The Street is reporting on a rumor today that AT&T is planning to drop the cost of the entry-level iPhone plan in the US from $69US per month to $59 per month. The suspected drop will take place when new iPhone models are released, as early as "...next month."

What's AT&T's motivation here? To attract price-conscious customers, woo Apple away from a rumored Verizon deal or simply clear inventory for the next-generation iPhone? As a person who's on this plan, I honestly don't care why -- I just hope it happens.

The change would trim $120/year off of the current plan, reducing the overall cost of the 2-year plan to $1,760. [The original $240/year mention was due to an editing error. -Ed.]

[Via The Apple Blog]

Will the iPhone be sold unsubsidized? That's the conclusion I'm coming to as I read between the lines of this AT&T Memo to Retail Managers. The money quote is this: "However, not all customers will be qualified upgrades. AT&T has not determined the price of the 3G device for non-qualified upgrades." If I'm reading this right, AT&T will sell off-contract iPhones at a yet-unspecified price.

If true, this is terrific news for anyone who wants to hack their iPhone and not be bound to an AT&T contract. It's also fabulous news for anyone who wants to upgrade to a new iPhone but doesn't live in a 3G-serviced area.

If historical prices are any indicator, off-contract phones could sell for a few hundred dollars above the subsidized price. At the very least, according to this memo, you can sign up for a contract, get the iPhone and cancel after 30 days, paying the early termination fee. After that, the iPhone is yours free and clear. I am not a big fan of this option as I do not like signing contracts that I do not intend to keep. Regardless, this is (a) legal; and (b) in compliance with contract terms.

Thanks, Ethan Hixson.

TUAW reader Rawheadz writes: "The money quote is that you DON'T have to return the phone after the 30-day return period, so long as you pay the early termination fee; so, essentially, the "unsubsidized" price for the iPhone 3G is going to be $199 + the ETF." To which I add, plus one or two months of service.

Other readers clarify that "non-qualified upgrades" refer to existing non-iPhone customers who have not yet finished their equipment terms and would be expected to pay a penalty for equipment changes.

Although I wonder if it would be cheaper just to buy a foreign iPhone, I'm still hoping that Apple sells them in-box unactivated at their store. And there's got to be some sort of developer solution that doesn't involve contracts for each development unit.

Here's some math from TUAW reader Mike:

$199    for iPhone 3G
$ 36    to activate
$ 80    approximate, one month service plus taxes
$170    Early Termination Fee

That adds up to about $485 + tax for a 8 GB ($585 + tax for 16 GB).

Within the last week, news that Apple and NBC had failed to renew their agreement for TV show distribution via the iTunes Store is undoubtedly big news. An NBC Universal spokesman has been quoted by the New York Times as claiming that the iTunes Store's raison d'etre "[The iTunes Store] is designed to drive sales of Apple devices at the expense of those who create the content that make these devices worth buying." In some regards, it is a fair point: Apple needs content to offer so as to allow it to continue marketing and developing new iPods.

But at what price? Setting a price at resale, or retail for that matter, and then raising it is not only unreasonable, but generally not accepted by us, the paying customer. In an age where we routinely put up with the demands of the networks and labels, and their interesting ideas on DRM, in order to legitimately obtain content online the prices that Apple touted as NBC's preference are simply unacceptable. Sure, variable pricing sounds fair, in theory, but cynics of NBC's supposed "variable pricing" (I include myself in this group) argue that giving the network carte blanche with pricing would not, in fact, lead to any cheaper content - such is the distrust held against the media companies.

Yes, the commercials say "2 Year Activation". Yes, I said that it looked like prepaid options were out of the picture. This came a few weeks after after we had heard rumors about prepaid iPhone codes. This evening, Christopher Price over at Phone News dropped me a note and we briefly chatted back and forth. He pointed me to an article he'd written about newly launched AT&T options for pay as you go customers.

Price thinks prepaid isn't dead despite what you see in those commercials. The new AT&T feature packages look as if they're ready to bring prepaid phone services to a new level. So 2-year-contract? No 2-year-contract? Prepaid? No prepaid? I'm just getting whiplash. What do you think?

Oh and by the way: that commercial Scott posted earlier today? Check out the very end and see if you notice...what's missing.

Update: Commercial is LIVE at Apple. No "2 Year Contract"--although the earlier commercials still say that.

Update 2: TUAW Reader Steve reports that he's not seeing the "2 Year Contract" line on the live repeats of the first 3 TV ads either. Can any other readers confirm that these have changed as well?

Update 3: TUAW Reader Gruff reports that the text is now missing from all the online Apple ads.

Over at iPhone Matters, Tanner Godarzi asks whether you'll be able to buy an iPhone without a new contract, speculating that stores with extra inventory may allow just that. I think that's pretty unlikely. The commercials clearly state "Use requires a minimum new 2-year activation plan". Godarzi also suggests that you might be able to add an iPhone to an existing AT&T contract, which sounds at least a bit more realistic to me.

Contract details, specifically the complete lack of them, continue to keep many possible customers away from making their purchasing decisions. How many people do you know who have said "I might get an iPhone--if it turns out I can afford it"? With rumors of $70 per month data plans, it could be a very expensive choice.

I found this latest contract-free iPod pricing rumor over at TechnoJunkie. The poster there writes that he (or she) popped into a Cingular store the other day and chatted up some employees about the iPhone. The employees offered that non-Contract iPhones would sell for $899 (4 GB) and $999 (8 GB) compared to the expected $499 and $599 prices with 2 year contracts.

I find this hard to believe. Would a couple of bored Cingular store employees have the inside info about pricing and conditions so long before the actual product would go on sale? Probably just guessing and wasting time before the store got ready to close.