We’ve compiled a how-to guide that works the system, and will net you an iPhone 3G on July 11 for about $199, and leave you without any contract at the end of it all.
The process only requires that you (or someone you can borrow) does not have active service with AT&T. Want to know the steps? Read more to find out.
Update: Our links have been updated to take advantage of a $50 coupon that AT&T is offering on PDA Phones. The process is the same as before, but now, the deal is even better than ever!
First, why would you want to do this?
Several reasons, really.
One, you may be an iPhone hacker, looking to get an iPhone 3G that isn’t tied to contract. This is the cheapest way to do that, by a good few hundred dollars.
Two, if you have an original iPhone under contract, using this method nets you an iPhone 3G without a contract reset.
Three, you may want to buy one for use on another carrier. While iPhone 3G will undoubtedly be locked to AT&T at launch, hackers will undoubtedly begin working to unlock the device for use on other carriers.
Four, you may be on AT&T prepaid service. While we can’t guarantee that iPhone 3G will work on GoPhone plans, there is evidence to indicate that it will.
Five, you want an iPod touch that just happens to be the latest cell phone as well. It’s just as cheap, and leaves the door open for you to sign up for service later.
Here is what you need for this process:
1) Someone without an active AT&T account.
2) A first-generation iPhone. It can be used.
We have tested this guide up to the point of purchasing the iPhone 3G. According to AT&T’s guidelines for upgrading to an iPhone 3G, there should not be any issues with this guide.
See, as a part of Apple’s re-negotiations with AT&T, they put in one requirement; anyone with an iPhone on their account, is entitled to upgrade to the new iPhone 3G as if they were a new customer. We are going to exploit this as a loophole.
Step 1: Setting up a new account with AT&T.
The first step is to sign up as a new customer, but not with an iPhone. Instead, you need to order online using this link (which takes you to AT&T’s online store) and get a phone without any mail-in rebates. We stress that you should use the above link and not order from a third-party store, for reasons that will complicate this guide (but trust us, order direct using the above link).
Update: Now you really, really need to use this link. It gives you a $50 discount when ordering.
We suggest buying a refurbished AT&T Tilt as your phone of choice. This is a good phone because it is heavily discounted, and there aren’t any rebates. More on this later.
When your phone arrives, set it up with the new service plan that is bundled with the phone. Make a test call.
Step 2: Activating the first-generation iPhone.
Now, we’re going to take the first-generation iPhone and activate it.
(If this is a used iPhone, then go to your nearest AT&T store and ask for a new SIM card (they’re free). Insert the new SIM card into your iPhone.)
Next, connect the iPhone to iTunes. Follow the iTunes activation process, and be sure to chose the option to upgrade from your existing phone. iTunes will then transfer service from the phone you received from AT&T… to the particular iPhone.
Step 3: Buy the iPhone 3G.
Now, by activating the first-generation iPhone on your account, that makes you upgrade-eligible for iPhone 3G. Upon July 11, you simply need to wait in line, flash your iPhone to the store representatives, and walk out the door with iPhone 3G for $199 (or $299 if you chose the 16 GB iPhone).
Step 4: Cancel service. (Optional).
For this, you will have to wait exactly 30 days. On the end of the last day of the first month, call AT&T and tell them you wish to cancel service. It may be best to do this after the local AT&T store closes in your area.
Why? Because AT&T has imposed a requirement that you return your iPhone within the first 30 days, if you wish to cancel service. So, we simply wait until it’s not possible to return the iPhone 3G on the 30th day. This prevents you from paying for a second month of service.
You will have to pay a $170 early termination fee ($175 less $5 pro-rated for the first month).
Step 5: eBay the first AT&T phone, and the iPhone. (Also optional).
Remember that phone that we bought from AT&T, before activating the first-gen iPhone? Well, to recover the cost of the early termination fee, and one month of service… we’re going to sell that first phone.
Now it starts to make sense why we suggested the HTC Tilt. First, it’s cheap. Second, it’s popular. And, third… it’s easy to unlock! Unlocking a phone easily adds $50 to $100 to the cost of a device like the Tilt, so being able to do it easily is just a free bonus.
