How do I cancel service on an iPhone while still keeping the phone?

I want to cancel the contract I currently have with AT%26amp;T, but I want to keep the phone I currently have, without the contract. I called AT%26amp;T, but they said that to cancel the contract I would have to return the iPhone, since I unlocked the iPhone, I need to keep it. How am I meant to cancel the contract?|||call at%26amp;t|||if its a prepaid card u could get the sim out of the iphone