Why I'm not buying an iPhone 3GS in New Zealand (spoiler: it's not Apple's fault)

When Apple announced the 3GS with all its whiz-bang new features, honestly the only thing I cared about was the increase in capacity. Everything else was just a bonus. I had my bank account all primed and ready to buy the thing as soon as it came out down here in New Zealand, but I was also keeping a wary eye on the NZ telcos to see what sort of blech they'd bring to the situation. Well, the blech they've brought is bad enough that I'm not buying a 3GS any time soon.

I looked forward to the release of the iPhone 3GS in New Zealand with a mixture of excitement and trepidation. Excitement, because it would be nice to finally own an iPhone that can hold all of the music I actually listen to (16 GB just doesn't cut it). Trepidation, because as I made clear in an earlier post, the NZ telcos don't make buying an iPhone a cheap proposition.

The more time passed without any major announcements from either of the main NZ telcos, the more I knew their plans would suck. Vodafone already sold the 3G down here, so they were in a position to do pretty much whatever they wanted to the prices. Telecom was supposedly in "deep negotiations" with Apple to sell the iPhone in New Zealand, but the days stretched into weeks without any official word.

Traditionally, Apple has kept the prices of new products either the same or slightly lower when refreshing product lines like the iPod or iPhone. Many worldwide telcos have followed suit; in fact, across the Tasman Sea, Vodafone Australia offers a free iPhone when you sign up to a two-year plan.

Pretty much the most I was hoping for from the NZ telcos was that they'd keep their plan prices the same. I got my wish, sort of.

Across the board, Vodafone NZ's plan prices remain exactly the same as they were. However, unlike almost every other telco everywhere else in the world, Vodafone NZ has raised the price of handsets.

In February, I got a 16 GB iPhone 3G for NZ$799 with a $60/month plan. What does Vodafone charge for the 32 GB iPhone 3GS, on the same plan? NZ$849. True, that's only a difference of NZ$50, but considering the deals people are getting in other countries, it's a bit of a slap in the face for Vodafone to raise already absurdly high prices.

So what about Telecom? Are they swooping in to rescue New Zealanders from Vodafone's exorbitant rates?

Yeah, not so much. Telecom's "deep negotiations" with Apple apparently went pretty much nowhere. Telecom still doesn't sell the iPhone 3G or 3GS, nor do they have any plans specifically tailored to the iPhone.

The best Telecom has come up with is this: bring in your unlocked iPhone 3GS (purchased for NZ$1379 from Vodafone NZ or, if you feel like saving a whole $30, from Apple itself), sign a 2-year contract with them on a $80/month plan, and they'll give you a $600 credit on your account. This amounts to what I've been calling a "back-handed subsidy" -- you sort of, kind of get a subsidised iPhone by going this route, but not really.

This sounds pretty good, until you realize what you're getting from Telecom for $80/month: 180 minutes of talk time (which is good), no texts (which is very bad), and 240 MB of data per month -- and the data is only free for 24 months, after which you'll have to pay for that, too (which is *expletive deleted*).

I thought about taking Telecom up on their offer, blasé as it was, until I crunched the numbers. Keeping my current $60/month plan with Vodafone and getting a subsidised 3GS from them, the two-year cost is NZ$2289. Buying the iPhone through Apple and taking it to Telecom, even after the $600 "subsidy," the two-year cost comes out to $2669, and that's with no texts and 10 MB/month less data.

Granted, Telecom's XT network looks like a more attractive option for iPhone users than Vodafone's. Vodafone's "extended 3G" network works on 900 MHz bands the iPhone doesn't support, which means true 3G service is restricted to urban areas; outside of that, you'll suffer GPRS speeds that blaze along at about the pace of a dialup modem circa 1998. Telecom's XT network, on the other hand, runs at 850 MHz, which the iPhone's antenna supports just fine. In theory, this means Telecom's 3G network should have better range, speed, and support for the iPhone than Vodafone's.

In response to people wanting to switch to Telecom for that very reason, Vodafone currently has a promo running where they give an additional free 3 GB of data per month and 1000 free PXTs (also known as MMS) to all iPhone users -- but the promo is only running for three months. Plus, unless you're in Auckland, Wellington, Christchurch, or some other urban area all the time, and using your iPhone all day, you're probably not going to hit that 3 GB cap in three months, much less one. If you're out in the country and on GPRS speeds, by my (admittedly hasty) back of the envelope calculations, it would take you about 5 days of constant usage to hit a 3 GB cap.

Since Vodafone shows no signs of tailoring their network to the iPhone, and Apple shows no signs of tailoring the iPhone to Vodafone's network, it makes absolutely no sense for anyone in New Zealand who spends any amount of time outside the major cities to sign a contract with Vodafone if they want an iPhone. This is why I and many others were salivating at the prospect of Telecom offering a truly competitive plan for the iPhone, but Telecom has failed to deliver.

I can't justify a two-year commitment to Vodafone when they don't fully support my handset of choice, but I also can't justify paying full price for the iPhone and signing up to Telecom's half-hearted offering.

The end result? Until one or the other of these telcos pulls their heads out of the sand, I won't be upgrading to an iPhone 3GS.