A new recession hallmark: the pay-as-you-go iPhone

Next week, AT&T is expected to begin selling Apple's iPhone in the US without the required two-year contract.

A company spokesman told the Associated Press that the devices will cost $599 and $699 for the 8 GB and 16 GB models respectively, which normally cost $199 and $299 with the two-year contract. These iPhones will reportedly not be unlocked, and will still require an AT&T iPhone account to operate.

So what's the benefit of a no-contract iPhone if it's not unlocked? You can pay for it month-to-month without worry for the $175 early termination fee if you suddenly become unable to pay (or if you're an habitual early adopter of new phones).

The New Millennium Research Council released a survey yesterday indicating that prepaid cell phones are going to make a stronger appearance in the mobile device market if economic conditions persist. The group found that nearly 40% of those surveyed said they are now more inclined to cut back on cell phone expenditures by switching from a contract service to prepaid.

However, just as consumers are likely to opt for a prepaid service, they're just as likely to opt out of data and messaging plans.

"Thanks to the recession, the US cell phone marketplace is undergoing fundamental changes that will just get bigger as the economic downturn deepens," said Allen Hepner of the New Millennium Research Council. "What we see in these survey findings is clear evidence that most consumers will keep a cell phone during this recession, but only after shifting to less expensive cell phone plans, such as prepaid, and also by scaling back on cell phone extras including Internet connectivity and texting."