Buying an iPhone 4? Beware AT&T’s Nasty Surprise

The iPhone 4, lots of cool features, lots of surprising fees.The iPhone 4 drops today.

At least, for those lucky enough to reserve one before AT&T’s Website crashed and Apple ran out of stock last week.

But if you’re throwing down for a new iPhone, buyer beware: AT&T, still the iPhone’s exclusive U.S. wireless network, is going to wrap you in their tentacles tighter than ever before.

Effective June 1, 2010, AT&T has increased the early termination fee for netbooks and smartphones (including the iPhone), from $175 to $325. (The change only affects new two-year contracts, and AT&T will reduce the fee by $10 for every month of the contract you complete). Still, $325 is steep.

The increased early termination fee is just one more line item in the real cost of an iPhone.

But why’d they do it? Perhaps AT&T knows something we don’t. For example, maybe the age-old rumors will materialize and Verizon or another carrier will also offer the iPhone soon. Either way, based upon many customers’ disgust with AT&T’s service of late, it’s no surprise the network will go to lengths not to keep customers happy, but to keep them trapped.

What do you think? Are you buying an iPhone 4? Do you care that AT&T can basically make you pay whatever they want you to pay? Share your thoughts.

Emily Cesta contributed to this post.

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About David Weliver

David Weliver is the founding editor of Money Under 30. He's a cited authority on personal finance and the unique money issues we face during our first two decades as adults. He lives in Maine with his wife and two children.


  1. Johanna says:

    I’m hoping to buy an unlocked iPhone in Canada and use it on T-Mobile here in the States. If that’s not possible, I’ll stay with the phone I have. I will not go with AT&T ever!

    • David Weliver says:

      Whoa, cool idea, Johanna. I didn’t know they sold them unlocked in Canada. I’m only a couple hours from the border. Hmmm…

  2. “But why’d they do it? Perhaps AT&T knows something we don’t.”

    Because you could buy the phone for $199 then break the contract for $170 and unlock it to use with a different carrier.” That meant you were paying AT&T a total of $369, which is probably under what Apple is charging them for each iPhone 4. Remember, a contract-free iPhone 4 is $599.

  3. I can never understand why people spend so much money on these expensive phones with expensive plans and ridiculous agreements.

  4. It is a nice toy…

    My company bought me an iPhone. It was nice. More of a distraction that didn’t really improve productivity.

  5. I know people that wont’ get the iphone because of it being on AT&T. they say ATT is the devil.

  6. I think it’s only a matter of time before the iPhone is picked up by Verizon or another carrier. AT &T is probably scared blind because they know so many people will switch over to a carrier with a better reputation for good coverage. I think that ultimately, though, these kind of tactics will hurt them, because even more people will be eager to leave a company who has tried to trap them with unfair policies.

  7. Branyard Phillips says:

    Well, it depends on who is offering the long-term contract.

    In our area the phones are sold either with 3g capability or simply without.

    Buyer beware!

  8. I really hate the fact that AT&T can make you pay whatever they want. A recent news report said the iPhone may be coming to Verizon. I hope it is true.

  9. I did’t know this! Glad I read your article. I will not be upgrading my IPhone now. AT&T is out of control. They don’t seem interested in keeping their customers at all. I love my IPhone but I don’t have to keep it. I would love to go back to Verizon.

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