"That's right, not cancel and deal with the Early Termination Fees which you can often get reduced or waived with service problems, which we have had many of."

So they have service issues with AT&T and yet they still stay with them because of an iPhone? I really don't get people.

AT&T lives in a strange world

That might work, if you're willing to give up your phone number and be issued a new one when you sign up for a new account. I mean, it's not as if AT&T is going to port the number from your canceled account to your new one.

What $200-per-phone upgrade fee?

Oh, right, the non-existent one.

My wife and daughters are due for an upgrade (more than 3 years with the same phone and contract). I'm tempted to do this but I want to ensure they keep the same phone numbers. Do you lose your phone # if you "cancel"?

It is stupid that upgrading is NOT the same price as a new customer. Especially since we already fulfilled the contract.

As supremely awesome as this solution is, I think what holds most people back from doing this is the loss of their old cell phone #s.

The alternative though... go ahead and buy the 3GS at the ridiculous buy out price and then sell your old iPhone 3G(s) on Craigslist. Even though you might have to front the large expense on the new phones, you'll still get a pretty penny for an iPhone 3G!

The iPhone is the only thing keeping AT&T alive. They made a damn good bet on that phone. Most important thing to me is great service. If I get horrible service, I'll switch carriers. Fortunately, I'm on Verizon and shotty service is never an issue. Chicago even installed Verizon hardware on the underground El so now my phone works in the tunnels.

I wouldn't call it unethical... it's simply a matter of "what the market allows". AT&T apparently wants to punish customer-loyalty with this pricing scheme (and rarely is the word "scheme" so apt). If a body is so attached to a particular tech that he or she will take a penalty regardless in order to upgrade, the lesser penalty will do nicely, so go for it!

@Sean Masters: *Sigh* Did you read the pricing for the new iPhone? The $199 and $299 price points are only for new customers. If you already have an iPhone (or any other AT&T phone) it costs $399 to $499 for the new iPhone. And actually, there is an upgrade fee of $18. So, it would more accurately be stated as an $18 upgrade fee and buying the hardware at a higher price point, but "$200 upgrade fee" is really pretty accurate and a lot more concise, don't you think?

Apple has a fine product, hands down. But AT&T is being an ass when it comes to retailing these new phones.
I feel that this falls under the Sherman Anti-trust laws, just barely, if not figuratively. Keeping an iron grip on these phones, charging what they wish to in effect, price gouging the crap out of folks that are hooked on the phone, but not the service.

The telecom may have a good racket going on from the Street's POV, but if the Fed gets involved, they may have a hard time explaining the obscene profits garnered from this recent round of new phones.

@Phishy: As a follow-up though, I did assume that Arnie and wife received new cell phone #s when they signed a new contract.
Is it really possible to cancel your contract, start a new contract, and port your old numbers over? I know you can when switching carriers, just not sure about it when you cancel mid-contract for a 'new' account with the same company!

@rick_in_texas:

You might want to check with ATT on this one, it seems people who are up for contract renewals can get the lower price, but I'm not sure.

@VeeKaChu: i thought the majority of carriers "punished" people by making you pay full price. It is nothing something new to AT&T.

But whatever, a fool and his money are soon parted.....

First off... Customers shouldnt bitch about the upgrade price if they havnt fulfilled their 2 year obligation... Yea the price sucks, but ATT has to recoup that money they subsidized to you... So deal with it...

Second... WHY would you rat out a CS agent that's telling you a loophole??

I'm not defending ATT's service because its pretty bogus how limited their capabilities are, but people who want to bitch and complain about the price of an upgrade after NOT fulfilling their contract need to grow up and deal...

Yes, its cheaper to cancel, then resign up... I'd do it... But i wouldnt rat out an agent for trying to HELP you work the system...

I'm thinking about doing this with comcast, because they have a ridiculously good deal for cable and HBO for 29.99 a month for a year.

@davebg5: I was just thinking the same thing. I hate switching numbers because its an inconvenience to me as well as all of the people that regularly call me.

@davebg5: Quite a good point.

@rick_in_texas: If you're out-of-contract, the only upgrade fee you pay is $18 per line, same as activation.

