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Want to ditch AT&T for a Verizon iPhone? It may cost you

Mark Milian
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iPhone coming to Verizon?
STORY HIGHLIGHTS
  • Some AT&T customers may defect to Verizon now that the carrier is getting the iPhone
  • Buying out of a two-year AT&T contract costs up to $325, less $10 each month
  • AT&T customers will have to determine whether it's worth the cost to switch
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(CNN) -- Fans of the iPhone are practically foaming at the mouth at the idea of being able to use the popular Apple device on Verizon's network, which many consider the nation's most reliable.

Verizon Wireless held a much-anticipated news conference Tuesday in New York to announce a deal with Apple to begin carrying their version of the iPhone, which will go on sale next month.

So amid speculation of a mass exodus from AT&T, we wondered: What would it cost you to buy out of your AT&T contract?

That depends on when you signed up. But no matter how you cut it, it's not cheap. Here's a breakdown of what you can expect:

Remember that contract?

It's common practice for cellular carriers to require that customers sign two-year contracts when they buy new phones. They say the fee is used to subsidize the cost of the hardware and thus save people money upfront at the store.

For AT&T customers who want to jump ship, the early-termination fee costs $325 for those who bought a smartphone, including the iPhone, after June 1, 2010. The fee is prorated, so subtract $10 for each month you complete on your contract.

So let's do the math.

If you got an iPhone 4 for the holidays during the first week of December, it'll cost you $315 to get rid of it and switch to Verizon. But if you stood in line with the thousands of Apple fans on launch day in June, you can buy out of your contract for $265.

Still rocking an iPhone 3GS from summer 2009? Canceling that contract could cost $85. Why the big discrepancy? AT&T raised the cost of ditching a smartphone contract in June last year. Before then, it cost $175, prorated by $5 for each month completed.

Are your high-school algebra skills a little rusty? Try this handy widget for calculating AT&T early-termination fees, which CNN built with the help of Wolfram Alpha's development tools.

Thinking about jumping from AT&T to Verizon? Tell us why.

Oh, and if you get an iPhone on Verizon Wireless and don't like your service for whatever reason, it'll cost you $350 to get rid of that contract. That's good to know if you find that reception on the largest U.S. carrier isn't all it's cracked up to be.

Is Verizon worth the fees to switch?

Many longtime iPhone users view Verizon's network as the pinnacle of cellular service. But is the grass really greener?

"In terms of AT&T defectors, some of that will be human nature -- that whatever lane I'm sitting in in traffic is moving slowly and the other will move faster," said Michael Gartenberg, a consumer-technology analyst for Gartner.

Another question for Verizon: "As iPhone users proliferate on Verizon's network, will Verizon users have to deal with the same thing AT&T users are dealing with?" Gartenberg asked.

AT&T has been the exclusive U.S. carrier of the iPhone since it launched in 2007. In that time, the company has been plagued by accusations that its cell infrastructure is too weak to handle iPhone owners' heavy data usage.

In Apple-congested cities such as New York and San Francisco, iPhone owners have long complained of weak signals or dropped calls. (But maybe that's not AT&T's fault. Maybe you're just holding the phone the wrong way.)

But analysts have long wondered whether Verizon would have fared any better had that company gotten the iPhone instead.

Verizon says it's ready

For now the Verizon iPhone will not take advantage of Verizon's new 4G network but instead will use the 3G CDMA network, which is generally slower than AT&T's 3G network.

"The iPhone is built for speed, but that's not what you get with a CDMA phone," said AT&T spokesman Mark Siegel. "I'm not sure iPhone users are ready for life in the slow lane."

Because the new phone uses 3G, it won't be able to make voice and data calls at the same time.

Regardless, Verizon says it's ready for the boost in usage demand expected from iPhone customers. It's had time to study AT&T's stumbles and to test its network against data-hungry Droid users.

When asked about the rumored iPhone in an interview last week, Verizon Wireless CEO Dan Mead stressed the network is prepared to handle the type of high data load that an iPhone would require.

Are AT&T customers unhappy enough to bear the costs?

Even for those convinced that Verizon would provide a happier mobile life, the costs of switching can seem daunting.

AT&T added 5.25 million new Apple phones to its network in the three-month period surrounding the launch of the iPhone 4. "And that means that those folks have signed two-year contracts," Siegel pointed out.

At that time, AT&T allowed customers still tied to lengthy contracts to renew, which helped the carrier add the most new iPhones compared with any previous business quarter.

Besides the contract-cutter fee, people on family or business plans would have to abandon those cost savings to switch carriers. AT&T says 80% of customers using keyboard-and-internet-capable devices are on those types of plans.

Casual smartphone users can get a cheap $15 internet plan for their iPhones with AT&T. It wasn't clear Tuesday morning whether Verizon will sell the iPhone with an unlimited data plan, which would be more expensive. (AT&T recently stopped offering unlimited data plans.)

"The supposed impact of the loss of iPhone exclusivity has pretty much been vastly overstated," Siegel said. "We expect to keep the vast majority of our iPhone customers."

Gartenberg, the Gartner analyst, agrees that defections from AT&T won't be enormous.

"I don't think we're going to see a huge influx," he said. "If I just bought an iPhone 4, and I'm on a two-year contract with AT&T, I'd have to be pretty unhappy to break that contract to move over."

Where would Verizon iPhone customers come from?

So if AT&T customers don't end up leaving the carrier in droves, Verizon will have to find iPhone buyers from other places.

"I think what we're going to see, should the iPhone be on Verizon, is the years of pent-up users who have been waiting," Gartenberg said Monday. "The initial demand will be staggering."

Those people could be Verizon customers twiddling their thumbs with older, out-of-contract phones. Customers could also come from smaller networks, such as Sprint or T-Mobile.

"The iPhone has proved to be a super-iconic device," Gartenberg said. "Any network that doesn't offer the iPhone is going to be at somewhat of a disadvantage and is going to look for more devices and more ways to differentiate."

T-Mobile has taken aim at the iPhone in a recent ad campaign by criticizing AT&T. That gag won't work once the iPhone is available on Verizon.

Sprint Nextel takes a defensive approach.

"We do feel very confident in our product lineup right now," Teresa Kellett, Sprint's director of 4G, said in an October interview. "We feel very strongly about our Evo. We feel it can stand head to head with the iPhone."

[TECH: NEWSPULSE]

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