately, won't you make a decent profit of at least $700????!!!!
So I think the penalty of $800 for early termination of contract is pretty fair.
Now given the high penalty cost of the contract. Early re-contract penalty of $300 for the early adoptor is fair too.
Again, nobody forces anybody to upgrade and pay the $300 penalty. Current iPhone 3G owner can choose to use their phone for another year till their 24months contract is up before upgrade your phone. By then you can go for the 4th generation iPhone.
Of course you will miss the fun of owning a new phone now!!!!
Jul 08, 2009 15:33
hazrizal says...
FYI, some selected Singtel customers (like yours truly) who are over or close to completing 12 months of their contracts have contract extension fees of $300 only.
That means, if I trade in my 16GB iPhone 3G on my iFlex plus plan, I only need to pay $38 for the new 32GB iPhone 3GS.
That is, $138 + $300 (extension fee) less $400 trade in value of the 16GB iPhone.
Jul 08, 2009 16:54
FYI, some selected Singtel customers (like yours truly) who are over or close to completing 12 months of their contracts have contract extension fees of $300 only.
That means, if I trade in my 16GB iPhone 3G on my iFlex plus plan, I only need to pay $38 for the new 32GB iPhone 3GS.
That is, $138 + $300 (extension fee) less $400 trade in value of the 16GB iPhone.
Jul 08, 2009 16:54
AlfredLoh says...
i still cant understand why $600?Or Singte simply wanna demarket the new 3Gs phone from the existing user?
I agree with Flyhigh, and we can't simply say that by early upgrade, singtel will earn say 14mthxS$56 = S$784 (for iflexi value) less. As the profit margin is not 100%. Or can i assume that their profit is 79.9% in this case?
It is a shock for me after all! when i received the email from singtel on monday evening.
$300 shall be a right penalty fee i think, for their profit margin around 30-40%.
Jul 09, 2009 10:37
i still cant understand why $600?Or Singte simply wanna demarket the new 3Gs phone from the existing user?
I agree with Flyhigh, and we can't simply say that by early upgrade, singtel will earn say 14mthxS$56 = S$784 (for iflexi value) less. As the profit margin is not 100%. Or can i assume that their profit is 79.9% in this case?
It is a shock for me after all! when i received the email from singtel on monday evening.
$300 shall be a right penalty fee i think, for their profit margin around 30-40%.
Jul 09, 2009 10:37
therandall says...
I agree with the article 100%
A contract is a contract. If Singtel doesn't do "market research" then, boohoo, take it as an adult. Move on and never subscribe to a Singtel service ever again.
I'm an Iphone 3G owner myself and have the patience to wait for my contract to be eligible for the lower upgrade cost.
You should too. Just because the "masses" decide that paying $600 is too much to upgrade for the Iphone 3GS, doesn't mean the original contract you happily signed last year is invalid.
People, grow up.
Jul 24, 2009 15:39
I agree with the article 100%
A contract is a contract. If Singtel doesn't do "market research" then, boohoo, take it as an adult. Move on and never subscribe to a Singtel service ever again.
I'm an Iphone 3G owner myself and have the patience to wait for my contract to be eligible for the lower upgrade cost.
You should too. Just because the "masses" decide that paying $600 is too much to upgrade for the Iphone 3GS, doesn't mean the original contract you happily signed last year is invalid.
People, grow up.
Jul 24, 2009 15:39
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flyhigh
Let's do the sum (based on iTwo Value):
Penalty : : 600
A new 3GS : 548
Plus one additional year of lock in = 48.15*12 mths = 577.80
Total = 1725.80
The above did not take in addtional charges like data usage etc. I feel liked taken a ride by Singtel after being their customers for almost 20 years.
Jul 08, 2009 10:32