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Can the iPhone Go Phone?

Ever since the inception of the iPhone last year, we have been following the trends in using it on a prepaid basis. While AT&T GoPhone prepaid service leaves a bit to be desired, it still beats signing a two year contract. The first time around, it seemed fairly straightforward to activate an iPhone on prepaid. Since you were paying full price for the device, all you had to do was get a little creative. As in, enter in a fake social security number so your credit is rejected. This time around, though, with the subsidy, things haven’t been so easy. So can you get the iPhone 3G on prepaid?

The snag: price subsidy

Unlike the initial iPhone, for the 3G version AT&T and Apple decided to subsidize the price. The main objective with this was to bring down the price, thus theoretically allowing more people to afford the device. More people with iPhones means more sales dollars for Apple and more service revenue (thus even more money for Apple) for AT&T. However, this does have an adverse affect on the consumer.

Where before you could activate the iPhone on your own terms, now it requires a two-year contract. Hey, Apple and AT&T aren’t going to subsidize the price of the phone without something in return. This two year contract also includes a required data plan, which rose in price since the original iPhone from $20 to $30 monthly. Even with the $39.99 voice plan, this still comes out to $70 per month before taxes — and you’ll pay it every month for two years lest you incur an early termination fee.

From this, it seems that getting your iPhone on a prepaid account will be a bit tougher this time around. Thankfully, there are plenty of people out there who want to solve this problem. So we can look to a solution.

iPhone compatible with prepaid out of the box

When the iPhone 3G was first released, there was speculation as to whether you could even use it on prepaid without a jailbreak. This meant that you would have had to find a program which could give your iPhone the ability to work on a non-contract AT&T plan.

The strange grammatical structure of the preceding sentence is in place for a purpose. It was a hypothetical at the time, but eventually it was disproven. You can, in fact, activate an iPhone 3G on prepaid without any unlocking or jailbreaking. Just insert your AT&T prepaid SIM, and you’re good. So why aren’t more people taking to this?

Still the problem of the contract

Here’s the issue that’s holding most people back. When you buy the iPhone 3G, you agree to a two-year contract. You cannot break this without incurring an Early Termination Fee. Additionally, you cannot break your contract within the first 30 days, or else you have to return the device. This is just a way for AT&T to make sure you’re activating the phone on a postpaid account with a data plan.

Because of this, most people are turned off from using the iPhone on prepaid. They’re under contract already, so it doesn’t make sense to have a postpaid account and a prepaid account. Many people are also turned off by the idea of paying an early termination fee. The path of least resistance here, clearly, is to just suck it up and use the iPhone as AT&T and Apple want you to.

Could it be cost effective to terminate your contract?

At the time of the iPhone 3G release, AT&T offered an unlimited MEdiaNet plan on their Pay As You Go service for $20 per month. Voice calls are 25 cents per minute (unless you pay a dollar per day for 10 cents per minute), but hey, we don’t buy an iPhone so we can call Great Aunt Sally. No, we want them for the data features. So the MEdiaNet plan made perfect sense.

For the first two years of iPhone service on a contract, you’re paying $199 for the phone and then $70 per month, minimum, for service. That works out to $1,680. However, if you just ate the termination fee, you could be paying much less.

Under this scenario, you’d pay $199 for the iPhone, $70 for the first month’s service, and $175 to get out of your contract, so you’re at $444. The data plan, at $20 per month for 24 months, works out to $480, so $924, leaving you $756 for voice minutes over that period before you break even with the postpaid scenario. That’s 3,024 minutes.

If you’re not big on voice minutes, it could be cost effective to eat the early termination fee and migrate to prepaid. There’s now a snag in that idea, though.

No more unlimited MEdiaNet

Unfortunately, we learned a while back that AT&T is discontinuing their unlimited data plans. This first applied to just Pay As You Go customers, but was later made to include Pick Your Plan deals. This means that the best you can do, at the moment, is $14.99 per month for 10 MB of data. That’s hardly anything, especially when you’re browsing from an iPhone. So while going prepaid with the iPhone 3G sounds like a good idea in theory, AT&T’s current plans don’t make it seem so hot anymore.

Not only that, but AT&T also raised the Go Phone text messaging rate to 20 cents. So that $756 you had for voice minutes won’t stretch as far. You’re probably better off getting a texting bundle, which makes the plan just a bit less economical.

So can an iPhone Go Phone?

Yes, it can. It would have made sense back when the device was released, but now without the unlimited MEdiaNet package, it’s tough to justify it.