AT&T to sell new iPhone without contract in U.S.

AT&T will sell the new eight-gigabyte iPhone for $599 US without a contract. (Jason DeCrow/Associated Press)

AT&T Inc. will sell the new version of the iPhone in the United States without a service contract for $400 US more than the price with a two-year plan, a break from the rules set when Apple Inc.'s popular touch-screen gadget debuted last year.

Two new models of iPhones go on sale July 11 for $199 US and $299 US depending on the amount of memory, with two-year AT&T contracts. The no-contract versions will cost $599 US and $699 US and will be sold sometime "in the future," AT&T said.

Buyers would then go month-to-month on AT&T's service. AT&T said the no-contract phones would be "locked" to work only on AT&T's network, as the contract-laden phones will be.

The new iPhones will have faster data access and more accurate navigation capabilities. The cheaper model will have eight gigabytes for internal memory, half that of the more expensive model.

The first version of the iPhone was sold in the United States without a contract, but AT&T would activate it only with a two-year contract. Many phones ended up being "unlocked" from AT&T's network and shipped overseas.

Also Tuesday, AT&T revealed that the iPhones will go on sale at 8 a.m. local time on July 11. Last year's iPhone launch, which happened in the evening, had Apple devotees camping outside stores in anticipation.

In Canada, the iPhone will be sold only on a three-year contract from Rogers Communications Inc. and its Fido subsidiary.

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