Also the lack of a mail-in rebate means you don’t have to hold onto the device for six months to get part of your money back.
Finally, you can eBay the first-generation iPhone. Unlocking that as well will increase its eBay value.
The result? The “profit” in selling the two under-contract devices for a no-contract price on eBay will cancel out the ETF and the first month of service. Of course, based on eBay prices, which are variable… we can’t say with certainty that you will wind up with a net cost of $199 for iPhone 3G. However, it should come close.
Here’s the math, in case you’re wondering:
AT&T Tilt Refurb price with 2-year contract: -$99
Activation Fee: -$36
One month of service: -$70
Early Termination Fee: -$170
iPhone 3G 8 GB: -$199
Total Costs: -$574
eBay value of AT&T Tilt Unlocked: ~$380
$574 – $380 = $194… that’s less than the price for an iPhone 3G, and you now have no contract. You can then sell the iPhone 3G, or activate it on another line of service.
And, of course, there is one more thing.
We do caution that while this is kosher with AT&T policy, this guide will probably become very popular, very fast. It is possible that AT&T will impose a limit of today on iPhone owners to establish service, and be able to buy an iPhone 3G at $199/$299.
It is unlikely however, that AT&T will make such an announcement retroactive. So, sign up for service today and hurry up! It’s not likely that AT&T will allow this deal to continue for folks that activate iPhone after the 11th.
But, what about?
The most common feedback we received in testing about this guide was the following: “How am I going to do this with my iPhone that is already under contract with AT&T?”
Simple. Have someone else establish service with AT&T. You put your iPhone on their account, and they then upgrade from Tilt, to iPhone, to iPhone 3G. Legally speaking, you’re giving your iPhone to someone else for a week, and putting your existing AT&T account on another device (like, that super-cheap phone your friend just got from AT&T).
We aren’t here to debate the ethics of this procedure, we just figured it out, put it in motion, and are all doing it ourselves. The idea stemmed from the fact that folks at PhoneNews.com all use iPhone 3G on GoPhone Pick Your Plan accounts. This is something supported by iPhone, but AT&T has prohibited on iPhone 3G.
We will note however that iPhone 3G is the only device in the industry that is not for sale without a contract of some form, and that anti-consumer practice at launch is something we feel is unacceptable. While iPhone 3G will eventually be available without contract (and probably on prepaid as well), we feel it is not reasonable to prohibit such sales from day one.
I just set up AT&T service yesterday (at a corp. store) to be ready for the iPhone on Friday. I just got the cheapest flip with no rebate hassle, the Nokia 6085. Can I go into the corp. store, exchage for the refurb Tilt, then proceed with the plan? Or will the exchange for the Tilt lock me in?
Where is the best place to borrow or purchase an iphone?
Did I screw up in my eagerness to be assured an 3g iPhone next week with no signup hassles?
Note: The following only applies to Jason. He screwed up being “eager” and didn’t follow these instructions. Again, you need to order the first phone using the link in the article.
Your best bet is to cancel the account you just made and have someone else order the Tilt online. Basically, you’re following the instructions listed above, except you’re in the same boat as people that have an iPhone and 2-year contract already.
If you don’t know someone with a spare iPhone, you will want to call local AT&T stores in your area, they will continue selling stock until it is depleted. eBay is also option.
I’m not impressed. This feels like a new low especially with all the enthusiasm you’ve put into the “article”.
Kudos for finding this loophole. I think it’s a new high for PhoneNews.com. Excellent work!
I’m now on my way to getting an iPhone 3G for only $199. That saves me $200 I wouldn’t have otherwise!
It all just seems a bit pointless, I mean unless you really want to use your iPhone 3G on T-Mo. Otherwise you are doing a lot of work just to not sign a contract so that you can end up with a phone you can only use on the carrier you don’t want to sign a contract with.
Oh well, I do like loopholes 🙂
I was going to do something similar to this when ATT had the original Iphone–since they weren’t giving any discounts on the unit.
I was going to go to the store and buy a tilt….then sell it on Ebay and make about $150. Then I was going to take THAT $ and get an Iphone for $500.
