There must have been some sort of "out" for Apple in their contract with AT&T. I've never seen a contract without some sort of early termination section. (I'm not a lawyer, but I work with them on business contracts often.)

It must be a prohibitively large dollar amount for Apple to end the agreement early, which is surprising since I think it's been far more successful than anyone could have imagined -- so I assume what would have at launch seemed like a ridiculous sum would now be quite affordable for Apple to remove the 100lb gorilla in the room.