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Monday, October 01, 2007

The secret iPhone subsidy that ATT doesn't want you to know about (buy a new iPhone for $200)

Update 10/2/2007: Answered some concerns at the end. Added ATT/Cingular terms.

It's no surprise that the Apple Iphone is a big hit. It looks not only looks great, but functions well also. The press and public are infatuated with it (notice all the iphone related news). The one problem is its price. At $400 (down from $600 after the recent $200 price cut), it's a pricey phone. Many would-be buyers have to ask themselves, why spend $400 when you can get a subsidized phone for free?

The problem is that ATT/Cingular does not subsidize the Apple iPhone in any way. Normally they subsidize the price of your phone to entice you the sign up and lock you into a lengthy 2 year contract. This way, over the course of 2 years, they can recuperate the cost of that initial subsidy (usually around $200). This is why you see all those "free phone" commercials and advertisements.

So how do you take advantage of this subsidy if ATT/Cingular isn't offering one?

Here's a step by step method on how to do it.

Assumptions first: You aren't currently locked into any contract with any carrier. And you are comfortable with using ebay/craigslist.

1. Go online at amazon.com, newegg.com, or where ever you prefer, buy a new phone and sign up for a new 2 year contract with ATT/Cingular. For example, the Sony Ericsson W580i is currently selling for $0.01 on amazon.com.

2. After your contract becomes valid and activated (a couple days after you place your order), go buy your new iPhone from Apple. At this point you are locked into a 2 year contract with ATT/Cingular.

3. Once you get your new iPhone, activate it normally. Your new plan (the one with the unlimited wireless) will also require you to sign a 2 year contract. This is the key to this method. The new 2 year contract UPDATES the contract you signed when you bought your phone from amazon.com. Your contract is still 2 years from the date you activated your iPhone. It is not four years.

4. When you receive your phone from amazon, sell it on ebay or craigslist! Ignore all the junk you get from amazon about how to set up and activate your new phone, you don't need to do that anymore. If you get $200 for it, great - your iPhone was effectively $200 cheaper! Enjoy your new iPhone.

The end result is that you have your iPhone, the contract you would have signed if you had gotten your iPhone right away, and about $200 extra in your pocket.

Any comments or questions? Leave a comment. Remember to bookmark my site! Thanks.

Questions and Answers:

Jonathan from My Money Blog asks: Are you sure that the new iPhone contract simply shifts the contract date a couple of weeks, and does not tack on two years on the end? You would think both phones (subsidized or not) require two-year contracts. Otherwise you could just keeping buying iPhones and selling them with no contract (and only extending your current one by a few days).

Yes, I am positive that you do not end up with a 4 year contract. You are merely adding the $20 wireless data plan and that will restart your 2 year contract commitment. In fact, the Cingular website even has a FAQ on this same question. I'll copy and paste it here for clarity. From Cingular's iPhone FAQ:

Q. I just upgraded my phone recently. Are there any penalties or restrictions for upgrading to iPhone right away?
A. No. Everyone can upgrade to iPhone right away, you just need to add an iPhone Data Plan (this may replace your current data plan but your voice plan will stay the same) and sign a new 2-year service contract. Discount eligibility for other devices will continue from the time of your current contract.

As for keeping on buying iPhones, you are more than welcome to do that. However, I think each subsequent iPhone you activate will deactivate the earlier ones, making the whole process moot. Furthermore, you DO NOT get another free cell phone (or subsidy) if you are already locked into a contract. This is the key point. This whole method only works if you are not in a contract with Cingular currently.

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2 Comments:

Blogger Jonathan said...

Are you sure that the new iPhone contract simply shifts the contract date a couple of weeks, and does not tack on two years on the end?

You would think both phones (subsidized or not) require two-year contracts. Otherwise you could just keeping buying iPhones and selling them with no contract (and only extending your current one by a few days). I'd have to read the fine print before jumping in on this.

4:01 AM  
Blogger justanotherblogger said...

Jonathan,

Thanks for posting your concerns and questions. I've updated the post to reflect this.

To answer you quickly though : no it does not tack two years on the end :)

10:21 AM  

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