I disagree with those who disagree with this loophole. ATT wins no matter what. They paid PEANUTS for these phones….trust me. In the end, ATT will get $ and the user will save $.
Thankfully, I’ll be switching from VZW, so I’ll be paying $299 for my 16gb–with a freakin ETF of $150
Once again, phone”news” does their best to sound like a legitimate news source but crashes and burns. Why not make people aware that your “link” is simply a referral link that will put a little $ in Christopher P.’s pockets. There’s nothing wrong with doing that; just make people aware of your reasons instead of just saying “TRUST US, everything will be screwed up if you don’t use THIS link! Don’t even go to att.com/wireless! It won’t work!”
if you were so authentic, why not start a post-paid at&t account to properly review their phones. instead, you “specialize”in pre-paid iphone coverage because you have a sprint account and probably can’t pass the at&t credit check.
this website is a joke. i look forward to seeing how long this comment is up before CP, a thief of journalism, removes it and blocks my IP. gain back some credibility and just state that your link is a referral link.
If you start an account with a discounted ATT phone no matter which one it is, then add a used iphone, it doesn’t make u upgrade eligible… your a new customer to att, not an existing one who’s eligible for an upgrade so your pricing is based off of that. Its easy to see that you already got a discount on a phone and in order to get the subsidized price for the iphone would require you to return the 1st phone…
What’s the reasoning that waiting until the end of the 30th day will make AT&T decide to let you keep the phone, anyway? It seems more likely they would just say that it was your fault for waiting until the store was closed and continue billing you for a second month of service since the phone hasn’t been returned…
Reply to willi:
The reason is that there is only a 30 day return policy on the phones. According to the policy you can’t return the phone after 30 days, which is why you get to keep it in exchange for paying the cancellation fee.
Reply to jack:
According to numerous sources, any customer willing to sign a new 2 yr contract is eligible for the rebate pricing on the iPhone 3G. You would only have to pay the higher prices if you were to not want a contract.
Via Engadget:
iPhone 3G will be available for $199 (8GB) and $299 (16GB) for iPhone customers who purchased an iPhone prior to 7/11, customers activating a new line with AT&T and current AT&T customers who are eligible for an upgrade
Existing AT&T customers who are not currently eligible for an upgrade discount can purchase iPhone 3G for $399 for the 8GB model or $499 for the 16GB model. Both options require a new two-year service agreement.
Actually, there’s an even bigger, easier loophole to avoid a contract with ATT.
I heard the messaging rates charge d on iphone are changing in August, or maybe on launch of the new 3G. If true this will work.
Get an old IPHONE, before 7/11, or currently have one.
Activate it and sign a 2 year contract.
On 7/11 upgrade to the new iphone.
The 2 year contract is the same and since it predates the launch of the Iphone 3g you have a special right, the right to cancel when ATT raises their text messaging rates on the Iphone.
Whenever a cellular carrier makes a material change to the rates you get a 30 day free cancellation window. *everyone* who has a cellular contract should cancel whenever they get the chance.
FWIW Tmobile put a bill stuffer in this months bill raising text messaging rates to 20 Cents per message for sending or receiving. So each Tmobile customer has 30 days from the effective date of August 29, 2008 to cancel free. You should do it. After you cancel you will be eligible for another subsidized phone since you have no contract.
Reply to Steevo:
That is true, but as soon as you walk through the door and upgrade and SIGN a new contract, you are signing that you accept the new T&C’s and you don’t have that right anymore. Anyone can do that currently, but you wouldn’t be able to upgrade to the iPhone 3G for the rebate pricing and then take advantage of that loophole.
there is no such thing as rebate pricing.. its either upgrade eligible (199/299), early upgrade (399/499), new activation (199/299). Doing the scheme as presented above is a new activation and in order to get the discounted prices requires you to return the originally discounted phone in this case its the tilt. Just because you activate a 1st gen iphone doesn’t change the fact that your still a brand new customer and doesn’t qualify you for an automatic upgrade since you have no account history or haven’t even paid a bill yet.
