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AT&T raises the price of iPhone 3GS from free to $0.99, refurb for a penny


Last Friday AT&T generated a lot of Twitter talk (and confusion) when it raised the price of the iPhone 3GS from free with two-year contract to US$0.99 with two-year contract. The "free" price of the iPhone 3GS was noted as being a major draw for price-conscious consumers by both AT&T and Apple when it was announced on October 4th, so the raising of the price to a nominal $0.99 was a bit puzzling. Adding to the confusion was the fact that the iPhone 3GS is still free with a two-year AT&T contract when bought directly from Apple.

When we contacted AT&T again today to get more specifics on the price change, a company spokesperson told us, "I can't share anything specific on the reasoning" and went on to reiterate AT&T's official response, "Our brief statement is this: 'iPhone 3GS is still available at an incredibly low price and we're confident consumers will agree that this remains one of the best deals for a leading smartphone.'"

MacRumors suggests that the price could be a way for AT&T to combat fraud, as the price of the phone cannot be applied to a user's AT&T bill and must be charged to a credit or bank-issued debt card. The requirement of a credit or debit card means that people using stolen identities to obtain the handsets have much less chance of getting one unless they've actually physically stolen the person's credit or debit card as well. This line of reasoning adds up considering the iPhone 3GS is still free through Apple. That is perhaps because Apple requires you to have an Apple ID with an associated credit or debit card tied to the account to make online purchases.

Lending further credence to the "anti-fraud" theory is the fact that refurbished 8GB iPhone 3GS models now cost $0.01 through AT&T. The nominal penny fee is also likely applied to refurbished models to combat similar identity theft fraud by requiring a valid credit or debit card to be charged a single cent.

Finally -- and perhaps unrelated to the new iPhone 3GS charge -- AT&T seems to be sold out of the iPhone 3GS online. We've asked the company what's behind the inventory shortage and are awaiting a reply.

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