updated 3/19/2009 4:21:08 PM ET 2009-03-19T20:21:08

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.

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.

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.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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