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Current iPhones Keep Cheaper Plan on Reactivation

You won’t pay a 3G rate for a 2G iPhone with a new service plan, AT&T confirmed for me today. This should be good news to anyone looking to either sell their so-called 2G iPhone when they upgrade to an iPhone 3G, or for those looking to buy (or beg) the older iPhone model without paying a fee for bandwidth they can’t use.

This stems from AT&T’s clear policy that the firm will allow current subscribers with 2G iPhones – the ones that use EDGE as their fastest connection method over the cell network – to trade up to the iPhone 3G, exiting their current contract with no cancellation fee. You get to keep the 2G iPhone as well; that wasn’t entirely clear a few weeks ago, but is now quite certain. (Since every U.S. customer paid full freight for that iPhone, with no carrier subsidy, it would be impossible for AT&T to reclaim the phone.)

What wasn’t clear, even with the release today of piles of details about AT&T’s pricing for the iPhone 3G hardware and associated service plans, was what someone who purchased or was given a 2G iPhone would pay for a new contract with AT&T.

The company gave me an answer this afternoon: The current 2G iPhone plans will continue to be available for people who want to start up new service plans with someone’s old phone. That means a 2G iPhone buyer or gift recipient can pay $20 per month for unlimited EDGE and 200 text messages (combined incoming and outgoing); plans with additional text messages along with family plans are still available, too. The equivalent iPhone 3G service plan is $35 per month: $30 for unlimited 3G, and $5 for 200 text messages; you can choose no text message bundle, but then pay a whopping 20 cents per SMS.

The original GoPhone prepaid option is also available, which costs $20 per month for unlimited EDGE data on top of whatever voice minutes you choose, but does not include text messages in that price.

There will likely be hundreds of thousands of the over 5 million 2G iPhones put up for sale or handed off to family members because of AT&T’s upgrade policy. The combination of a sale price for the 2G iPhone with the lower monthly service plan pricing will likely make it a reasonable alternative for people who don’t want to commit to $35 per month for two years.

AT&T hilariously avoids the secondary market issue by suggesting you “hand it off to a friend or family member.” Which may be what I do, but I doubt that will represent the majority of 2G iPhone transfers. The company posted instructions about wiping your 2G iPhone, which is rather nice of them, although they chose to distribute these instructions as a PDF.

Also today, AT&T clarified who qualifies for a subsidized iPhone, and how much a contract-free iPhone will cost. If you are in the middle of a contract period with any handset but an iPhone, you don’t qualify; that’s also true if your account isn’t in good standing. Users who meet those criteria pay $400 (8 GB) or $500 (16 GB). No-contract iPhone 3Gs won’t be available at launch, but when that option comes around, it will cost $600 (8 GB) and $700 (16 GB). (At least one site has pointed out that buying an iPhone 3G, keeping the plan for over 30 days, and then canceling service and paying the early-termination fee is much cheaper. AT&T may offer a wrinkle there to prevent this.)

All current iPhone users will pay an $18 fee to upgrade to an iPhone 3G, and $200 (8 GB) or $300 (16 GB) for the phone. New customers pay $36 for the phone activation.

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