Contract-Free iPhones Coming Next Week

If you’ve been dying to get your hands on an iPhone but don’t want to deal with a pesky contract, you’re in luck. Starting next week (March 26 to be exact), AT&T will offer contract-free iPhones. The 8GB iPhone will run you $599, while the 16GB model will cost $699.

We’ve known about a no-contract option since the iPhone 3G was introduced last July, but this is the first time the phone is officially being offered without a commitment. In addition to being free from the usual two-year contract, customers who purchase the contract-free iPhone can also activate it at home using iTunes rather than at the AT&T store.  AT&T is restricting the no-commitment price to existing customers who want to add a line, purchase a gift, or upgrade their phone.

Even though these phones are being offered as contract-free, they aren’t unlocked. In fact, you’ll still be required to activate the phone with AT&T in order to use the cell phone service. (Of course, hacks are available that will let you use the iPhone with a different provider, but they’re not approved by Apple or AT&T.) Without activation, the phone basically operates as a marginally beefed-up iPod Touch. Once activated, the iPhone’s service will be on a month-to-month basis with AT&T.

A contract free option may sound good to some, but let us consider this: AT&T’s early termination fee for the iPhone’s two-year contract is currently $175. For that price, it’s possible a person could sign up for a month’s worth of service and then cancel. Even after activation fees and 30 days of service, you may still be ahead in the long run. Of course, the phone would still be locked to AT&T’s network.