I'm of the mindset that if you're not eligible, gaming the system does nothing but satisfy a ridiculous urge for instant gratification.

I tracked Gizmodo's liveblog of the WWDC yesterday. I'd love the 3GS but I'm not eligible for an upgrade for two years so I'm just going to wait. Simple as that.

It's part of the contract. If you do X, Y will happen. I don't see why it's so difficult for people to understand. You signed up for a contract specifically knowing you wouldn't be able to upgrade for a certain amount of time. And then you want to get around that, when it was acceptable when you signed up?

@Phishy: If you port your number to a pay-as-you-go phone, like Virgin mobile at cancellation, you're all set.

@VeeKaChu: How is AT&T punishing customer loyalty? This is the same service every provider offers. You get a two year contract and a discount on the phone of your choice. Some are free with contract, others are reduced costs.

Just because people feel the need to upgrade their phone to the latest model every year doesn't mean the contract no longer applies to them.

A fool and his money...

Seriously.. iPhone 3G S is a minor upgrade to the existing iPhone. Most of the new features are SOFTWARE and you'll be getting that for free.

STAY with your current iPhone, in a year when your contract is up, renew for another 2 years and you'll get the subsidized price on whatever Apple releases next year.

Although I consider myself a techie...so far my cheapskatedness has helped me avoid such delimas. I just can't see paying $70-$100 a month to be able to surf the web on a tiny screen or send text messages every now and then. I have an old cheap phone that works fine that I got for free with my contract, and pay $35 a month for my contract.

@VeeKaChu: They could do as they do in E.U., and just make everyone a pay-as-you-go customer, and charge full price for the devices ($599 and $699 for the two iPhone 3GS models).

But that makes people sh*t bricks. Not good for business, unless you're a bricklayer.

@davebg5: The act of porting a number automatically cancels an account. If you're under contract you'll get charged ETF.

This has been used in the past, especially if your provider offers better deals to new customers than to upgrades. You buy a tracfone for $10 at walmart and port your number out. Give AT&T or verizon one to two weeks to close your account and purge your number from their system. Then port the number back in when you sign up for a new line.

works like a charm.

@Adrienne Willis: That part doesn't make sense to me. I have AT&T because they have good coverage where I live and friendly service. They also happen to have the iPhones, but I don't really want one.

I liked that the language used made it sound as if AT&T were holding them hostage and doing terrible, horrible things.

@davebg5: Is there something to stop me from opening a new account to get a cheap 3GS, cancelling, then using that phone on my existing line? Even with the ETF it's cheaper than the unsubsidized price.

@rick_in_texas: If you are on AT&T and are not eligible for an upgrade to the iPhone 3GS (or any phone, for that matter) then yes, you can cancel and sign up again...but you won't be able to just get your numbers back. You could ask, but it's not always possible. Also, AT&T is not likely to port your number over because when they see that you've canceled with AT&T, just to come back a week later for new service (and discounts), it won't look good for you.

If you have been on AT&T for three years, how come you're not eligible for an upgrade? When your original contract ends, and you decide to continue, it's a continuation of your contract, not a brand spanking new one...you're not considered a new customer again after you hit the end of your contract and decide to continue. So check to see whether your family is eligible for phone upgrades.

@Nighthawke: I'm pretty sure you don't understand the way "antitrust law" works. First, you have to have a monopoly. There's definitely no monopoly here.

You can choose to have a nokia phone or a motorola phone, or choose sprint, verizon, or AT&T as your carrier (among others).

No one's FORCING you to purchase an iPhone. There are plenty of players in the market, and the iPhone barely eeked out 1% of the global marketshare.

Last year during AT&T's annual business meeting, they mentioned that the current iPhone sales will not be profitable until well into 2010, due to the fact that AT&T is eating $400 per device, and making up for it in the 2-year contract over time. I'm sure there are profits to be made, but I don't know exactly how huge it is.

@Nighthawke: LOL, as if iPhones are an unavoidable necessity like water and electricity.

Good one. You were joking, right?

@zigziggityzoo: But I don't think you can port your number from a pay as you go phone to a contract phone, right?

