Carrier contracts and device subsidy policies mean wireless subscribers who want the latest and greatest iPhone have to think carefully about their upgrade strategies.
In this edition of Ask Maggie, I offer some advice to one frustrated reader who has been waiting a long time to upgrade to a new iPhone. She can't decide if she should pull the trigger now and buy the iPhone 4S, or whether she should wait for the next upgrade to the iPhone, expected next year.
I also explain how the fact that Apple has used common chips for the iPhone 4S on AT&T, Verizon Wireless, and Sprint Nextel means that travelers have more freedom to use their phones when they're overseas. But at the same time, the software each carrier uses to lock these phones to their own networks, also limits where and how they can be used.
Ask Maggie is an advice column that answers readers' wireless and broadband questions. The column now appears twice a week on CNET offering readers a double dosage of Ask Maggie's advice. If you have a question, I'd love to hear from you. Please send me an e-mail at maggie dot reardon at cbs dot com. And please put "Ask Maggie" in the subject header. You can also follow me on Facebook on my Ask Maggie page.
Hedging your bets: Upgrade or wait?
I was looking forward to Apple's next iPhone, but was a little disappointed that after 16 months of hype around the iPhone 5, Apple announced the iPhone 4S instead. Don't get me wrong, the iPhone 4S does have some nice features. But I felt like the hardware could have been a bit different to set itself apart from the iPhone 4. I currently have the original Motorola Droid from Verizon. And I'm looking to upgrade. Should I buy a phone full price with no contract and wait sometime next year for the iPhone 5? Or maybe I should get a used iPhone 4 online until the iPhone 5 comes out?
Let me start by saying that you are not alone. I have received lots of e-mails from readers, friends, coworkers, and even family members asking me this very question. People have been holding off on upgrading their phones and contracts with their carriers to see what Apple would announce. And since Apple kept everyone hanging on an extra three months, some people, including you, are really ready for that upgrade.
But the question remains: Should you blow your upgrade now not knowing if Apple might introduce a newly designed, fully 4G-enabled iPhone 5 in nine months? That's a good question. And to be honest, I don't know for certain what Apple's next upgrade plans will be. My best guess is that the earliest we'd see a newly designed iPhone 5 with even more functionality, including one that might support 4G LTE, is June of 2012. But there's no guarantee that the next upgrade will be that big, nor is it certain that Apple will return to its June update cycle. It could introduce a new product in October or even December next year. It's hard to say for certain.
Buying a brand new iPhone 4S without a contract is certainly one option. That will ensure that you can use your upgrade for a subsidized phone in nine months or in a year. But it's expensive. With a contract the 16GB model is $199; without a contract it's $649. The 32GB model is $299 with a contract and $749 without. And the 64GB model is $399 with a contract and $849 without one. Also, if you don't have a carrier contract, your carrier could raise rates and you may not be protected from price increases or other changes to your plan.
If you choose to go this route, the good news is that Apple products hold their resale value. So if you decide to buy a new iPhone 4S now for the full retail price, chances are you'll be able to sell it and make back some of your money. But realistically, you won't be able to recoup the full amount. And once an even newer iPhone is released, prices on previous generations dip a little bit. That said, the prices tend to plateau at a certain level. So you will likely get some money back if you resell it in the future and if you make sure the phone is still in good condition.
The benefit to getting a new phone now is that you still get to enjoy all the latest technology, such as the faster dual-core processor, 8-megapixel camera, and the Siri personal assistant app. And your phone is under warranty for a year. The accessories that come with your phone are also under warranty, such as the headset. This is key, because I find the headsets break frequently, and if your device is still under warranty, you can get the headsets replaced for free. (They're $30 a pop if you buy them.)
Of course, you could also get the phone for the reduced price and re-enter a contract. And when the next-generation iPhone is released, you could think about selling the iPhone 4S and buying the next iPhone at full retail price. The risk there is that you don't know what the price of the next iPhone will be. It's very likely the pricing scheme will stay the same, with the least expensive phone sold for $200, but you never know.
Another option is to buy a new or used iPhone 4 now. You can get the older iPhone 4 8GB from one of the three carriers for $99. eBay is listing the new iPhone 4 16GB models for Verizon's network for about $400. And you might be able to get a used or refurbished Verizon iPhone 4 16GB for between $250 and $350.
Keep in mind that the iPhone 4 for Verizon and Sprint are less valuable, because these phones only work on a CDMA network. But the iPhone 4S on Verizon and Sprint should have better resale value in the future because they can also be used on a GSM network.
I know you really want an iPhone. And I know it will be disappointing if a revolutionary upgrade is announced next year before your contract for the iPhone 4S is up. But keep in mind that all of this scheming to ensure you have the latest and greatest iPhone is not without risk. There's always a chance that you will lose some money when transitioning from one generation of the iPhone to the next before your contract is over. For some people, this may be the price they are willing to pay to keep up with Apple's latest and greatest iPhones. For others, it may not be worth it.
If I were you, I'd probably just renew my contract and get the iPhone 4S. You will be happy with all the new features. And if something else better comes out next year, you can revisit the issue then. The worst case scenario is that you have to wait another year for another iPhone. And by that time, you may decide to go back to a Google Android phone.
