AT&T, the No. 2 U.S. mobile provider, said the price cut would kick in on January 7 for the iPhone 3GS, which first hit stores in the summer of 2009. It said that in Apple stores the 3GS price would be determined by Apple itself.
Bigger rival Verizon Wireless, a venture of Verizon Communications and Vodafone Group Plc, is expected to start selling a version of iPhone early this year.
The price-cut news follows AT&T's announcement at the Consumer Electronics show on Wednesday that it is planning to sell 20 new high-speed wireless smartphones this year to lessen its dependence on Apple.
Verizon executives are expected to announce product plans at CES later on Thursday.
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