Does the UK iPhone Plan Add Up?

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?"

Cruel Britannia

[samuel4242]

Alas, the tax rates are dramatically higher there and they probably sock it to the cell phone folks. There are many things to love about Britain, but it's not known for selling stuff on the cheap. Practically everything costs more there except, perhaps, for warm beer. And if memory serves me right, there was a raft of regulations that kept prices of beer cheap. That's a simple way to buy off the masses.

You're lucky.

[Anonymous Coward]

You're lucky to have the iPhone with inexpensive unlimited data. In canada, we have rogers wireless. You can get 500 MB of data for "only" $210.00/month + $7 system access fee!

The Free WiFi makes the WiFi portion useful

[hattig]

The free WiFi via TheCloud makes the wifi portion of the iPhone actually useful, as there are thousands of TheCloud WiFi networks around the country. I don't think that there is anything similar for the US iPhone.

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:It depends on the provider, has nothing to do w

[Brian Gordon]

It's about Apple because they force you to use O2...

Re:Cruel Britannia

[samuel4242]

Some other links: http://en.wikipedia.org/wiki/Rip-Off_Britain [wikipedia.org] http://www.rip-off.co.uk/ [rip-off.co.uk] http://news.bbc.co.uk/1/hi/business/476050.stm [bbc.co.uk]

Rule of thumb for traveling to the UK

[Enlarged to Show Tex]

I was given this rule prior to my first overseas trip, and I've found it to be generally accurate for the UK:

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.

Rip-off Britain

[payndz]

Everything is more expensive in the UK than in the States, even though wages are lower on average. Why do companies charge more for the same product over here?

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.

Re:Incoming calls are free in the UK

[Andy Dodd]

In general, US and European providers have VERY different pricing structures, and so you will not likely ever see parity in plans available.

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.)

The answer

[Mr_Silver]

Is it just me or is the UK iPhone deal seriously more expensive than the US deal?

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:

• CDs and DVDs
• iTunes Store songs, tv programmes, iPod, and iPod games
• Computer Software - the most notable example being Microsoft Windows Vista
• Books
• Electrical Goods
• Houses
• Petroleum and diesel fuel

Unfortunately as we put up with paying those prices, we allow companies to continually screw us.

Re:Incoming calls are free in the UK

[digitig]

European wireless customers never pay for incoming calls. Calls are charged to the caller, whether the caller is a landline or mobile.

Unless they go to another country (geographically pretty much equivalent to crossing a state line in the USA), in which case incoming calls /are/ charged.

O2, not Apple

[saterdaies]

Looking at O2's website, we see this breakdown in plans: 200min plus 400 text: 25pounds 750min plus 100 text: 35pounds 1350min plus 100 text: 50pounds http://shop.o2.co.uk/tariffs/18_months/Talker [o2.co.uk] http://shop.o2.co.uk/tariffs [o2.co.uk] THESE ARE ONLINE-ONLY SPECIALS. One has to assume that the iPhone will cost 10pounds more per month than the normal plans (since they cost an extra $20 more per month over here). So, the iPhone charges 10pounds more at the 200min level (but you loose half the texts), 10 pounds more at the 750 minute level (loosing 150 minutes, but gaining 400 texts), and 5pounds more at the 1350 minute level (again loosing 150 minutes and gaining 400 texts). They MIGHT be a worse deal than the AT&T plans over here, but not by much. They're pretty much standard O2 rates plus 10 pounds. Since the AT&T plans are the standard AT&T plans plus $20, that's pretty equivalent. NOTE: In both cases, the premium you're paying for an iPhone plan is getting you unlimited data and so if you're already paying for that, you might not consider it an increase in fee at all.

Re:Try lowering VAT

[Anonymous Coward]

As a VAT registered company in the UK, you can reclaim VAT on all your business purchases, and you collect VAT on all your sales, and you give the difference to HM Customs and Excise every quarter when you complete a VAT Return. It's all rather simple really.

Re:Uniform Commercial Code does all of that too.

[sjf]

The difference is in the very first clause of the very first section: Unless excluded or modified

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 goods. Again, such clauses are unenforceable, in the UK.

If a retailer offers a 12 month warranty on a product, all that does is simplify your life for 12 months. If you buy, say, a refrigerator and it breaks down 12 months and a day later, British Trading Standards Officers will likely argue that it is reasonable for a fridge to last several years. The 12 month warranty can never mean, under British law, "we wash our hands of the product after 12 months."

Re:Rule of thumb for traveling to the UK

[StikyPad]

Which is why coming to the States to shop for "expensive" items is a booming industry right now. Back when the AUD was roughly 55% of the USD, I did the same thing there. As a side note, the USD is flushing even further down the international toilet with the recent Fed rate cuts. Enjoy.

Re:Incoming calls are free in the UK

[ToasterMonkey]

Many people here in the US have cheaper regional plans that roam out of state. I think only the biggest carriers have relatively cheap nationwide service.

Re:Incoming calls are free in the UK

[Anonymous Coward]

You're absolutely completely and unterlly wrong. We pay way more in the US and Canada than some European countries. Be very careful not to lump 'Europe' into one basket. Each country has its own carriers and offers its own pricing structure and unique legislation (e.g. in Finland I understand there is a separation between hardware and service. You pay full price for hardware from competative hardware dealers and then go get your service elsewhere at much better rates than we see in the US and Canada, and with no contracts to lock you down so you can switch carriers at will with full number portability based on what carrier offers the best plans for your usage. THat's true competition. We DON'T have anywhere close to "competition" in North America with up to 3 year locked in contract nonsense, phones locked to carriers, and falsely inflated "full price" phones offered from carriers just to make their "$50 on a one-year contract" prices look good (and hell, you get a LOCKED phone with that!).

Re:The Free WiFi makes the WiFi portion useful

[hattig]

Don't forget VAT!

£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.

Re:Incoming calls are free in the UK

[Andy Dodd]

In some ways it is silly, but I think it rose from pricing structures and regulations regarding landline phones, i.e. a mobile carrier could not force a landline provider to charge the landline user for calls to that mobile carrier's network. There are (or at least were) pretty clear rules regarding what numbers cost money and what don't for landlines, and mobile pricing schemes evolved around those.

Re:Uniform Commercial Code does all of that too.

[matthewp]

Valdrax wrote: I kind of like the UK's rules better for buying goods at a store, but I'd hate to be seller on eBay or their equivalent of craigslist.

Those requirements only apply to sales by traders. Items sold by private individuals only have to be 'as described'.

A particularly active eBay seller might be considered a trader, but people trying to get rid of their old stuff don't need to worry.

Re:Incoming calls are free in the UK

[vonFinkelstien]

You charge the cell phone because landline local calls are free. Cell phones in America have no different number system, so you don't know f you are calling a cell or landline phone. All you know is whether it is local on long distance.

Re:The EC will love the iPhone

[mikeplokta]

But they are required to unlock the phone for no charge at the end of the contract (which may be well before the end of the initial contract period if the terms & conditions are changed to the user's detriment partway through). So they're going to have to provide an official mechanism for unlocking iPhones.