An AT&T iPhone without a contract is still an AT&T iPhone


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Intentionally or not, AT&T engendered a fair amount of confusion (and not a little drooling) this morning by saying that Apple’s new iPhones would be available, at some point, without a contract for AT&T cellular service.

Understandably, some of the Web world took that to suggest that the phone might be ‘unlocked,’ i.e. usable on other carriers. Tech blog Valleywag, for instance, noted that the lack of contract would enable penalty-free switching to another wireless network, but it neglected to mention that you won’t be able to take that iPhone with you.


The truth, however, is that while paying an extra $400 for an iPhone gets you out of committing to a two-year-contract, it doesn’t get you out of having to use AT&T. That’s a lot of money, more than double the current maximum cancellation fee of $175 for breaking a two-year deal.

So why is AT&T offering the option, or rather, promising to do so in the future?

‘Some people just don’t want to be hooked in,’ Gartner analyst Ken Dulaney said. ‘Maybe you want month-by-month because you think prices are going to go down.’

Less charitably, maybe AT&T thinks it benefits from confusing the unlocking issue. Or maybe it just wants to call attention away from the harsh news: Although current iPhone owners and new customers are eligible for the discount, many AT&T customers who use different phones aren’t. That means they’ll have to pay $200 more for the iPhone 3G.


-- Joseph Menn