The world is going gaga over the iPhone, yet again, thanks to the announcement that the iPhone 4 will be out at the end of June. Just my luck to have finally picked up an iPhone 3gs just a week ago, three days before they announced the new model! At first I felt bad, not because of the model upgrade but because Apple was cutting prices. But then I remembered – this is Israel, and I’m signed  up with Orange – where the prices go up, not down, no matter what!

In Israel, iPhones really are for elite power users who have “resources” (ie money) to spare. It appears that the cellphone companies (Orange, at least) splits its “phone world” into two; iPhones and everything else. If you want to be in the iPhone world, be prepared to pay – more than you bargained for. In my case, it was (almost) the data network I had to pay for, without even realizing that I was being charged, and after doing everything I was supposed to in order to avoid the extra charges!

Here’s the story: Being in need of a couple of cellphones for members of the tribe (one to replace a broken device, the other for a new high school student traveling every day), I thought about upgrading to an iPhone, to replace my Nokia XM5800, which I had relatively few complaints about (and in fact outdoes the iPhone in some ways!). The reason is not because I consider myself to be part of some “cellphone elite”; so many of the companies I write about are doing apps for the iPhone (and Android phones or Blackberry, but not for Nokia’s Symbian phones) that I felt I was missing out on being able to write accurate stories about their technology. So things just sort of fell into place for a Shamah iPhone.

When I pick up my already ordered iPad in the States in a couple of weeks, I’ll have a whole Apple family – Dad (iMac), Mom (Mac Mini), a couple of teens and tweens (Macbooks, aluminum and white version), Junior (iPad), and Baby (iPhone)!

And the iPhone is everything they say it is – a beautiful screen, far advanced UI (light years ahead of the Nokia’s clunky UI), and an endless amount of apps that do anything and everything. While I really missed the lack of multitasking (a no-brainer on the Nokia, and a lack that will be resolved with the new iPhone OS due with the iPhone 4) and no ability to record phone calls (that one hurts!), it’s easy to see why people love their iPhones.

One big plus for me is the iPhone’s built in ability to tether its cellular connection to a laptop, enabling you to use it as a modem (I used a separate program for that, called Joikuspot, on the Nokia, but the iPhone’s implementation is far better). I use the modem program (known as tethering feature on iPhones) to connect to the net when the router goes down (an occasional problem where I live).

As it happened, the day after I got my iPhone, the internet was out for a few hours while I had “crucial” on-line work to do. So, I tethered my device to my Mac (that’s a story in itself, because I had to do a “mini-jailbreak” from the block Orange put on tethering!), and did my thing. Great connection via 3G – much faster than I ever had with Joikuspot on the Nokia! So I was happy.

But only for a little while. After about 2 hours (it was a long outage) I got an SMS from Orange saying that I had used up my internet surfing package, and would now be charged per megabyte. I thought it was strange that I had used up a full 150MB of upload/download time so fast – clearly it was the 3G, I thought – and realized I had to upgrade from my “middling” package (150 MB/NIS 47 per month, better than the free 30 MB they give you, but not as good as the 5 GB/NIS 88 a month I was planning to order). But that was for another day. For now, I went to settings, and turned off “Enable 3G” and “Data Roaming” on the Network settings.

Flash forward about a week. I still hadn’t gotten around to upgrading the package, but that was OK, because I seemed to be able to find a Wifi connection when I needed it (even when we ate out at a place in Herzliya for my wife’s birthday!). On that day (about a week after I got the phone), I got two phone calls from Orange – the first to try and sell me “screen insurance” (at NIS 47 a month I said no thanks), and a second from an Orange rep asking me if I liked the phone, did I have any questions, etc. (than in itself is a sign that they look at iPhone customers as being in a different league – no one called me when I had my Nokia, Sony, or any previous device!). Very helpful and thoughtful, I said to myself.

I said thanks, everything’s fine, and was about to hang up – when I figured that now would be a good time to order the 5GB wifi package. “Good idea,” he said. “You know you’re over the limit on your 30 MB connection package.” Whoa – 30 MB? Shouldn’t that be 150 MB? After all, they transferred my previous Nokia plan to the iPhone – or so they told me they would do in the Orange store!

But no – they apparently “forgot” to upgrade me, and now I “owed” them over 50 MB over my allocation! That works out to about  NIS 95 that I was going to have to pay!

Unacceptable, I told the (now formerly) “helpful and thoughtful” fellow on the other end of the phone. In fact, it was impossible for me to have gone into such megabyte debt; did I not turn off 3G as soon as they warned me that I was now going to be charged for cell data connections, making sure to use only Wifi? After much hemming and hawing (and keeping me on hold for about 10 minutes), he came back with his best offer – Orange would knock off half the charges, and I would end up paying only NIS 45 (from my previous complaints to Orange, it appears that they have a stock policy of giving energetic complainers half off whatever charges they’re complaining about).

Nothing doing, I said – rather loudly, by this time. “It’s not my fault they didn’t transfer my 150 MB package, and anyway I was only using Wifi. If I still had my 150 MB package, we wouldn’t be having this conversation, because I only used 80 MB of allocation – and anyway, I was only using Wifi!” Unable to do more, he gave the number of customer service for data plans. I called, and spoke to another rep, who also listened, gave me an argument, then regave me the 50% discount – and then, after emphasizing numerous times my chief arguments and that I was not willing to pay a shekel for this – they knocked off the whole thing (or so she told me on the phone; it remains to be seen if they try to sneak the NIS 90 onto my final bill. As of now, it appears on my account usage page on the Orange site).

