The dark satanic rumour mill has turned out a yarn that AT&T plans to offer iPhone 3Gs at $599 or $699 without requiring the customer to sign a new two-year agreement.

The rumour says that announcement will be made next week. AT&T said it planned to offer such a deal last year but it never happened. It seems that AT&T wants to get shot of its iPhone inventory ahead of a predicted new product launch later in summer.

Apple's hardware releases are usually every year around July and when they happen, Apple wants to get its users to upgrade quickly. The last thing that AT&T would want is shedloads of old phones that Apple will not do any marketing for.