My neighbor said that if you don't buy the 2 year contract the phone would cost $400
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Hey, yes you can indeed, but your neighbor is just simply right because the other way the phone cost about 500 dollars the contract it would be around 100 or free depending on the contract and policy of the company your buying it from.
I'm afraid that you can't do that. When the first iPhone came out AT&T had a contract with Apple that the iPhone was supposed to push customers onto AT&T's service. Since the phone could be purchased without contract it was simple for people to jailbreak the phone and get the iPhone on any service which was breaking Apple and AT&T's contract.
Yes, but looks like ATT has put a hold on this for now..
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