So Assume someone got a iPhone 3G on July 11 last year (launch day). That's 11 months So AT&T's Early Termination fee is $175 - ($5 * 11) = $120 So pay the $120 and port your number to a cheap pre-paid. Then once you've paid the fee and closed the AT&T account go back as a "new" customer and get the $200 discount! I left my last cell phone provider and moved to a new one simply because when my phone died with 6 months left on my contract it was cheep to break the contract and buy new phones with a discount at a different provider then to replace the broken phone. I figure using this method people could save $80 (but it may mean being without a working iPhone for a couple of weeks). As a side note, about a week after I ported the numbers I got a mailing from the original provider offering me the "2-year contract price on new phones" and 10% off my old plan if I would come back. Not sure if AT&T does this, but after you port the number you my find them willing to play ball to get you back, but YMMV.