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Summary:

Choice is now here when it comes to U.S. iPhone service providers, so if you’ve decided that you’ve had enough of AT&T, there are a few options available. Keeping in mind that you may not escape unscathed, here are a few options for breaking your contract.

att_break

Choice is now here when it comes to U.S. iPhone service providers, so if you’ve decided that you’ve had enough of AT&T, there are a few options available. But keep in mind that since AT&T put up some serious cash subsidizing the iPhone to get you to sign that two-year contract, it’ll probably do its best to get some of that investment back.

Avoiding the Early Termination Fee

In most cases, you will not be able to avoid paying AT&T the early termination fee (ETF) of $325 minus $10 for each full month of your Service Commitment that you’ve already completed. Before you do anything, be sure you read the terms of your agreement, as each situation is unique and options may be available to you that are not available to others. Limitations aside, there are some options:

Within the first 30 days. If you’re within the first thirty days of your contract, you can likely cancel the contract.  You’ll still be liable for any usage and fees that were incurred during that time, but you won’t have to pay the ETF. You will have to pay an equipment fee if you don’t return the hardware.

Wait out the contract. It doesn’t take a mathematical genius to figure out that $10 a month over two years does not equal $325.  Hardly a well-balanced, pro-rated formula.  If you’re close to the end of your contract, just hang in there a little longer if you can.

Watch for an increase in rates. It’s unlikely that AT&T will be increasing its rates any time soon, but if they do (or have during the term of your contract), that gives you an out, since it allows you to exit early according to AT&T’s standard terms and conditions.

Move to a location without service. A bit extreme, but perhaps you were already moving for other reasons, or you already live somewhere without great coverage. If the area you are moving too does not have adequate coverage, then there is a chance you can terminate your contract without paying the ETF.

Sell the contract. According to the WSJ, sites like celltradeusa.com and cellswapper.com will charge you a fee to sell your contract to somebody else.  This may work with your average cell phones, but I’m not sure how well it will work with today’s smartphones and their expensive data plans. It’s worth a try, in any case.

Sell your hardware to cover the ETF. You can still get a lot of money for an iPhone 4, even one locked to a carrier. On Gazelle.com, a site that lets people sell their old gadgets for cash, you can get $430 for a 32GB iPhone 4. On eBay or on Craigslist, you can probably also get more than the $325 ETF. You’ll have to fork over for a new device, but at least you won’t be paying for it twice.

Getting Out at All Costs

Lets face it, everyone knew this day was coming, including AT&T.  Their customer service reps are all trained to keep you as a customer.  They know all the tricks because they deal with them every day.  It is therefore likely that the ETA will just be a reality that you will have to pay.  If such is the case, you have only two options left:

Cancel the account directly with AT&T. If you wish to sever ties with AT&T, you can leave at any time.  Targeting the end of your billing cycle is typically the best option. Contact AT&T Customer Service and inform them that you wish to terminate your account at the end of the current billing cycle. While this will avoid those prorated formulas that favor the carrier, it will limit your chances of being able to keep your phone number and you’ll still have to pay the ETF. When switching carriers, this is generally not the best way to go.

Transfer your existing phone number. Be sure to take a copy of your most recent cell phone bill with you when you decide which carrier you want to switch to.  Your billing information must remain the same from your old carrier to the new.  As per the FCC guidelines, cell phone carriers are required to transfer your wireless number, provided certain conditions are met.  Typically it’s the new provider that issues the request to the old provider when transferring a number.  If your phone number is not in active service, it cannot be transferred.  In most cases, it takes between two and three hours for the transfer to complete.

And You’re Out

Once you’re out, you’ll be free to go ahead and throw your lot in with Verizon. Of course, you might want to hold off on that until Apple releases its next iPhone, or to see if other CDMA carriers follow in Verizon’s footsteps. Got any advice other than that already mentioned here? Please share in the comments.

Related content on GigaOM Pro: (sub req’d)

  1. Keep in mind that AT&T only raised the ETF to $325 in June 2010. Those of us who entered contracts prior to that are still bound by the $175 ETF, prorated down monthly. In my case, my AT&T contract began in August 2009, so at this point I’m looking at an ETF of $90.

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  2. Very misleading title. This article is just a rehash of everything we already know.

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    1. So what’s misleading about it then?

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  3. You can also cite lack of poor service provided you call and complain enough. I actually finally got AT&T to refund me for the m-cell device after enough squalking about how it dropped more calls than before even having it.

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    1. I have also read where if you roam more than you connect to at&t’s network, at&t could opt to drop you because you are too expensive of a customer. It stand to reason that at&t may drop you if you overuse you unlimited data plan as well. Taking actions that may or may not prompt your provider to drop you seems awfully time consuming and risky.

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  4. [...] a $325 cancellation fee plus another $200 or more for a new phone. Since I’m not eligible for any of the ETF workarounds, I’d rather wait out my contract and reevaluate at that [...]

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  5. [...] a new phone and terminating a contract is always expensive, but in switching from AT&T to Verizon there are a few caveats. Verizon [...]

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  6. They used to waive ETFs for moving to a no coverage area but do not anymore. Makes sense though because #1 in terms and conditions there is absolutely no guarantee of coverage everywhere #2 how is it at&t’s bad that you moved out of their coverage area? Just keeping you up to date on policy.

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