with telstra they have two levels of breaking contract. a pen1 (or first teir penalty) is when you are breaking your contract and paying it over the duration of the contract term. a pen2 (or total penalty) is where you're paying it all out in a lump sum. the bulk of contracts now have the pen1 (monthly installments) and pen 2 (lump sum) adding up to the same - and it can work out less than the value of the contract remaining (is usually worked out to cover the value of the phone - if you got a less expensive phone it will be less). if you got your phone in july last year, you'd have a fair amount of time left still.

do you have a cap phone plan (phone free) or a cap plan with phone replayment option (MRO) and were they doing the penalty for breaking the cap plan or the phone. if you have an MRO, all you'd be doing is paying out the value of the handset - your plan would be able to be recontracted without penalty