In concert with the expected announcement of a new iPhone, AT&T has once again moved up the eligibility dates to qualify for subsidized pricing of an iPhone upgrade. If you purchased an iPhone 3GS at launch of last year, you are now eligible for subsidized pricing for the new 2010 iPhone, if you sign a new 2-year commitment and pay an $18 upgrade fee, that is.

I purchased the iPhone 3GS at launch, and only a month ago AT&T showed that I wouldn’t qualify for subsidized pricing until November 20, 2010. But this morning, I checked my upgrade eligibility again (dial *639# and tap Call), and it shows I am now immediately eligible.

Is AT&T’s fervor to lock people in for another two years more evidence that a Verizon iPhone is coming?

*Update* Apple officially announced that AT&T Wireless will allow upgrades up to 6 months early.

Another way to check is to log in to ATT.com and click the Check Upgrade Options link on the rightside of your account view:

Another easy way is to stop into an AT&T Wireless store and ask them to check your upgrade status for you.

Qualifications for Upgrade Pricing

When you sign a 2-year contract with AT&T, it usually means you have to wait the entire two years to qualify for upgrade pricing. But there are exceptions. It’s possible to qualify early if your monthly costs are more than whatever ATT’s cheapest iPhone monthly plan is. As AT&T’s official iPhone FAQ explains:

AT&T, like most U.S. carriers, offers a variety of phones that we sell below our actual cost when customers agree to sign service agreements. In general, the more a customer spends with us, the quicker they become eligible for a price break on a new device. For example, iPhone customers who spend more than $99 a month per line with us generally are eligible for an upgrade between 12 and 18 months into their contract.

There may be more good news if you’re an iPhone 3G user looking to upgrade to an iPhone 3GS soon. AT&T recently started moving forward the dates for upgrade pricing eligibility. From their FAQ:

We’re now pleased to offer our iPhone 3G customers who are upgrade eligible in July, August or September 2009 our best upgrade pricing, beginning Thursday, June 18.

Note that this currently does not include the rumored fourth-gen iPhone (aka, the iPhone 4G, iPhone HD, etc).

How Much Money Do I Save With “Upgrade Pricing?”

When AT&T offers you “upgrade pricing” on an iPhone, it means they’re giving you the iPhone at a lower price than what Apple would normally sell it for. The upgrade pricing for an iPhone 3GS 16GB is $199. Without it, the cost is $599. That’s a savings of $400.

What About Those Rumors of a Verizon iPhone?

Rumors about a Verizon iPhone have been around for a while, but recently the chatter has been getting louder. There seem to be indicators that a Verizon-compatible iPhone will be released sometime in the fall of 2010. So what happens if you sign a two-year contract with AT&T and then decide you want to switch to Verizon? Unfortunately, there will be some additional costs to you.

First, the iPhone you bought through AT&T will not likely not work on Verizon’s network. Current rumors state that Verizon will have it’s own model of iPhone with a CDMA radio inside (CDMA is the type of network Verizon has). That means you’ll have to buy an entirely new iPhone. Fortunately, Verizon is likely to offer subsidized pricing just like AT&T ($200-$400).

Another cost will be an Early Termination Fee for breaking your two-year contract with AT&T. The fee is $175 minus $5 for each month of the contract you’ve fulfilled. Via AT&T’s official terms:

An early termination fee of $175 applies if service is terminated before the end of the contract term and will be reduced by $5 for each full month toward your minimum term that you complete. If phone is returned within 3 days, activation fee will be refunded. If phone is returned within 30 days in like-new condition with all components, early termination fee will be waived. All other charges apply. Some dealers impose additional fees.

So total cost to quit your AT&T Wireless contract early and switch to Verizon? Roughly $300-$500.

Want to upgrade to the iPhone 3G S but don’t want to pay the early upgrade price? Wired and Cult of Mac have come up with some clever ways to help iPhone 3G owners afford AT&T’s Early Upgrade pricing for the iPhone 3G S ($400 16GB/$500 32GB).

Wired suggests the most hassle-free method: sell your 3G to a website like Gazelle.com, which buys used electronics. I was able to get a price of $192 for an 8GB iPhone 3G and $232 for a 16GB. And if you sell your iPhone this week, you can get an extra 10 percent by entering in the coupon code “iPhone.” Some similar sites are NextWorth, BuyMyTronics, and Cash for iPhones.

If you do sell your old iPhone, make sure you erase your data and do a full restore before sending it off to its new owner. To do a secure erase of your iPhone:

1. Tap the Settings icon on your iPhone
2. Tap General.
3. Scroll down and tap Reset.
4. Tap Erase All Content and Settings.
5. Tap Erase iPhone for the two warnings that pop up.

Note that it can take up to two hours to do a secure erase of your iPhone, but it’s very thorough.

Cancel Your AT&T Account, Then Resubscribe

Cult of Mac has some other interesting ideas, including canceling your current AT&T account and paying the pro-rated termination fee. You can then open a new AT&T account and get the subsidized price. It could save you a couple Andrew Jacksons. According to Cult of Mac:

AT&T permits its customers to terminate their contracts early for a fee of $175. This fee is pro-rated: Under your AT&T contract the termination fee is reduced by $5 per month of the contract completed. For example, for those of you who bought your iPhone and renewed your plan in July 2008 your termination is approximately $120 ($175-$55 = $120) since you probably have completed approximately eleven months of your contract.

So what do you say, lemme upgrade ya?

Links:

Wired.com: “How to Avoid Paying the iPhone 3GS Upgrade Tax”

Cult of Mac: “How To: Make a Profit Upgrading To The iPhone 3G S“

If you want to check if you’re eligible for AT&T’s subsidized pricing for the new iPhone, the easiest way if you already own an iPhone is to dial *639# and tap Call. Another way for AT&T Wireless users to check is to log in to ATT.com and click the Check Upgrade Options link on the rightside of your account view:

A third option is to go into an AT&T Wireless store and ask them to check your upgrade status.

For the iPhone 4, AT&T Wireless has announced that it has moved up upgrade eligibility by up to 6 months for qualifying customers.

Link:

Check for iPhone upgrade eligibility at Apple.com