The iPhone isn’t at all impressive. It is the most convoluted peace of garbage and I don’t get what people see in it. The Neo Freerunner is not only cheaper, unlocked, contract free, but it also based on a completely free design. You can do whatever you want with it on any network!
It is a much sweeter deal too. Instead of the $600 you pay about $450 for the same thing once you add in the cost of an 8GB MicroSDHC card. Unlike the iPhone any application can take full advantage of its features too. For instance the applications you get can take advantage of the GPS built-in. You don’t have to pay absurd carrier charges for it either as the thing has built in 802.11B/G wifi. Over the course of 2 years you can save about $145($6 / month plan) on things like SMS charges too depending on where you live and what carrier you have. This is not to mention the monthly fee for normal phone service is going to be a fraction of the cost. You can still get Internet access too via the carrier if you want it.
http://www.openmoko.com/product.html
Some have asked why you would want an iPhone without contract.
I assure you, the thousands of iPhone hackers on the internet (here and abroad) would love to have an iPhone 3G without any contract tied to it.
Also, for current iPhone owners; following this process nets you an iPhone 3G on your original postpay account… which will now only have one year to go on the contract. If you’re not happy with the 3G coverage in your area, this is a great way to upgrade but still be able to cancel next year, sans ETF.
Finally, those that really benefit from this deal are those on an AT&T contract, but don’t have an iPhone. This nets them a $200 savings instantly.
P.S. Jack, the Neo FreeRunner lacks both EDGE (which the first iPhone had), and any UMTS/HSPA access at all. If you like Wi-Fi primarily, this deal isn’t for you… an iPod touch would be a more valid competitor. With the AppStore, you can use VoIP on the iPod touch, and that is a much more valid comparison to the FreeRunner. The FreeRunner is much more of a Linux development niche phone.
P.P.S. Jack, you are incorrect about the pricing. Using this process knocks you down to the $199/$299 tier, since being an iPhone owner forces AT&T to sell the device to you at the $199/$299 price point, something which we have covered previously.
The only reason it is stated that the link in the article must be used is because it is an affiliate link – the writer of this article receives cash for everybody he gets to purchase via the link – regardless of whether the tactics stated work.
Additionally, this is likely in violation of the AT&T affiliate agreement with Linkshare.
Mark, if this process stops working, we would certainly update our readers immediately. We put our readers before paying the bills. Plus, if it doesn’t work… you can just return your phones and cancel in the first 30 days! Then there’s no ETF.
Of course we, like every other member of the mobile media, use affiliate links when possible. We would have posted this guide regardless.
We are in full compliance with our relationship with Linkshare. We are not violating (nor are we even suggesting that customers breach) their Terms of Service with AT&T. Paying the Early Termination Fee is a legitimate end of the contract. It’s AT&T’s fault for overpricing the full retail price of iPhone 3G, and it’s as simple as that.
just fyi all the link they insist on using are add links wich pay them. but great guide nice if i had the money i did it so go ahead and have fun.
Dude… You didn’t even cloak your affiliate links!
Why the hell won’t Apple just sell the damned thing unlocked?
I wouldn’t buy it anyway but right now it is being used as a ‘carrot’ for people to put up with a carrier and contract they otherwise wouldn’t. There will probably be some announcement tomorrow with a small change to their agreement.
In response to “why would you want to do, you can only go to t-mo” t-mo is cheaper and can roam on att for free. T-mo’s plans are half att price and same net.
what kind of rate plans do we sign up with AT&T?
For the sake of argument, let’s say I can’t get an old iPhone… Say they’re sold out or something. Would the next best thing be to buy a new one on the 11th and cancel the contract before 30 days? Then I don’t pay the termination fee, supposedly, only the activation fee. So new iPhone with no contract=$299+$36=$335? Then things start to get hazy… What do I do after that point if I don’t want to sign up for an AT&T plan? It sounds like the new phone won’t work on T-mobile and GoPhone won’t be offered either.
Reply to aa:
You wouldn’t want to then. The point of this is to walk away with a new iPhone without a contract because: you have an existing line with AT&T and don’t want to extend the contract -OR- you are a developer and want to test applications without have another phone on a contract.
