Still Cheaper to Get an iPhone by Canceling Your Verizon Contract First

Last Thursday I attempted to pre-order a Verizon iPhone, but changed my mind after calculating the cost to cancel and start over was substantially cheaper. This morning, I tried again to buy an iPhone under the general public release, but balked when Verizon's web estimator said it wouldn't ship until February 18 (hey, would you wait?). So tonight, or rather tomorrow morning early, I'll take my place in line and give it the old retail go.

For those new to the story, last week I discovered it'd be cheaper for me to get an iPhone 4 with Verizon by canceling my existing contract and starting over with a new one. If you're an existing Verizon customer without upgrade options, you're stuck paying full retail price: $650 for the 16GB iPhone or $750 for the 32GB iPhone. By contrast, new customers pay $200 or $300, respectively, for the same phones.

I ported my Verizon phone number to Google Voice. It cost $20, took about 24 hours, and automatically canceled the number with Verizon. I've been forwarding the number to my Skype line and handling calls with a bluetooth headset and laptop. Once I get the new Verizon iPhone, I'll simply forward calls to the new number. In fact I plan to leave the old number with Google for business calls and keep the new one for personal-only, because I'm surprised and impressed by just how well Google Voice works (hey, it even lets me screen calls for free).

I canceled my Verizon contract and paid the $135 termination fee. It's actually $175 for standard phones, less a prorated amount that's based on how many months you've completed of your contract. I signed up with Verizon in April 2010. That translated to $40 off the ETF as of January 2011. Note that advanced phones, i.e. smartphones, have a much higher base ETF of $350, so if you pursue the cancel/restart option, be sure you've checked your numbers--your mileage may vary.

I can sign up as a new customer tomorrow, no problem. There's a rumor going around that Verizon won't let you sign back up for 60 days if you cancel early. This rumor is false, possibly stemming from a related policy whereby Verizon says it can take up to 60 days to return your security deposit (if you paid one--I didn't). I spoke with a Verizon representative this morning who clarified this: So long as your account was closed in good standing (all fees paid, no outstanding balance) you can sign up for new service immediately.

I'll save $260 by canceling and restarting instead of upgrading. It's pretty simple, really. I pay $20 to port my number to Google Voice for safekeeping, the $135 ($175 minus $40) Verizon contract early termination fee, and $35 to activate the new line. If I pick the 16GB iPhone, that adds up to $390 out of pocket, compared to $650 had I upgraded under my old contract--a remarkable savings of $260. You'll save more or less than this depending on your phone type and ETF prorate.

Canceling your contact is both ethical and Verizon-legal. Contracts have cancellation terms for a reason. If you want out, you can have out for a price. In some cases that price is going to be prohibitive, in others less so. There's nothing dishonorable about availing yourself of your contract's full terms and conditions--including those that allow for its dissolution.

Last thing, then I'll let you go. Why am I buying an iPhone 4? To play games, mostly. Personal information management, definitely. Phone service, sure. Data access, you bet. And yeah, having all that packed into one device definitely beats picking up an iPod Touch and carrying around two. But mostly I just want in on the handheld gaming scene, and the games I most want to play are only on the Apple Store.

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