Following yesterdays rumour AT&T has confirmed that it will start selling iPhones without requiring a two-year contract, but they will cost $400 more.

Spokesman Michael Coe said AT&T will sell the phones starting next Thursday for $599 or $699, depending on the storage capacity. The two models cost $199 or $299 under contract.

The phone company had said in July, when the latest version of the iPhone was launched, that it would sell contract-free phones in the United States. 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.