What's the best way to beat the commitment involved in iPhone ownership? Bad credit. AT&T Inc. said on Friday that people who buy Apple Inc.'s much-hyped iPhone but do not meet its credit requirements will still be able to keep the phone without having to commit to a two-year contract.
AT&T, the exclusive U.S. service provider for iPhone until 2009, had said in the months leading up to the phone's launch that customers would be required to sign up to a two-year contract in order to buy the device, which costs up to $600.
The companies did not widely publicize that customers who do not pass its credit test have the option to pay for their service on a month-by-month basis, escaping what some consider a restrictive two-year plan.
"We want to give people an alternative if they don't meet the criteria," AT&T spokesman Mark Siegel said.
After buying an iPhone, customers are required to go to Apple's iTunes Web music store to activate the phones.
While AT&T performed credit checks on customers who came to its stores to buy the iPhone on Friday, Apple stores did not.
Secret code
When it came to activating the device, AT&T customers were given a code to tap into iTunes, proving they were already approved for the service and allowing them to skip some steps in the online process. Apple customers would have to go through that process at home in front of their computer.
If they found out that they did not meet the requirements, they would be offered the option of signing up for a prepaid plan, which allows customers to pay for calls in advance.
While prepaid call charges are more expensive than per-minute charges for postpay customers who pay monthly bills, prepaid customers do not have to commit to keep the service.
Postpay customers pay a hefty fee to leave contracts before they expire. In order to avoid such costly cancellations, mobile service providers often pay huge subsidies for customers' phones as a way to entice them into contracts. AT&T, however, is not subsidizing the iPhone's retail price tag.
While several reviewers gave glowing endorsements to the iPhone this week, many criticized the phone's Web browsing speeds as it does not run on AT&T's fastest data links.