I went into a at&t store one time and when I asked about the iphone they spent 30 minutes explaining to me why it shouldn't be called a phone. my favorite was "ya know how all of the commercials end when they get a phone call? that's cuz that's when the trouble begins!"

Next year, Apple will announce a new iPhone with a bigger, prettier Apple logo on the back. No change to the hardware, just a better logo. Apple fanatics will line up around the block.

@Phishy: If you check the completed auctions at Ebay, the 3G iphones are selling between $350 and $400. I'm not sure what the new $99 price will do to that market though.

@JeanStork: Some loophole, canceling service outright and coughing up for the ETF within so many days of termination or get sent to the cleaners.

Someone didn't grow a brainstem before the thought out this new phone rollout. No discount for dedicated customers over so many years, no discounts for custies that bought the first iphone when it was rolled out. No appreciation from AT&T, no sir. Just a bag in one hand, a gun in the other and a "fork it over mister" to top it all off.

One more megapixel, a bit of video, and a compass. Totally not worth even $200.

@VeeKaChu: Why is it a scheme? You are eligible for upgrade at X time. Before X time, you are not eligible. Just because there's a new phone on the market, doesn't mean you suddenly get a free pass and can get the same discounts other people who are eligible will get.

well if you cancel your account, you cant start a new account within 30 days so they wouldnt have a phone for 30 days...is that really worth 150 dollars?

@secret_curse: No. See any number of Consumerist and Gizmodo threads for why.

New hardware comes out all of the time across dozens of industries. Buy it, don't buy it, but don't frigging whine about it or call it an "upgrade".

@rick_in_texas: Upgrading IS the same price... IF you are due. What this is is an early upgrade price for people who upgraded LAST year to the subsidized iphone. This person has not completed their contract and is not due for an upgrade. You are out of your contract.

DO NOT CANCEL. You should qualify for normal iphone pricing.

I'm surprised the evil behemoth that is ATT doesn't have a clause like T-Mobile does. If you cancel and resign up, you only get "new customer" pricing if you haven't been with them for something like 90 days. It may be possible to cancel your account and then have another family member sign up under their name, but you can't do it under your name (they cross reference Social Security numbers).

@Cupajo: ...and whine about having to pay a huge upgrade fee. Don't forget that part ;)

@rick_in_texas: Someone correct me if I'm wrong, but if you're beyond the initial 2 year contract and you didn't do anything that would have extended it, you should be due for an "upgrade" anyway. That means you should be eligible for a phone upgrade and hence the lower iPhone price (plus the $18 upgrade fee, of course). That would make canceling and then signing up more of a hassle, but you wouldn't be charged an ETF.

Unless I don't understand the "upgrade" policy correctly, which is totally possible.

@davebg5: But can AT&T tell you they're not going to port your number? I thought that you "owned" your number, as long as you got it associated with a new phone within a certain time frame. But maybe that's only if you are actually switching carriers.

OK, so that's one way you'll be able to get your brand new iPhone 3G S. Just remember that you're signing ANOTHER two year contract for a subsidized phone. When next summer rolls around and Apple releases the "3G Ultra S," you'll be only one year into the new 2-year contract. What will you do, cancel again?

I don't understand what everyone is up in arms about when it comes to upgrading from 3G to 3G S. It's exactly the same with ALL carrier subsidized cell phones. You commit to two years before you get an equipment upgrade. It doesn't matter how loyal you are.

You signed a CONTRACT for 2 years. If you didn't want the contract, you should have paid retail or bought the phone somewhere else. I loved how the OP pulled the "loyal customer" card to prove a point. Yeah, loyalty is nice, but when you sign a contract, you agreed to be bound by it.

iPhone owners think they are too good for contracts (good ol' Apple higher than thou mentality) and that what they signed is not applicable to them. How would you like it if you entered into an agreement with someone and they come back later and complain to you about what they signed? You'd laugh at them and say "You signed it".

It's colossally stupid, but not for the reason you might think. Getting so torqued-up over a gadget that all you see is the $150 you save is stupid. Thinking that a PHONE is going to make you happy is stupid. Bottom line: Prozac is cheaper.

I'd be willing to bet that the AT&T CSR probably gets a bonus for signing up "new" customers.