Like most smartphones, iPhones are sold with a 2-year contract here in the States, the cost of which is used, in part, as a subsidy to reduce the initial price of the phone. Those wishing to escape their ongoing contract must pay an early termination fee, which starts at a certain price and decreases monthly. AT&T's starts $325 and drops by $10 per month.
Dislike math? Me, too. Fortunately, there's a great Wolfram Alpha widget that works it out for you. Still, here are some quick numbers for reference. Those who received a shiny iPhone 4 for Christmas ought to keep it, as they'll pay $315 at this point. If you stood in line last June as I did, you'll pay around $256 to switch.
Those of you still using an iPhone 3GS can switch for just $85. Not too bad.
Is it time to switch? Hold your horses, Texas Pete. This announcement is only a few hours old. Let's wait and see how AT&T responds. Remember, they haven't had to compete for sales of the super-popular iPhone within the U.S. before, and many geeks are beside themselves at the thought of their Precious on Big Red. AT&T may offer incentives to stay on its network. In the meantime, your termination fee is only going to go down, and you'll give case manufacturers time to design something that will fit your Verizon phone. Unless your local AT&T coverage is absolutely abysmal, we say exercise a little patience.
Finally, try to cover the cost. In this case, a new carrier also means a new iPhone (and probably a new case). Consider selling your current model to help offset the dollars flying from you wallet. Sell Your Mac and NextWorth are two good resources. At the very least, you might make up for that pesky termination fee. For our complete guide on how to sell your iPhone, look here.
*Verizon is currently in the process of acquiring AOL, Engadget's parent company. However, Engadget maintains full editorial control, and Verizon will have to pry it from our cold, dead hands.