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Does the UK iPhone Plan Add Up?
Posted by
Zonk
on Thu Sep 20, 2007 03:03 PM
from the extra-tax-for-awesomeness dept.
from the extra-tax-for-awesomeness dept.
An anonymous reader writes "Is it just me or is the UK iPhone deal seriously more expensive than the US deal? If you look at what AT&T offers compared to what O2 offers, you get significantly less for your money in the UK than you do in the States. It's also significantly more expensive than other non-iPhone deals in the UK, which offer similar services. Steve Jobs response to the more expensive UK iPhone is that 'it's more expensive to do business in the UK', but what does that mean? As a UK resident I'm disappointed that we didn't get the same plan as the AT&T plan, particularly the free mobile-to-mobile calls. Is there some element of the UK iPhone service that I'm missing here?"
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Submission: UK iPhone plan doesn't add up by Anonymous Coward
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Incoming calls are free in the UK (Score:5, Insightful)
In other words, our minutes are eaten in half if we make as many calls as we receive. That's probably one aspect right there.
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Re:Incoming calls are free in the UK (Score:5, Informative)
Among other things, as I understand it:
European wireless customers never pay for incoming calls. Calls are charged to the caller, whether the caller is a landline or mobile. U.S. wireless customers pay for all incoming and outgoing calls (well, the calls are deducted from their monthly airtime allowance...), subject to exceptions (mobile-to-mobile on the same carrier, off-peak times)
European wireless customers only pay for outgoing SMS, not incoming. U.S. customers pay for both, with the above voice exceptions often applying to SMS.
Few European wireless carriers offer flat-rate data plans, although their pay-per-kilobyte prices are typically far cheaper than U.S. pay-per-KB prices. U.S. carriers offer exorbitant pay-per-KB prices so that anything but a minimal amount of usage proves to be more expensive than the flat-rate monthly plans. This is the big problem with the iPhone in Europe - as a few other articles have indicated, it was basically designed around an unlimited-data plan and in fact AT&T won't sell you the unit unless you get unlimited data service.
In general, Europeans jumped straight from GPRS to UMTS, skipping EDGE deployment. Bad for iPhone, no UMTS capability.
To make a long story short - comparing pricing between a U.S. carrier and a European carrier is like comparing apples to oranges. It's much easier to compare pricing schemes between U.S. carriers, which all operate on similar principles. (One exception - I get the impression European plans are a much closer match to U.S. prepaid/pay-as-you-go plans, except they are far more reasonably priced. U.S. PAYG plans are massive ripoffs.)
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Re:Incoming calls are free in the UK (Score:5, Informative)
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And often US carriers do not provide a way to block unwanted text messages, causing me to have spent about a dollar over the life of my phone (I've had it for four years) on ten-cent text messages that someone who didn't know I don't use them sent me.
Re:Incoming calls are free in the UK (Score:5, Funny)
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Well apart from Verizon of course. I heard they had a deal for 0.002 cent/MB which seems amazingly cheap. And you get fantastic customer support to back it up...
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It depends on the provider, has nothing to do with (Score:3, Insightful)
Re:It depends on the provider, has nothing to do w (Score:3, Informative)
Re:It depends on the provider, has nothing to do w (Score:2)
Unlimited M2M within your carrier has basically been standard in the U.S. for a few years. (Note to Europeans: ONLY applies to mobile-to-mobile on the same carrier, not to others in the U.S.)
Cruel Britannia (Score:5, Informative)
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02 (Score:4, Insightful)
The Free WiFi makes the WiFi portion useful (Score:5, Informative)
Also the unlimited data usage is probably underestimated. Sure, they say 1400 pages a day, but how big is a web page these days (excluding Flash)? 100KB? That's 140MB a day, which would cost a tonne over here with many other deals.
The talk and text limits are rather poor of course. I pay £10 a month for 500 minutes and 100 texts with Three, so when £35 only has 200 minutes and 200 texts and no phone subsidy you have to worry.