I'd probably offer the same advice to people with an iPhone 3GS. Go ahead and upgrade now if your contract is up. And don't worry so much about the next iPhone. As for people who currently have an iPhone 4? If you can sell your current iPhone for good money, you might consider upgrading now. But if you're not interested in the hassle or you're unwilling to dish out more cash, you might as well wait until your contract expires and you're eligible for an upgrade before making the switch.
Unlocking the truth about the iPhone 4S 'world' phone
I've seen many articles explaining the benefits to Verizon and Sprint users, who get the new iPhone 4S, because it's now a "world phone" (namely that they will be able to roam on GSM networks in Europe). But what about AT&T users? We could already roam on GSM networks in Europe, but will we now be able to roam on CDMA networks in places like China? Will AT&T make use of the CDMA capability of the new iPhone in any way? Also, will I be able to take out my SIM card and replace it with a local SIM card on a local GSM carrier's network?
Let me start by explaining some basics. As you indicated in your question Verizon Wireless and Sprint Nextel subscribers traditionally have been challenged when traveling abroad. Their phones operate on a network that uses the CDMA technology, which means their phones usually only roam on other CDMA networks. Sprint has roaming agreements with CDMA carriers in 35 countries and Verizon has roaming agreements with CDMA carriers in about 40 countries.
AT&T and T-Mobile USA use a different network technology, GSM. Because GSM is used throughout the world in more than 200 countries, including most of Europe, where no one offers CDMA, phones from AT&T and T-Mobile USA can easily roam onto those carrier networks in Europe.
To appeal to world travelers, Verizon and Sprint have begun selling some phones that they call "world" phones. These "world" phones include a GSM radio in addition to the CDMA radio. Verizon's first iPhone, the iPhone 4, was not a "world" phone, and so Verizon customers have been restricted to using their phones only on CDMA networks.
The iPhone 4S regardless of carrier will use the same dual-mode chips in their phones, which includes GSM and CDMA radios. This means that subscribers on Verizon and Sprint can roam onto a GSM network, when CDMA isn't available.
Now here is where things start to get a bit tricky and somewhat fuzzy. The AT&T version of the iPhone 4S also uses the same dual-mode chips. So it also has CDMA built in to the device. But the AT&T version of the phone will not use the CDMA functionality.
So what does this mean if you travel to China, South America, or any other part of the world where CDMA is used? Well, most if not all of these countries also have carriers that operate GSM networks. So if you are an AT&T customer traveling to China, your phone will access China Mobile or China Unicom's network, which operates using GSM. Sprint and Verizon customers will be able to access China Telecom's network, which is CDMA. But when a Verizon customer is in Europe, that customer may access Vodafone's GSM network.
You also asked about swapping your SIM card. This is another tricky question. First the basics: Phones that operate on a GSM network have SIM cards, which provide access to the network. These cards can be replaced with SIM cards from other carriers. Meanwhile, phones on CDMA networks do not have SIM cards.
One of the benefits of a SIM card is that you can pop out the card and replace it with a card from another carrier. So it makes it easy to take your phone with to another service provider. And if you're traveling abroad, it also means that you can put a SIM card from a local provider into your phone, so that you have access to the local network. Your phone number will change, and you'll have a local phone number. But you won't have to pay expensive international roaming rates from your carrier when making local calls.
But because U.S. carriers want you paying them instead of someone else for service and because they don't want to subsidize a phone that you may use on another carrier's network, they lock the phones they sell in the U.S. with special software to ensure it can only be used on their networks.
Carriers have been particularly selfish when it comes to locking the iPhone. For instance, AT&T will provide you with an unlock code for almost every other device it sells on its network after you've had the phone for a certain amount of time. But it still does not provide codes for unlocked iPhones.
That said, AT&T and Apple have begun selling unlocked iPhones in the U.S. And if you want to swap SIM cards, AT&T recommends on its "unlock" page on its Web site, that you buy the unlocked version of the iPhone. Unlocked versions of the iPhone 4S will go on sale in November.
Before you get too excited and start thinking that you can buy an unlocked phone and use it on Verizon or Sprint, let me stop you. The unlocked version of the iPhone will only have the GSM radio turned on for use. This means you can put in a SIM card from another GSM carrier, but you won't be activating the phone on Sprint or Verizon's CDMA networks. (See Apple's FAQ.)
Verizon and Sprint versions of the iPhone 4S will also lock the SIM card on the iPhone. But the companies may allow subscribers to unlock it. For example, a Verizon Wireless spokeswoman said that all Verizon "world" phones are locked as the default. However, customers may request to have the SIM unlocked when they travel overseas and use a local country SIM. They need to call Verizon Wireless before they leave the country and ask to have the SIM unlocked. There are some stipulations. You have to be a customer in good standing for 60 days (your bill has to be paid) and the phone you want unlocked needs to be active on the account.
Sprint didn't respond to a request for more information on its roaming policy. But other "world" devices are able to be unlocked. So there's a good chance the company will allow customers to call for an unlock code on the iPhone 4S as well.
I hope that explanation was helpful. Good luck and safe travels!
Correction 6:23 p.m.:This story was updated with a correction. Verizon Wireless confirmed that it may unlock the iPhone 4S for customers traveling overseas. And Sprint Nextel offers unlocking for some of its existing "world" phones.