How does a 3 year cellphone contract work?

Question

Usually my Dad pays my cellphone bill but now I have to work for a phone. I want an iphone 3g from fido. (In Canada) It says:

$199 on a 3 year contract.

Answer 1

A phone is usually less expensive on a contract, meaning for those 3 years you have to keep your line with that company, if you want to cancel before the 3 year period you have to pay a fee, the fee depends on the company.

You can also upgrade later on to another phone for a discounted price on or before the 3 year period, BUT, to get the discounted price once again, you have to get another 3 years contract starting the day of the order.

Answer 2

The 3 year contract is a contract that you sign which simply says that you agree to keep paying them for phone service for 3 years. Legally they have to let you stop paying them, even if you sign the contract, but they almost always charge cancellation fees upwards of $150. The reason you have to sign the contract to get the iPhone is because they buy the phone from Apple for $400, then sell it to you for $200. In this process they lose $200, which they make up for in 2 years of you paying for phone service.