iPhone 4: Are Telstra & Optus price gouging?


blog A long-held rule of the global capitalist system has been that any given commodity will gradually go down in price over time, due to wider availability and improved manufacturing processes which drive scale. But now, according to MacTalk, Australia’s beloved top two telcos, Telstra and Optus, have decided that — despite the presumed imminent launch of Apple’s next mobile Jesus, the price of the iPhone 4 should instead go up:

“Believe it or not, but there are people who didn’t buy their iPhone on launch day. Step outside of our nerd bubble and the bulk of people buying iPhones happens now, not on launch day. Their contracts end, or they just want a new phone and go buy the nicest one out there, which happens to be an iPhone 4. The telcos know this as well and it seems they’ve jacked up iPhone 4 pricing to leverage that fact.”

MacTalk’s contention (please click through and read their detailed story) is that the two telcos have actually hiked the price of the iPhone 4 since launch day last year — by $120 on a $79 cap plan in one Telstra example, and by $168 in a similar Optus example. Vodafone, in comparison, appears to have cut its prices; but then, many customers are unclear as to whether they can currently get service from the embattled telco.

To be honest, this isn’t exactly illegitimate behaviour from the point of view of the two telcos. The iPhone 4 is in hot demand, after all — why not make hay while the sun shines, the argument is probably going internally. Telco plans change all the time and customers have always had to choose from a set of current offers when buying a new handset.

However, it does ring slightly unfair, given the incredible strength of the Australian dollar against the US greenback, and the fact that consumers today will be paying more for what is exactly the same hardware, on exactly the same networks. Telstra and Optus could at least bundle in a few value adds — extra data packs, maybe a nice choice of covers — to take the sting out of the wallet raid.

Image credit: William Hook, Creative Commons


  1. Hi Renai, I can confirm that all carriers have increased their iPhone 4 pricing in recent months, with Virgin Mobile being the most recent to update their plans and price payments for the iPhone 4 on 5th of February.

    Virgin Mobile is still competitive however at $0 for the iPhone 4 16GB on the $59 Cap. Optus are now at $9.50 per month on their $59 Cap for iPhone 4 16GB.

    The first major move was on the 1st of December last year with two of the main carriers increasing their pricing within days of each other. Also, we’ve also noticed the incentives have been dropped on iPhones, with ‘x months free’ or otherwise no longer being offered with iPhones.

    iPhone die-hards (existing and up-graders) will see this as ‘price gouging’ as it adds more cost to their chosen device. However, when you step back a bit, pricing is used a mechanism to direct consumers in certain directions, and the recent winners have been Android phones who have seen their prices with carrier on plans collectively drop, as well as the Windows Phone 7 devices. The pricing changes could be seen as a mustering stick away from the iPhone 4 and towards other devices to promote some more diversity.

    Insiders are hinting that Apple now has a lot of control in the Australian industry as each carrier has used cheap plan pricing to win market share, but it has let Apple get a massive market share quickly which breeds control and power for Apple. There’s no secret in that (it’s pretty obvious when you look at launch day pricing and take a ride on the train and see all those little Apple logos in people’s hands). I’d suggest the pricing changes as a push towards diversity in handsets and a diminishing of the halo around the iPhone 4 rather than a deliberate gouging on potential iPhone 4 customers.

    You’ll know I’m wrong though if Telstra or Optus announce record profits and quote their iPhone pricing as the cause!

    • Thanks for your comments Cameron — this adds a great deal of detail to the story!

      I think you’re probably right. My view of it is; it’s likely that there are several reasons for the price rises. Firstly, there are always going to be people who will buy the iPhone, regardless of competition, so I guess the telcos figure why not take some extra margin on that locked in purchasing decision anyway. Especially Telstra — as there are quite a lot of people who will now only buy an iPhone on Next G, given the network problems that Optus and Voda have had.

      Secondly, with the wave of handsets about to arrive on Australian shores, we are truly about to experience the year of the extremely cheap, high-end Android smartphone in Australia. With the greater control the platform offers carriers, there’s absolutely no reason for them not to direct consumers off the iPhone — and a stack of reasons to do so.

      I personally think it will be very interesting in 12 months’ time to see where Apple is in the local smartphone market. I suspect they will still be quite important — but no longer dominant. HTC and Samsung are about to go into an intense turf war — with the likes of LG, Sony Ericsson and even Huawei sitting just off to the side.

    • Um … how is demand greater than supply? I walked into a Telstra store about three months ago, during the Christmas period, and bought an iPhone 4 off the shelf. There are plenty of devices out there, unlike during the first few months of the iPhone launch locally every year.

  2. like the 3gs before it i just wanted for the iphone 4 and brought the model behind it. it has a sophesticated capability and i’ll be waiting for the iPhone 4gs before upgrading to the 4.

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