AT&T iPhone Activation Idiocracy

First, I should point out that I've been with Cingular/AT&T since I graduated high school and I haven't really had any complaints about their service up until this point.  Maybe I just have low standards or don't know any better since a lot of my friends and co-workers don't have that high of an opinion of AT&T and if they were in my shoes, they would have more than likely switched to T-Mobile or Sprint at some point in the last 6 years.

But the crap I had to put up with this morning was just unacceptable.  It makes absolutely no sense to me.

As we all know, the highly anticipated iPhone 3g was released three days ago.  A buddy of mine upgraded from his original iPhone on the first day it came out.  Because I've been such a loyal AT&T customer all these years, I won't qualify for a fully-subsidized upgrade until October.  I could pay an extra $200 to upgrade now, but I cannot justify $200 for not waiting 3 months for a new phone.  This is because sometime last February, I got a Cingular 3125 because at that time, my old Motorola's battery was so terrible at holding a charge that the battery would drain if I used it while it was plugged in.  Long story short, I can't upgrade for awhile unless I want to pay a $200 premium.

My buddy who upgraded decided to hand down his old iPhone to me, so I can at least use iPhone 2.0 until I can fully upgrade in October.

Now here's where it gets interesting...

When I tried to activate this used and unsubsidized phone through iTunes, it asked me to renew a two-year contract.  A two-year contract for a previous generation, used, unsubsidized phone.

Must be a mistake, right?  There's no reason for AT&T to require a new contract because whatever money they might have lost through revenue sharing with Apple must have been recouped already, right?

I called up AT&T customer service to make sense of this.  After putting me on hold for 15 minutes (not terrible, I suppose), the customer service rep told me that I shouldn't have to renew a 2-year contract to activate an used phone that wasn't even subsidized to begin with.  I asked if this would change my upgrade eligibility in October.  He said no.  Then he told me to go to an AT&T retail store to make sure that everything is done correctly.

Great news, right?

Wrong.

This morning, I went to the AT&T retail store and told them I wanted to activate an original iPhone.  This is basically the conversation that took place:

Me: Hi, I'd like to activate an original iPhone.

AT&T: Oh for that, you can activate that through iTunes.

Me: It's asking me to sign a new 2-year contract.

AT&T: That's correct.  You have to sign a new 2-year contract in order to activate your phone.

Me: I called up customer service and they said I didn't.

AT&T: Well, customer service is wrong.

Me: Suppose I wanted to upgrade to the new iPhone 3g under the subsidized price.  When would I be able to upgrade if I signed this new 2-year deal?

AT&T: In two years.

Me: So let me get this straight... I have to sign a new 2-year contract in order to activate a USED phone that was NEVER SUBSIDIZED and I can't upgrade to the current generation phone for until 2010.

AT&T: That's correct.

So there you have it... you have to sign a dreaded two-year contract to use the original iPhone even though it is used and AT&T has no revenue to recoup from subsidies.  If anything, they have even more money to gain since they'd be getting money from both the original iPhone's original owner, who is still under contract, and the original iPhone's new owner, who still needs to get service from AT&T.

AT&T has a video telling you how to hand down your old iPhone.  At the end the narrator says,   "We're confident we'll have two very satisfied customers."

They're full of crap.

Update #1:

I called AT&T customer service again and instead of only talking to a business center rep, I got transferred to the iPhone department.  The rep there said that it was ridiculous for me to sign a new 2-year service agreement.  She told me to go ahead and go through with the service agreement in iTunes even though I'm not actually binding myself to AT&T for another 2 years.  I will also be able to upgrade to the iPhone 3g at the same time as before.

Hopefully, everything will work out according to what she says.  It is AT&T after all.