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AT&T to sell new iPhone without contract for $400 extra

NEW YORK (AP) -- AT&T Inc. will sell the new version of the iPhone without a service contract for $400 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 and $299, depending on the amount of memory, with two-year AT&T contracts. The no-contract versions will cost $599 and $699 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 8 gigabytes for internal memory, half that of the more expensive model.

The first version of the iPhone was sold in the U.S. 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.

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