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:


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:

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:

  1. 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.
  2. 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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Neville Hobson

Social Strategist, Communicator, Writer, and Podcaster with a curiosity for tech and how people use it. Believer in an Internet for everyone. Early adopter (and leaver) and experimenter with social media. Occasional test pilot of shiny new objects. Avid tea drinker.

  1. James Cridland

    I think you might be a little unfair.

    Yes, data roaming abroad is damn expensive. But in my experience, I find wifi hotspots abroad also work fine – perfect for this device. So, when abroad, I leave data roaming off, and just slurp wifi as and when.

    Only 3 appears to have sensible data roaming as far as I can see.

    (posted on an iPhone)

  2. neville

    Wifi is definitely preferable to 3G or any other cellular service, James, no question.

    But here’s what I encounter with wifi, whether here or abroad.

    1. Phone (N95 8GB) sees hotspot.
    2. Start browsing or run app.
    3. Asks permission to connect, click ok.
    4. Phone says connection is a valid access point. That must be good.
    5. If wifi is a public hotspot, get log in screen with options to pay.
    6. Choose option, dig out wallet, get credit card.
    7. Type in card number, enter other info, click the button.
    8. Wait for authentication.
    9. Authorized, go.

    What a bloody performance!

    I do realize that there are plans and deals you can sign up for that do away with the palaver of buying a connection every time you want to get online with your mobile device. My provider, Vodafone, has such deals.

    If I were travelling all the time, and/or wanted to be able to connect anywhere anytime, I probably would get such a deal.

    But I don’t, like most people I know. One reason: what you get for your money is a piddling data consumption volume at a price that is too high. Just look at what O2’s charging for 50 megs of data per month with the new iPhone.

    Fine for simple things like text emails. No good for more serious stuff online, which is what the stats say iPhone users do. Me too, especially things like live video streaming with Qik. And boy, is that a massive bandwidth consumer.

    More often than not, I hop online via a cellular connection when I’m out simply because it usually is the easiest, painless and quickest way to get online.

    And I do that only if it’s to check Gmail or Twitter, or check out a website (and pray it’s a mobile-friendly site).

    I never, ever, do this when roaming. Too expensive so I just don’t go online from the phone when abroad if I can’t do it via wifi.

    So what’s the answer? Grin (or wince) and bear it? Looks like it, I guess.

    Not a good situation. If O2 want to tempt people away and get them onto their service, their pricing just isn’t compelling enough even if the iPhone is oh so appealing.

  3. jiggs

    I have been an o2 iPhone customer for 6 months. I think the plan is great. Plenty minutes and Txting to be done for a just above average price. What stands out is the unlimited internet. The exessive use policy is confusing. I listen to 128 Kbps Internet radio in my car through 3g and have caned up over 850 mb use in half a month. Haven’t heard from o2 yet!!!! Will keep you posted

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