New iPhone Can Decouple From AT&T, for a Price

Apple's popular iPhone can be yours, no contract required. But there's a catch -- and a pricey one at that.

AT&T yesterday announced that it will offer the smartphone to people who want to use another carrier, starting at $599.

The iPhone 3G, scheduled for a July 11 release, will be available for $199 to new AT&T customers or existing customers eligible for an upgrade -- under a two-year contract. The larger-capacity 16-gigabyte model will cost $299 under the same conditions.

For those looking to use another carrier, the 16-gigabyte version will cost $699.

Apple pitches the two new iPhones as having far faster Web speed than their predecessors because of their faster wireless network technology, called 3G, for "third generation." Other features, such as the phone's built-in camera, are unchanged.

AT&T also released details of its new monthly pricing plans, drawing complaints at news and technology Web sites yesterday, where potential customers crunched the numbers on the new costs.

Last year, the lowest monthly rate for the iPhone was $59.99 under a plan that let users receive 200 text messages. This year, plans will start at $69.99, and text-message users will have to pay extra for that service, from $5 to $20 per month. Users can also opt to pay 20 cents per message, according to AT&T.

Consumers went online yesterday to debate whether the new pricing plan was a deal-breaker.

"Was going to join the line at midnight," wrote one commenter responding to a Washington Post blog post about the price plans. "Now won't get one at all."

"I will just have to swallow the price hike," wrote another.

Analyst Tim Bajarin, with the Silicon Valley-based research firm Creative Strategies, said the phone's lower prices "will open a floodgate of mainstream consumers" who will buy the device. The original iPhone, with eight gigabytes of storage, debuted a year ago at $599. One year later, it's easy to see Apple's ongoing impact on the smartphone market reflected in some new phones that appear to have taken design cues from the iPhone. Samsung, for example, has just introduced a phone called Instinct that resembles the iPhone and offers a similar set of features.

Though the main new feature touted by Apple is the phones' high-speed Web connection, Bajarin said a new wave of software applications for the device might be more significant than the lower price tags. A new Apple online store that will offer downloadable applications for the iPhone is scheduled to open soon.

A concert promoter, for example, might be able to peek into a user's iTunes collection and send a promotional notice if a favorite band is coming to town. IPhone users also might receive specific news or sales offers based on where they are located geographically, thanks to other software tools and services currently in development.

"The applications that are being developed for it cause you to completely rethink what a cellphone can and should do," Bajarin said.

Video game companies are designing new titles for the device as well. Bajarin said he is impressed by what he has seen so far. "The games on it are phenomenal," he said.