Re:The Free WiFi makes the WiFi portion useful (Score:5, Informative)
£35 is £29.80 without VAT, or $60 for 200m/200t/wifi, or £23.83 / $48 for the 200m/200t only. Also because you don't lose minutes on incoming calls, that's effectively 400m/400t when comparing to the US if you get as many calls as you make. And the contract is 18 months long instead of 24.
The lifetime cost of the iPhone is £269 + £35*18 = £900. That's $1532 taking off tax and translating into US dollars. That compares reasonably very well with the lifetime cost of the iPhone in the states. And you don't need to buy a new iPod.
Apart from that the situations are so different it is pretty pointless to compare the plans.
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Try lowering VAT (Score:3, Insightful)
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It's simple accounting. Mind you, the UK's simple accounting is different to the US's. Everyone uses double entry here.
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You're KIDDING. (Score:5, Funny)
Re:You're KIDDING. (Score:5, Funny)
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Re:You're KIDDING. (Score:5, Funny)
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Rule of thumb for traveling to the UK (Score:3, Informative)
Take an item in the US, and it will probably cost the same in GBP in the UK as it does in USD in the US. With the current exchange rate, this means that most items cost a little over twice as much in the UK vis-a-vis the US.
Re:Rule of thumb for traveling to the UK (Score:4, Informative)
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Rip-off Britain (Score:5, Informative)
Because they can.
British consumers have become numbed to paying more for less over the years, so companies clap their hands with glee at the thought of increasing their profit margins by 50% or more over the US for exactly the same product. "Oh, but you use PAL." "Oh, but you use 240 volts AC with three-prong plugs." "Oh, but you have VAT." Always the same excuses, and they're pretty much bullshit - but nobody questions them any more. We've been ground down by decades of being ripped off.
Mod parent up!!!!! (Score:5, Funny)
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However once you take tax into account then what you say is true. I don't know what US income tax rates are, and I know US goods have (~8%) sales tax applied over the sticker price unlike here, but with the UK's 22% income tax (not including first £5k earnings) plus 12% National Insurance, and then 17.5% VAT on most goods
Re:Rip-off Britain (Score:5, Insightful)
And because of the primary threshold on NI, they'll pay 8.8% national insurance (11% between the primary threshold and upper earnings limit).
So income tax + NI for an average earner is below 25%. Of the remaining 75%, a typical family easily spends a third on things like mortgages or rent and other things that are not subject to VAT. That leaves about 50% of their money that they pay 17.5% VAT on, or 8.75% of their income. Add it up, and the tax burden including VAT is more like ca. 34% total rounded up.
For comparison, a US average earner at $40k would pay about 19% federal income tax and social security tax (FICA) after deductions. Depending on which state they live in they'll pay anything from nothing (8 states) via 3% flat (Vermont) to around 7-8%, I believe (some states have higher max state income tax rates, but only at higher income levels). So that gives a tax range from 19% to around 26-27% plus sales taxes.
Of course these figures are not at all directly comparable to UK tax levels, since UK national insurance actually includes comprehensive health insurance and partial dental, to the point where only a tiny fraction of British taxpayers see any value in private health insurance.
But in any case, when you add up local taxes (in which case you need to take into account council tax in the UK too, though certain cities in the US have local taxes that can far outstrip the UK council tax), state taxes and federal taxes in the US, the UK and US have pretty similar tax levels even ignoring the fact that NI includes health insurance.
I did the math for myself a couple of years ago, and realized that moving to the US (which was an option due to work) would not have saved me any tax at all unless I moved to some backwater I wouldn't be prepared to live in - in fact I might have ended up paying slightly more, and I would have ended up paying a lot more if I wasn't in a field where full health insurance typically is provided as a benefit.
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"laws" (Score:2, Insightful)
The Sale of Goods Act 1979 (Score:5, Interesting)
I'm American but have lived in London for ten years. Yes, (some) things are more expensive here. I was curious and looked into it. Excepted from the above link:
When you buy goods from a trader, such as a shop, market stall, garage, etc, you enter into a contract, which is controlled by many laws including, the Sale of Goods Act 1979 (as amended by the Sale & Supply of Goods Act 1994 and the Sale and Supply of Goods to Consumers Regulations 2002). The law gives you certain implied, or automatic, statutory rights, under this contract.
