Report: Apple May Offer iPhone 3GS For Free Under Contract When iPhone 5 Comes Out

According to a research note from RBC Capital, customers who sign up for a two-year contract may be able to score an iPhone 3GS for free in September, when the next version of the iPhone is expected to be released.

CNBC cites the research note that says the approach would be intended to counteract Android devices’ heft in “mid-markets,” meaning customers who like to score outdated technology on the cheap rather than pony up big money for the latest and greatest. You can currently find the 3GS through AT&T for $49.

The RBC expects the next iPhone to cost between $199 and $299 on contract, causing the usual domino effect that reduces the prices of previous models, including the iPhone 4 to $99 on contract.

For American customers, the “free” 3GS is only good news for AT&T customers, because the phone doesn’t work on Verizon’s network.

Apple May Offer Older iPhone for Free in Fall: RBC [CNBC]