Dan H- thanks… I guess a new iPhone with no contract for $335 doesn’t sound bad? I could always resell it, maybe after unlocking it.
I’d keep it if there was a hack like with the old iPhone and the $6.99 Tmobile data plan. I mostly care about data.
2 things Friends don’t sell to to friends.
(1)- A FORD. iF You HAVE A BROTHER IN JAIL AND A BROTHER IN A FORD GO GET YOUR BROTHER OUT OF THE FORD FIRST.
(2) ANYTHING WITH AT%T
I work for AT&T and to due to proprietary reasons, I can not discuss much about the iPhone 3g prior to 7/11, but I can tell you that unless you get someone who doesn’t care about their job with AT&T when you go to cancel, this idea will not work. There are many rules in place specifically for canceling service if an iPhone 3g is on the account or in the equipment history of the account. Nice try, though!
I’ll be curious to see if this works, but I think there’s a glaring problem with your logic here. Apple has required that AT&T allow people to upgrade their existing iPhones, yes, but AT&T’s part of that concession is that when you upgrade the phone, you sign a two-year extension to your contract. Basically, Apple has required that every iPhone owner be considered upgrade-eligible, NOT that they be allowed to just purchase a new iPhone with their old service. At the very least, those of you looking to keep your old rates need to know that, since it’s not gonna happen.
Also, I don’t see why AT&T wouldn’t simply require you to ship in your phone when you call them. If you fail to do so, then they continue to charge you and treat your cancellation as null and void. I can’t imagine that they haven’t thought through the whole “phone cancellation” process.
Again, I hope it works for you all, (I’ll be getting mine the regular way,) but I seriously wouldn’t go through with this if you’re not prepared for the possibility of getting stuck with cancellation fees and no phone.
SO how much are you profiting off this guide? C’mon that link is from http://www.linkshare.com and promocode is clearly visible “PROMO=promo1470017”
you must be rich by now ;))
First, some are not reading the entire comments before posting.
So, we’ll repeat it again: Of course we, like every other member of the mobile media, use affiliate links when possible. We would have posted this guide regardless.
As to the “att employee” that says this will not work, we have read all the launch details issued… there is noting to-date issued that prevents this method from working, inside or outside of AT&T.
Finally, we’ve added a brief preamble to the guide, explaining the different reasons why you might want to embark on this process.
“The process only requires that you (or someone you can borrow) does not have active service with AT&T.”
But it also requires an old iPhone right? That seems like the more difficult requirement, seeing as they’re out of stock everywhere. I’d need to get one off Ebay and make *sure* it and the refurb Tilt got here before Friday. And the ones on Ebay aren’t cheap either, maybe because they already are unlocked 🙁
How I wish I leave at US 🙁
“We stress that you should use the above link and not order from a third-party store, for reasons that will complicate this guide (but trust us, order direct using the above link).”
You lost substantial credibility right there. How transparent!
“Of course we, like every other member of the mobile media, use affiliate links when possible. We would have posted this guide regardless.”
You regained none of it there. But if you’d wanted to regain some credibility, you’d have removed those affliate links. There are very serious flaws in your *theory* and while the suckers click away on your link and stuff cash in your pocket, they assume all risks (rather probability — it’s a virtual guarantee) that this will blow up in their face. But you’ve got nothing to lose by posting your misguidance, yet $omething to gain. Very clever. Very low.
Perhaps you missed where we said that most of the staff was doing this ourselves. We’re confident that as things stand, there will be no issue.
And again, worst-case, you just return the Tilt to AT&T and cancel service within the 30 days. No ETF can be charged in the first 30 days, so there’s really no risk here.
We have no plans to remove affiliate links. As we have said, we would have posted this guide regardless. We post affiliate links wherever relevant, so long as they do not interfere with the content in question. That is standard for most online media, look at the success of initiatives such as Amazon.com Associates.
Do we profit more from this guide than others? Sure. Would we have posted it anyways? Absolutely.
I hope that answers everyone’s questions on affiliate links. We will be deleting further comments on that debate, and directing posters to discuss about that in the forums. It is inhibiting discussion about the workflow that is reported on here.
