Haters of cellular lock-in: Has AT&T seen you coming?

The numbers, they baffle me:

AT&T "No Contract" iPhone deal: $599

$200 "2 year contract" iPhone plus $175 early termination fee: $375.

Now, only new lines of service are eligible for the $200 model. Assuming you're coming fresh to iPhone country, why would you pay a $400 premium for not having a contract, when you may simply buy out the contract for no more than $175 when you wish to?

I must surely be missing something blindingly obvious.

[#1 posted by Paula Wirth , July 6, 2008 5:45 PM]

I can only think that they may raise the rate of an early termination fee at some point. I bet there is small print that allows them to do that.

May still be cheaper to go with the early termination fee, but it may be an unknown cost, vs. the known cost of a contract-free phone. Having had the most terrible experiences with cell phone contracts myself, I tend to opt for contract-less arrangements these days.

[#2 posted by Rutiger , July 6, 2008 6:43 PM]

As "It doesn't come easy" from slashdot points out.

From the service agreement

"Service may be cancelled after 14 days but within 30 days and early termination fee will be waived, but equipment may not be returned."

So you pay the 199/299, plus the activation fee of 36 you can get an iPhone for 235/335 if you cancel between 14 and 30 days. Before 14 days however you may be required to return the iPhone. And after you must pay the termination fee.

[#3 posted by gregwlsn , July 6, 2008 7:35 PM]

For those w/questionable credit or poor history w/AT&T, a 2 year agreement probably isn't even an option.

For those with good credit, entering and immediately terminating a contract can't help your credit score.

[#4 posted by Anonymous , July 6, 2008 9:26 PM]

It might be a 'no contract' phone, but it's still locked to AT&T-- so until someone figures out how to jailbreak the iPhone 3G, you're stuck paying for an AT&T contract for service anyway.

[#5 posted by Rob Beschizza , July 7, 2008 3:47 AM]

Terminating a contract like this, with an ETF, will not affect your credit.

[#6 posted by Anonymous , July 7, 2008 4:58 AM]

You also have to unlock the phone after terminating the contract. Once you unlock it (I am not sure that you can even do it with 2nd generation iphone), your warranty is void. So the difference is probably the risks involved in terminating the contract and being able to use the phone with another carrier.

[#7 posted by DragonVPM , July 7, 2008 5:40 AM]

I must surely be missing something blindingly obvious.

People, by an large, are really bad at math.

For instance, I've noticed a few websites mention that the new "cheaper" iPhone also ends up costing you more than it's predecessor in the course of the 2 year contract and yet that doesn't seem to really sink in with the masses who are still giddy that the new iPhone is "cheaper"

[#8 posted by nex , July 7, 2008 5:43 AM]

Where I come from, "no contract" means it's not locked to any specific carrier. Are the "no contract" iPhones mentioned here really locked to AT&T? And what about terminating your contract, will they really not unlock the phone for you, not even for a fee?

[#9 posted by Anonymous , July 7, 2008 7:04 AM]

When the iPhone was only EDGE, I could see the value of unlocking (= switch to T-Mobile)...

I hate contracts, and I'd still just as soon not fatten AT&T's wiretap-enabling coffers, but with no real alternative until T-Mo gets its 3G network deployed, is there significant value in unlocking the new iPhone? 'cuz I'm not seein' it. (Heck yeah, we need more GSM competition in this country.)

[#10 posted by Rob Beschizza , July 7, 2008 8:01 AM]

iPhones will still be officially locked with no contract deals.

[#11 posted by qousqous , July 7, 2008 10:04 AM]

One of the best reasons to unlock a phone is so that you can use prepaid SIMs when travelling in other countries. I'm probably going to get an iPhone here in Canada on Fido and don't have anywhere else to bring my business here (Rogers is the same company), but when I visit the US I sure as hell want to use my 10c/minute T-Mobile prepaid card rather than my $1/minute (plus 12% tax!) roaming on Fido. So I'll definitely be unlocking my phone even though I'm sticking with Fido for the foreseeable future.

[#12 posted by Eli , July 7, 2008 11:50 AM]

This is true, though I'd expect someone to break the SIM lock before too long.

(It's worth noting that it *IS* legal to unlock a cell phone that you own. It's an exception to the DMCA.)

[#13 posted by gilowyn , July 8, 2008 3:39 AM]

See, I'm in Germany, which means T-Mobile. And their pricing has been too confusing for me to even contemplate an iPhone.

First off, the cheapest subscription is 29€ with 500MB data volume.

Now supposedly, with the 49€ subscription you get a flat-rate data volume. Unless you use up more than 300MB, since they will then reduce your download speed to 64/kbps.

So actually you get more data volume with the cheapest subscription? Confuses me.

Oh, and calls are more than 3x what my current provider charges, sms more than double the price.

So unless another provider comes up with a way to use the iPhone internet options, I am hanging on to my no-frills Nokia... and possibly eyeing a Blackberry.