AT&T to sell iPhone without contract for $599

AT&T Inc. is going to start selling iPhones without requiring a two-year contract, but they will cost $400 more than those sold with contracts.

Spokesman Michael Coe says AT&T will start selling the phones next Thursday for $599 and $699 depending on the memory capacity. The two models cost $199 and $299 under contract.

The Dallas-based phone company had said in July, when the latest version of the iPhone was launched, that it would sell contract-free phones in the U.S. Such phones are sold in some other countries.

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The new phones will still be "locked" to AT&T and won't work with any other cellular carrier unless they're modified. AT&T will only activate them on the regular iPhone plans, which include a $30 monthly charge for data access. Prepaid service will not be available.

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Apple Inc., the maker of the iPhone, has been selling the device from its stores and Web site, but would not say if it would sell the contract-free version.

Apple is widely expected to release a new version of the phone this summer.