3 tethers iPhone users to two-year plans

Mobile carrier 3 has announced prices for the iPhone 3G S, separate to that from its merging partner Vodafone.

Its 3 shops will offer the iPhone to buy outright at the same prices as Vodafone; the 32GB iPhone 3G S is $1129 upfront, the 16GB is $929 and the 8GB is $759.

Unlike Optus, 3G S owners on 3 will not pay a monthly fee for tethering, which turns the phone into a mobile modem for data transfer to a laptop.

And on the surface, 3's tethering data rates are more attractive than Optus' and Vodafone's: 500MB of data for $6 a month, 1GB for $10 per month ($19.95 a month with Optus or $24.95 with Vodafone) or 3GB  for $20 a month (2GB for $24.99 from Optus).

But 3 used the lure of cheaper rates to draw customers into signing longer, two-year contracts.

A 3 spokesman said customers will be charged $55 if they end the contract early.

He said customers can change to higher-value data tethering plans for free but "if you sign up to a high-level pack and move down packs there [will] be a charge".

Mobile carriers are struggling to lock iPhone users into predictable patterns of use to make a profit on the subsidised devices.

In a survey last week of 248 iTnews readers with iPhones, about 90 percent said they will change providers when their contracts expire and more than a third said tethering costs were the reason.