Just a thought:
I’m not a lawyer, but I was under the impression that selling an unlocked phone was illegal (in the US, at least). This might cause some trouble for anyone selling an unlocked Tilt on eBay.
The phone’s firmware (which you’re exposing the world by unlocking it) is copyrighted material, protected by the DMCA, and thanks to a lovely clause in there, circumventing “protection” to access that firmware is illegal.
That sucks. Luckily, there is an exception that allows you to unlock phones (http://arstechnica.com/news.ars/post/20061124-8280.html). What I don’t know is whether that still applies when you aren’t unlocking the phone for personal use. I had thought selling unlocked phones was illegal, though I can’t find anything mentioning that now. Does anyone else know more about this?
[…] [via PhoneNews] […]
Sarten-X, you are absolutely incorrect in that it is illegal to sell an unlocked phone in the U.S. I direct you to Motorola’s online store for proof.
As far as unlocking the Tilt and then selling it, thanks to the Copyright Office ruling, anyone is more than allowed to unlock their device provided it can be done and it does not specify that it only be done for personal use. The DMCA does not apply to phone unlocking, nor does it affect unlocked phone sales at all.
People, don’t forget that you need to return the phone if you cancel within 30 days (as per ATT ToS).
all I can say is AT&T sucks ***. What a crappy company.
Motorola’s online store isn’t any sort of proof that an individual selling an unlocked phone would be legal. Motorola owns the copyright to the phones, so it can do whatever it wants.
The DMCA does apply to phone unlocking, at least in a strict sense (considering the firmware to be copyrighted material). That’s why the exception is there.
To quote the exception, from the Library of Congress:
“Computer programs in the form of firmware that enable wireless telephone handsets to connect to a wireless telephone communication network, when circumvention is accomplished for the sole purpose of lawfully connecting to a wireless telephone communication network.”
(http://www.copyright.gov/1201/docs/1201_recommendation.pdf, page 53)
This isn’t clear whether resale is part of that “sole purpose” or not. Again, not being a lawyer, I don’t know. Are there any references elsewhere that clarify this?
Where’s the mention of the cost of the original needed Iphone to pull this off? Doesn’t seem like the math adds up.
They seem to be going for $550-$650 on Ebay, depending on whether they’re new or not. Presumably you’d need to resell for that amount after the 11th. Need to factor in $40 or so for shipping and Ebay seller fees.
Forgot Paypal transaction fee… Maybe closer to $60.
Sarten-X, you can read our prior reporting on the recent unlocking clarifications using the search tool at the top of the page.
However, to hammer it home, it is generally accepted that SIM unlocking a phone is legal in the United States. If there was a controversy on that, we’d cover it, and advocate that SIM unlocking be made more clearly legal. It is our opinion (and the opinion of the Bush Administration) that it settled and moot.
There are some gray areas which the courts have yet to address (not that it’s clear they ever will), but the process involved on unlocking the HTC Tilt does not step into any of those areas. If you want technical clarifications on that, I’d suggest starting a new thread in the PhoneNews.com Forums.
As to not including the cost of the iPhone, we did that for a reason.
You can borrow a friend’s iPhone for using this process, and then give it back to them after July 11.
You only need to pay for an iPhone if you don’t know anyone that will let you borrow an iPhone for the process. Now, we’re not saying you don’t have enough friends… but…
[…] AT&T, Apple, General News We’ve updated our iPhone 3G buying-without-contract-for-$199 guide. […]
Was hoping this would be less convoluted. I don’t live in the US and wanted to bring a hacked iPhone home…
Chris – I’m on Verizon Wireless as part of myself and my wife having a family plan. Since I’m locked in until 2010 (she upgraded her phone this year) I was thinking about doing this process for an unactive iPhone + GPS for the car.
However, I wanted your opinion – do you think the new iPod Touches (perhaps announced in Sept?) will have GPS?
The iPod touch won’t have GPS as the Maps require an always-on internet connection (provided by 3G).
They can fix this loophole easily by only enabling one 3G upgrade per IMEI.