How hidden charges doubled my iPhone bill
In July I upgraded my original iPhone to an iPhone 3G at an Apple store. It seemed pretty easy; the offers presented were fairly straightforward, and the receipt was clear. Then I got my bill from AT&T this month and reality hit home (for month one, anyway).
If you’re planning to upgrade (or even just changing your AT&T plan), I’d suggest watching out for these and possibly other charges:
- $18 “Upgrade fee” – Hmm, I don’t remember anyone telling me about this when I was checking out. Nor do I see it itemized on my Apple receipt, just an iPhone, a dock, and some California sales tax. I guess I can’t complain too much though, as we did mention it on Engadget.
- $12.64 in various new taxes – The new phone also came along with another $12.64 in taxes, more than doubling my previous months’ totals to an even $25. Included in these numbers is a new ~$11 in California state and city taxes which (surprise!) come on top of the $25 in CA taxes I already paid at the time of purchase.
- $56 in SMS charges – This easily hurt the most. My rate before was $0.05 per SMS, so I knew if I went over my original iPhone’s 200 SMS allotment, I wouldn’t be pinched that hard. I also knew the base 200 SMSs were going away with the iPhone 3G plan, but it wasn’t ever mentioned that I’d have to take a new SMS rate, too — let alone one that amounts to a 4x increase. (FYI: even 5c per SMS is a HUGE margin for AT&T.)
Of course, some of this could be mitigated. For instance, if I’d have been informed that there was a $5 / 200 SMS plan at the time of purchase I could have saved a good chunk of change on those two-dime messages. But I was only told of a $20 unlimited plan (which I declined, proving to be a dumb move on my part). The surprise would also have been dulled if customers were properly notified in-store, or simply presented itemized plan and rate changes (like the 4x hike on SMS), as well as other various service charges on its receipts.
Of course, at a certain level it also comes down to doing plenty of pre-purchase consumer diligence and not leaving anything to chance, right? Still, overall experience: poor.
I'm an editor and technology critic in the midst of founding a new web startup: 
Wow… AT&T, almost sounds like a Canadian carrier. That’s rough.
I was handed a pamphlet when selecting my new plan. The pamphlet listed the main plan choices at the top based on minutes and had a line at the bottom for SMS packages. If you chose your plan off a similar pamphlet it’s possible you just overlooked that extra package in the rush of iPhone procurement.
If you call 611 and whine enough, they’ll usually let you add unlimited texts retroactively. Be sure to mention that the CSR who set up your plan didn’t tell you about the bulk txt plan.
Ryan — seriously? I knew about the $5 SMS package (and the fee per text without it) and the $18 upgrade fee just from reading about it several times on Engadget — not to mention the dozens of other sites that covered and re-covered every minute detail of the iPhone 3G launch and pricing plans. It’s almost impossible to imagine that you — in particular — had not read about it at least a dozen times. I don’t know what these new monthly taxes are — but are they specific to the iPhone 3G or just a tax increase in general?
AT&T – unapologetic price gouging. T-Mobile iPhone = bliss.
Both AT&T and Apple are deliberatelty hiding the actual cost of the 3G iPhone and are emphasizing the new ‘cehper’ hardware price only. The whole deal is just too darn expensive for most people. I’d rather have an iPod touch and my old/cheap RAZR vc3 ;)
Drnkusv, it’s true, we did mention the upgrade fee on Engadget! Didn’t take it into consideration though — and my real point is these fees weren’t made clear at the time of purchase.
Niall, I didn’t get a pamphlet! Strange, because we both bought from an Apple Store. Certainly something to be said for the effects of inconsistent purchasing experiences.
Precisely why I’m sticking with the Amish of cell networks: US Cellular. What they lack in sophistication they make up for in quality customer service. I spoke to another customer who told me of her teenage daughter’s “unexpected” SMS bill ~$700. She called to explain she thought she had unlimited texting and US Cell nixed the ENTIRE texting fee for that month.
Not like these companies aren’t making money, would a little Zappos-esque ethic kill them?
I bought two for a family plan, one for erin. I was told the $15, 1500 txt message plan would be shared, just like the minutes. I had a $30+ charge on the firs bill because I was misinformed. A quick call to ATT rectified the problem and they promptly credited my account.
… now, that doesn’t address the RIDICULOUS txt price gouging going on here. Seriously, $5 for 200, $15 for 1500 or $20 for unlimited. Nothing for $10? And the $5 plan is 2-1/2 cents per message while the $15 plan is just one cent per message. Blurgh!
