iPhone 3G + Cancellation Cheaper than Un-Contracted iPhone 3G

I'll admit that when I saw the prices for the iPhone 3G sans contract ($599 for the 8gig and $699 for the 16gig), I was disheartened. It turns out these prices are a actually more surreal than they appear at first blush. Gizmodo did some math and figured out the following: it is cheaper to just buy an iPhone 3G and sign up for the contract, pay the activation fee, then cancel the contract immediately and pay the early termination fee. Check it out:

$299 - 16GB iPhone w/contract
$36 - Activation
$175 - Early Termination Fee
$70 - One month of service
Total Price Using The Shady Method: $580

...Of course, the above method does have a hidden cost: the cost of having AT&T run a credit check on you, which technically can put a ding in your credit rating if there are a lot of checks in a short period of time. There's also the ding on your morality -- financial shenanigans may make you feel like a huckster. If you try the above method, we can't be held responsible for anybody confusing you with Ron Popeil.

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Dieter Bohn

Dieter Bohn is former editor-in-chief of Smartphone Experts, writing across iMore, Windows Phone Central, Android Central, and more. You can find him on Twitter (and everywhere else) @backlon.

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Reader comments

iPhone 3G + Cancellation Cheaper than Un-Contracted iPhone 3G

13 Comments

you need to have the phone for at least 30 days or you will be required to return it. So for those people like me without iphones being available in their countries, this is still bad. Lots of phone sales will not happen because of this anti-unlocking tactics.

There is also the tax on the service charges. Also, you may be able to drop the data piece as you can with the current generation ipods saving a few bucks if you buy the voice-only plan.

yeah I am going to do that but actually is 299+tax it's
323.67
plus the ETF 175
+activation 36
+ 75.76 of the month that is all total up with taxes and everything so it's about
all of it it's $610.43 if you cancel after 30 days.....and if you buy the iPhone 3G without contract you are paying $648.41
So it's even cheaper than buying an iPHone without contract and more memory and if you want different color too
what I am not quite sure is about the deposit the credit check
the credit check is ok with me
but I don't know if they are
going to return to me the deposit
..........
here is my email
orteginho@gmail.com

Will the iPhone obtained by terminating the contract (and paying the fee) be unlocked by ATT so that it can accept SIM cards from other companies?
Will ATT unlock the iPhone for regular folks who fulfill their 2 year contract?
No one seems to be discussing (or asking ATT) about their unlocking policies ...

So, let's say you get the iPhone 3G using this method and somehow jailbreak & unlock it. Now which carrier will you use and how much will the monthly charge be?

You probably shouldn't count the voice/data cost in your assessment if you would be using that service otherwise and paying for it. ie- i pay 40/month in voice from AT&T anyway, so in fact for me, it's just an extra 30, not 70, so the cost of the iphone is that much less.
You should also realize, at least for iphone 1, you can unlock it, but it's on a diff platform than verizon, so you cant use it with them. ONLY Tmobile and AT&T in the states, im not sure if this logic extends to 3g iphone

What information does AT&T need for you to purchase an iphone ? I dont live in the US, im only here for vacation, can I buy one ?

People say we can only be allowed to buy two iPhone per credit card, is it true? Because I want to buy 3 iphones using one card
Can I do the cancelation online? Or do I have to go to AT&T for it?

So, the guy at AT&T tells me that if you cancel the contract before 6 monthes, you need to pay the phone full price (ex. the $400 left for the 8GB model) besides the cancelation fee.

I bought two 3g iphones from Bestbuy on September 13th, I signed a two-year family plan contract with the deposit of $150 per line. Unfortunately, I lost them a few days ago. My question is that can I cancel the contract with AT&T after 30 days without returning the equipments and get the deposit of $300? Of course, I will pay the ETF. Any information are appreciated.