If I understand correctly, if you get an iPhone and sign up for a 2-year contract with AT&T, you can break the contract after 1 year and pay the ETF ($325-$120=$205). Could you then get a new iPhone with a new 2-year contract and still get the subsided price? In other words, you pay $200 up-front, pay $205 in ETF a year later, you've essentially paid $405 and after 1 year have an unlocked iPhone that, if you had bought it unlocked a year earlier would have cost $650. Am I missing something? Is there any downside (other than paying the ETF) in doing this? It seems as though people who want a the latest hardware every year would benefit from the above, rather than buying an unlocked iPhone for $650... If I am incorrect about any of the above, please educate me. Would there be other negative consequences from doing this?