Thousands of Twits are signing Twititions about the O2 and AT&T deals offered to people who want to trade up to a new iPhone 3G S

Apple announced a new iPhone 3G S on Monday, which created a problem for people who already had an iPhone 3G but who really need the new features, or whose lives are hopelessly incomplete unless they can flash the latest shiny shiny gadget. Well, it was O2's fault, really. The phone company decided that people who wanted to upgrade would have to buy out their existing contract. In other words, it was offering "business as usual" rather than doing them a special deal.

Steve Alder, general manager of devices for O2 UK, told TechRadar:

"Having subsidised much (or all -- depending on tariff) of the price of a customer's iPhone 3G, we simply cannot justify invalidating that contract and subsidise a second device for the same customer.

"Much as we understand the desire of many customers to have the latest version, this would be a loss making deal for O2 and would be a distinct set of business terms for iPhone customers that don't apply to our other customers."

In fact, O2 did do a cut-price deal for iPhone users when the iPhone 3G came out, and it will do an iPhone 3G upgrade on its usual terms. The problem is that O2's early upgrade programme is only for people who are 6 months or less from the end of their contracts.



The obvious solution, of course, is for O2 to offer iPhones on an annual contract basis, based on the assumption that Apple is going to introduce a new model every year. At the moment, for some buyers, the contract is longer than the useful life of the iPhone.

Some Twitter users (eg me) have seen rather a lot of pleas to sign an online petition or Twitition (how twee!) that says "we the undersigned petition O2 to offer reasonable iPhone 3GS upgrade and tethering #o2fail". It has 3,902 signatures at the time of writing.

There's a parallel petition that says: "we the undersigned petition AT&T to offer reasonable iPhone 3GS upgrade prices" with 3,999 signatures. Or twignatures.

But as the LA Times says: "In the name of fairness, it should be noted that this movement comprises a vanishingly small fraction of iPhone 3G owners. The company has sold more than 15 million of the second-generation devices since their release last summer."

My own view, expressed here several times since 2003, is that it should be illegal to subsidise handset sales, as it is in South Korea. The mobile phone market would be a lot healthier if people knew how much heir handsets cost, and bought what they were willing to pay for, and if phone networks had to compete on the price of minutes and the quality of their service. The current system distorts competition in both areas.