The Sale of Goods Act 1979 (as amended) says that goods should be :
Store policies don't matter; this is the law and retailers must incorporate this cost into selling prices.
Uniform Commercial Code does all of that too. (Score:2)
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A consumer's statutory rights may not be excluded or modified in the UK. A retailer can only grant additional protection to the consumer, NEVER remove a statutory right
US retailers can put up a sign saying: "no returns on sale items." In the UK this is utterly unenforceable. US retailers, as a matter of course, print post-partum conditions of sale on the receipt that they hand you after you have paid for th good
The answer (Score:5, Informative)
It's not called Rip Off Britain [rip-off.co.uk] for nothing you know.
Seriously though, yes our prices include VAT at 17.5% which people often forget to take into account but, even so, there are plenty of products which have such a colossal additional mark-up on them (Windows Vista is twice as expensive which tax and shipping costs cannot explain away) compared to our European and American counterparts that it is hard not to feel cheated.
The Wikipedia article [wikipedia.org] on it is worth reading and notes that these items cost significantly more in the UK:
Unfortunately as we put up with paying those prices, we allow companies to continually screw us.
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Software (Score:3, Funny)
Note that Adobe and Autodesk also have vast price increases up to well over 2x as expensive; not including the 17.5% / 19% VAT that gets added on top. With the sucking U.S. dollar, that's only getting worse and worse. It'll be interesting to see if Adobe / Autodesk / etc. will adjust their non-U.S. pricing to adjust for this, as currently it is much cheaper to import from the
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What translation? It's not like they offer Windows in Welsh or Gaelic.* Microsoft cares so little about Britain that they can't even be bothered to take five minutes to change "color" to "colour". No, I don't think they can claim translation costs are what's pushing the price up.
* Yes, I know a Welsh interface pack does finally exist now, and a Gaelic equivalent is apparently
O2, not Apple (Score:3, Informative)
English Prices (Score:2)
BBC Prints Irresponsible Rubbish on Apple [roughlydrafted.com]
The BBC has joined the London tabloid press in printing a series of articles skewering Apple over invented suppositions based entirely upon misinformed speculation and some o
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But the iPhone doesn't innovate. It's actually an extremely limited handset that uses outdated connection formats at a time when people want 3G, picture messaging, video messaging and downloadable content. The nokia N95 does much more than the iphone and is several hundreds of pounds cheaper.
"Apple takes 40% of O2's revenues!!!"
The iPh
It's really simple (Score:2)
not comparable (Score:5, Interesting)
There is nothing special about a Mac or iPhone or iPod. The Mac provides me a great deal of value, so I buy it. The iPhone does not provide the value that the additional costs would warrant, so I won't buy one. I think people miss this simple point when they complain about the price drop of the iPhone. Current users effectively spent $2000 for the phone. This amount of money meant that the phone must have had some significant value to them, especially those that bought the first week. The $200 discount then represents a mere 10% discount, and 10% is an exceptional price to become an early adopter. I was not an early adopter my normal tolarance for contracted costs is about a third of what Apple and ATT wanted.
I hope we don't have to endure another year of moaning about the cost of the phone, or the cost of the plan, or the cost of early adoption. Those who have it find some value in it, and that is really all there is to it. Apple sells expensive machines, and those that need or want them buy them. Those that do not don't. If one needs or wants an iPhone, the costs will be worth it. Otherwise buy something else and apple will out the costs until it is low enough to attract the expected number of consumers.
The EC will love the iPhone (Score:4, Insightful)
Then, if it actually does become a large success the EC will want to have something to say about the relationship between the iPhone, iTunes and the iPod, and also the deal with O2. If they actually decide to do something about it then a bunch of people who can barely find Europe on the map, let alone know anything about its legal history, will moan and accuse the EU of being partial against US companies, and as a result get flamed on slashdot [for great justice]. Politics at its finest...
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Who cares? (Score:4, Funny)
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