What?!?!?! 20 cents a text up from 5 cents? Just because you have a 3G now? Or is that because AT&T is raising texting rates all around?
If they raised it because of the 3G service, um, huh, well, what does it get there faster? You don’t even finish typing and your lover already sent you a cute little “<3″ in reply!!!
If they are raising all texting rates for ATT maybe it’s cause of gas prices!
I am continually astonished at how AT&T is gouging consumers for the iPhone 3G! I believe this is one factor that will continue to impact further market penetration for this product. The up front costs are lower, but only a limited number of consumers are going to be willing to fork out an average monthly service plan of $85-100. My iPod Touch may lack some of the features found in the iPhone, and my Verizon BlackBerry Curve doesn’t have the sex appeal of the iPhone, but the single most important feature both devices have, is that neither are tied to some outrageous monthly price plan from AT&T.
At least they’re not charging $2.99/mo for visual voicemail? ;) Since leaving Sling and unlimited handsets behind I’ve blown through my monthly minutes unfortunately – and have been paying those steep overages. However, I’m content with my $20 first gen iPhone data plan which also serves 3G to my Nokia N95. Also thinking of picking up a Blackjack 2 once the WinMo 6.1 update becomes available – much better for making use of my 200 text messages.
I’m not trying to defend Ryan simply because he’s Ryan. But in general, if a company switches things around on you so often that you need to school yourself on new rates every month then that is simply a bad company that you shouldn’t do business with. And that’s the problem, if you don’t like ATT but you do like the iPhone then you’re screwed.
I’ll be happy if Android turns out even half as good as the iPhone because most likely I’ll be able to pick which carrier I want to torture me.
Maybe you all saw this, but just in case: http://tinyurl.com/5ky299
[...] You see, many Twitter users use SMS to send status updates to the service. Depending on how active you are, you could blow through those 200 in a very short amount of time and would then be getting charged $0.20 per message. Those fees can add up quickly. [...]
Wow, that is ridiculous. All those fees should be disclosed to you at the time of purchase. Actually, here in Michigan, it’s the law…
Hey i have a question… i will be purchasing a 16Gb Iphone 3g in the next week or so… But i need to know what the overall price will be… 299 + the activation fee ($36) are there any more fees i should be aware of that they charge when you purchase the phone? What about a Ca state tax?
your response is greatly appreciated
The upgrade fee and the extra tax is a fair complaint provided they didn’t tell you. When you talk with a customer rep at ATT they should make that clear. They should also tell you about the SMS but as far as I know they were quite clear about it elsewhere. This was the main reason I didn’t upgrade but also I am waiting to see what the next iPhone has to offer. This one just didn’t do it for me so I stuck with my old iPhone and I’m glad so far that I did.
it could be worse-it could be verizon then on top of the outrageous fees you would have a cr@ppy interface
[...] Ryan Block who is one of the masters of the tech blog universe wrote a blog entry just a couple of weeks back about when he got his new phone; it’s called “How hidden charges doubled my iPhone bill“. [...]
I work for ATT and you guys need to not listen to the apple store because gues what they are NOT att
yea the apple people aren’t ATT but, once again ATT is responsible for tacking on ridiculous fees whenever they wish and raising fees with absurd costs, taxes and whatever else they come up with… I have always though ATT to be simply the worst service to have and that is the EXACT REASON I have yet to purchase an iphone.
Go with the new Spring HTC Hero is the new Iphone or better. Spring had the simple everything plan. Unlimited text Msg, unlimetd Phone calls,Unlimited internet or data, Free tv and more for just $99.00 dollars. See web site for reviews of the HTC hero and Spring Simple everything plan. For those with AT&t for $36.00 extra you can have a 15% discount every month on your bill with the sponsorship plan. That reduce my bill plan of 1400 minutes &80.00 to $68.00 plus 15% if I want data plan or text Msg. See the link on you tube of both Iphone and HTC Hero compare. no to mention Spring is the 4g network. I hope this info can help you make a desicion.
God Bless Ameerica!
http://www.youtube.com/watch?v=G5F0Ruzwos8
http://www.testfreaks.com/cellphones/
http://holiday.sprint.com/index.php?pid=10&id9=SEM_Google_C_HTC
I co sign with Britt’s comments above. Don’t waste your time complaining to Apple. I actually think the HTC incredible is the best phone out anyways.