AT&T to Offer iPhone Without Contract

Updated from 10:20 a.m. EDT

AT&T (T) announced additional pricing details for Apple's (AAPL) next-generation iPhone, which the company will begin selling next week, including the disclosure that buyers will have an option to purchase the device without a contract.

AT&T reaffirmed that it will offer the 3G iPhone at a subsidized price to subscribers who are activating a new line with the wireless provider or to current customers who are eligible, at the time of purchase, for an upgrade discount. Those subscribers can buy the iPhone 3G for $199 for the 8-gigabyte model or $299 for the 16-gigabyte version. Those prices require two-year contracts, AT&T said.

Existing AT&T subscribers who don't qualify for an upgrade discount can purchase the iPhone 3G for $399 for the 8-gigabyte model or $499 for the 16-gigabyte device. Both options will require a new two-year service agreement. Current AT&T customers who are upgrading to iPhone 3G will pay an $18 upgrade fee and new AT&T customers will pay the standard $36 activation fee, the company said.

AT&T also divulged the unsubsidized cost of the iPhone 3G, saying it will offer a no-contract-required option for $599 for the 8-gigabyte iPhone or $699 for the 16-gigabyte "in the future." Previously, both Apple and AT&T had not announced plans to sell the iPhone 3G without a service contract.

Shares of AT&T were lately down 1.8% to $33.09. Rival Verizon (VZ) was losing 0.2% to $35.34. Sprint Nextel (S) slumped 9.3% to $8.62.

iPhone maker Apple (AAPL) saw its shares gain 1.9% to $170.68. BlackBerry manufacturer Research In Motion (RIMM) was adding 1.5% to $118.73, and Palm (PALM) gave back 4.1% to $5.17.

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