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?"

Incoming calls are free in the UK

[2nd Post!]

In the US, we pay for incoming calls.

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.

It depends on the provider, has nothing to do with

[LanceUppercut]

I'm un the US and with my provider/plan I don't get free mobile-to-mobile calls. Moreover, I have to pay for incoming calls and messages. This all depends on the particular provider/plan. It's about O2, not about Apple.

02

[SpectreBlofeld]

"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." This has nothing to do with the iPhone and everything to do with your carrier. Virtually all U.S. carriers include unlimited mobile to mobile, iPhone or not.

Try lowering VAT

[iamacat]

Then you can expect similar iTunes store or iPhone pricing as in US. Long-established british companies have probably learned on how not too pay the tax as many times on the same item as a foreigner new to the area would.

"laws"

[Anonymous Coward]

If I had to guess, I would bet it has something to do with the fact that the UK has these things called "laws" that protect consumer rights. In the long run, that costs corporations money that would otherwise be acquired through shafting the consumer.

The EC will love the iPhone

[BlueParrot]

I'm sure the European commission will LOVE apple locking the iPhone to O2, and I'm sure they will LOVE how it will operate together with iTunes. I'm also sure the European market will LOVE that it has shoddy 3G support. Also, I'm sure the lack of big Telecom monopolies in most EU countries will make it just as successful to do this over here as in the US. Don't get me wrong. Apple will make money here. It just won't be because the iPhone or the price plan, or service, or provider will be any good, but rather because the marketing and the hype will be. In short, they are going to offer a very sucky deal combined with a massive marketing campaign, and a lot of idiots will think the iPhone is actually remarkably innovative, when it really isn't even equal to a lot of phones already on the European market.

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...

Re:Rip-off Britain

[vidarh]

Actually, someone making an average salary in the UK will pay 16% income tax - the tax free allowance and the 10% band pulls it down quite a bit.

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.

Re:Incoming calls are free in the UK

[mabhatter654]

The deal with PAYG is that you can CHOOSE to not pay the $30 if you're poor that month and just not talk on the phone as much. It's not a better deal per call, but a more flexible for your wallet on limited funds. Best part is that you can't go huge amounts OVER and get slapped with even more money you can't pay down. Because then they tack on late charges and if you take more than 2 months to pay they disconnect you and charge the contract at $200. With PAYG if you run out of money, you just don't get any calls.. no hidden charges or contract violations to slap you with $100's in overage. The cell phone companies BANK on people going over and missing payments for $20-$30 extra dollars a month.. that's why terms are so crazy and billing so awkward and error prone.

Re:Software

[Haeleth]

There is, of course, the translations part.. translating Windows can't be cheap; though it surely can't be -that- expensive either.

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 on the way -- but these are separate add-ons, paid for out of public funds.