One of the reasons she gave me an argument was because of the following: Even if you turn off the 3G, you are still connecting to the data network via 2G, even if you’re just surfing Wifi! Accoourding to this Orange rep, you CANNOT connect to the internet without using a cell network, with just Wifi; the Wifi takes precedence, but if you move out of range, the 2G network AUTOMATICALLY kicks in – racking up the charges on your account, adding a phantom 50 MB in data usage. “The iPhone is the only device that does this,” she said. “You can connect using any other device using strictly Wifi, but not the iPhone.”

Needless to say, I though I was dealing with some ridiculous excuse to justify the charges – or some Orange-only scam (like disabling the internet tethering feature so they can charge you to open it!). Jumping to that conclusion makes sense, since Orange is very good at relieving you of your money in small increments (“nickel and diming,” they call it); the way the Orange website is organized gives you a clear indication of how they operate, but that’s a post for another day.

Anyway: Not believing this story, I actually called up Apple in the U.S., taking an educated guess that the device actually came from the U.S. (I was right, and anyone in Israel who wants can buy the Apple Extended Warranty for iPhone directly from Apple for $69! I don’t know how much Orange or iDigital sells it for, but I suspect it’s a tad more than that). And unbelievably, the Apple rep confirmed what the Orange rep said! Even if you turn off the 3G to save surfing megabytes, and even if you make sure to stay near Wifi hot spots at all times, you are STILL going to end up connecting to the cell data network!

The implications? If you have the iPhone, you are REQUIRED to have at least 500 MB in your data plan (since the next jump after 150 MB is 5 GB, that’s what you need to do, at least with Orange). Even if you plan on using just Wifi. Is this a “feature” Apple built in to help the cellphone companies it sells to? Why haven’t I heard this fact before (I did a lot of internet searching before calling Apple)? If this is the case, how can they let a customer walk out of the Orange store with only 30 MB in their data plan?

Once again, our local “business sharks” take what was supposed to be a nice, fun experience and use it as another excuse to shake down loyal customers. Lessons for the future: There is no way an iPhone is going to cost $200 (the price announced for the 16GB iPhone for last week) if you buy yours from an Israeli cellphone company. And two, when the iPad finally comes around, get ready to spend – $499 just isn’t going to do it. If they treat iPhone customers like millionaires who can throw money away on large data plans (who have no choice in the matter either), I can imagine what they’re going to do to the “super exclusive” iPad crowd!

Related articles by Zemanta

• The iPhone: Designed to Dominate (businessweek.com)
• Nokia sues Apple in Wisconsin for infringement of Nokia patents (Nokia) (techmeme.com)
• Nokia lodges another complaint against Apple (sfgate.com)

Yes, the iPhone is coming to Israel, but I wouldn’t get too excited – unless you like overpaying and getting stuck with what’s probably going to be a whopper of a voice/data plan. If I know the Israeli phone companies, customers who buy the iPhone from the carriers – Orange Israel (Partner Communications) and Pelephone – are going to be paying… and paying… and paying some more!

How do I know? Because that’s just the way things work here. Israeli cell phone companies don’t give out any free lunches – or free phones. Unlike in America, where they give you a phone for nothing (or for a very nominal cost) when you sign up for a plan. Here, you have to buy the phone, for full price – and then some!

Take, for example,  this Sony Ericsson W595 phone. At Amazon, it’s on sale this week for $199.99, unlocked – just insert your sim card, and you’re set. On the Orange Israel site, though, it’ll cost you NIS 1,044 – that’s $264 (at NIS 3.95/dollar)! And, that’s the sale price at Orange – plus it’s only for Orange customers, so you have to sign up with them for an 18 month contract!

Yes, you can pay it off in 36 payments, at NIS 29 a month. So what. Even over three years at 21% interest, with minimum monthly payments, it comes out a little cheaper buying it from Amazon!

But that’s not the worst part. The worst part is that this phone is an OLD phone (old in “cellphone age,” that is). It was announced almost a year ago and went on sale last fall (2008). That’s why it’s marked down at Amazon from its $319.99 original price (the original Orange price was correspondingly higher, too). Here, Orange isn’t selling this phone unlocked; it expects you to use it for the next three years, and is treating it like a premium/top of the technology product! Not that there’s anything wrong with this Sony model (we have several Sony phones and they’ve all been great). But why do we have to pay top shekel for older phones that they’re giving away for nothing in the U.S.? Correction – they’re not even giving away that phone anymore; it’s too old! The phones they’re giving away are phones like the Blackberry Curve 8900, the LG CU920, and the Samsung i637. Just for signing up for a plan!

Not that this isn’t a new phenomenon – Israeli companies have been marking up old phones and sticking customers with them for long term contracts for years – and often it’s been cheaper just to order the same model unlocked, pay the shipping, taxes , and duties, and just stick you current sim chip into your new phone. At the very least, you won’t be stuck with a plan that will keep you from missing what could be a better deal elsewhere.

So how much do you think they’re going to want for the latest top of the line iPhone? Answer: It doesn’t matter. Given the history of phone costs in Israel, I predict that regardless of what they decide to charge (note that iDigital, the Israel Apple reseller – which is NOT an Apple Store – is buying the phones from Apple and reselling them), it will be cheaper to spend the $100 on the iPhone in the States, sign up for a month of AT&T service and then pay the cancellation fee ($175) plus other various and sundry costs!

P.S.: There’s much more to say about taking the cell phone service providers taking top shekel for outmoded cellphones; the biggest scam has to be how the companies bought up old analog cellphones for pennies, rebranded them, and sold them for ridiculous amounts of money to Haredim as “kosher” phones. But that’s for another post!