He mixed up locked and no-contract. AT&T will offer "no-contract" phones for $599/$699 but they will still be locked to AT&T. You can use a different plan or

He mixed up locked and no-contract. AT&T will offer "no-contract" phones for $599/$699 but they will still be locked to AT&T. You can use a different plan or pre-paid, as long as it's from AT&T. If you cancel, it's still cheaper than buying a no-contract phone, but you can't use another carrier (until the jail-breakers figure iPhone 2.0 out).