Data costs could make the new iPhone an expensive proposition

Reading through some of the online commentaries and opinions about the second-generation iPhone announced by Apple yesterday, it’s easy to see why this gadget is already regarded as such a hot property before it’s even hit the marketplace.

3G at last, maps with GPS, support for Microsoft Exchange and now more affordable pricing are among the new features (full details) that will make for a broader compelling package when the phone rolls out around the world on July 11.

Peering through all the razzmatazz and hype, I’m wondering what the balance is between the low cost of acquiring a new iPhone if you’re an individual purchaser (ranging from free if you take out a mobile contract to an outright purchase price of $199 or equivalent for the 8Gb version in every market) and the real cost of using it - that good old total cost of ownership question.

The exclusive operator in the UK is O2 and this is what they’re saying at the moment on their website:

iphonecostso2

O2 will also be offering the new iPhone on a pay as you go deal, but they’ve not published any details yet.

Comparing O2’s monthly rates with the bewildering range of mobile contract deals in this country is far from easy. On the face of it, though, the pricing looks pretty good across the range of contract offers.

That’s until you then look at what iPhone usage will cost you if you do a lot of stuff on the web especially if you travel outside the UK.

Let’s take a look at some usage behaviour stats. These are from the US but I bet they broadly reflect similar behaviour in many other countries:

Almost 85% of iPhone owners browse the Web on their phones, versus 58% of the U.S. smartphone market and 13.1% of the overall U.S. mobile market, according to mobile research firm M:Metrics.
Some 31% of iPhone owners watch mobile TV or video, like Google’s built-in YouTube software, compared to 4.6% of the overall market.
About 20% of iPhone owners access Facebook, versus 1.5% of the overall market.
And 74% of iPhone owners listened to music on their phones, compared to 28% of the smartphone market and 6.7% of the overall market.

But the tariffs shown above include unlimited data use, right? Well, take a look at the small print which includes this:

Data usage whilst roaming not included. Unlimited Wi-Fi is available at any of the 9,500 Wi-Fi hotspots from our partners The Cloud and BT Openzone (available from 11 July 2008). Excessive usage policy and full terms apply.

The bold texts are my emphasis.

I found the excessive use policy in O2’s terms and conditions for iPhone a bit tricky to clearly understand:

UNLIMITED DATA / WIFI EXCESSIVE USAGE POLICY
Your O2 tariff for iPhone allows you unlimited use of Telefónica O2 UK Limited’s Edge / GPRS networks and The Cloud’s UK Wireless LAN network, for personal internet use, email and Visual Voicemail (VVM) on your iPhone only. All usage must be for your private, personal and non-commercial purposes.

No mention there of 3G. So no restrictions on anything if you use 3G?

On data use generally, the terms and conditions say this:

[...] You may not use your SIM Card in any other device, or use your SIM Card or iPhone to allow the continuous streaming of any audio / video content, enable Voice over Internet (Voip), P2P or file sharing or use them in such a way that adversely impacts the service to other customers of O2 or The Cloud.

Pretty restrictive although I don’t see that as unreasonable. After all, if you agree to the terms when you sign up, no point in whingeing afterwards that your can’t do VoIP calls. About on par with other operators’ terms.

But just get a load of these costs for data consumption when roaming:

If you are planning a holiday or travelling on business, why not take advantage of our Data Roaming Bolt Ons? Depending on your planned data usage abroad, you can select from the following options:

Data Abroad 10: £20 per month for 10MB of data

Data Abroad 50: £50 per month for 50MB of data

50 quid a month for just 50 megs? Wow. Daylight robbery! I’d expect an average user would get through that in a couple of online sessions or less.

So my quick take from all this:

A gorgeous phone, without any doubt. Apple is the undisputed leader in creating a device that has such emotional appeal, and is so easy and pleasurable to use, it truly is compelling. Almost irresistible.
The cost of using it for anything other than phone calls and text messaging looks outrageously expensive if you use it anywhere other than on your home (ie, O2 in the UK) network. And such non-traditional usage is growing and is precisely why I’d want to get hold of an iPhone.

Not likely at the moment, though - I’ll stay with my Nokia N95 8GB and Vodafone.

For now.

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