AT&T To Offer iPhone 3G With No Contract
 

Starting March 26, AT&T (NYSE: T) will offer the popular iPhone 3G without a contract and with no activation fee, according to the Boy Genius Report.

But not having a contract will come with a price, as the 8 GB model is expected to cost $599, and the 16 GB version will be $699. The report said the no-contract option will only be available for existing AT&T customers; AT&T has not responded for comment as of press time. Prior to the iPhone 3G's launch, the mobile operator did announce there would be a no-contract option, but it did not specify a timeframe.

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If the phone is locked to the network what's the point?

The ability to cancel, without any penalties. I'm already out of contract with my first generation Iphone.

Well some people unlock the phone and can use on a GSM network, but wouldn't it be cheaper though if you buy it at $199 8GB, then pay 175$ break contract fee,

Some people also take them out of the country, or give it as a gift. Easier to do this, before if you wanted to give it as a gift you would have to go with the person have them sign a contract. Ruins the mood of gift giving.

I just got mine Monday, I like it so far.