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Those looking to use an iPhone 3G with a PAYG plan from AT&T will be happy to hear this latest news, the iPhone 3G has been confirmed to work with a PAYG SIM card.

Of course this news comes with a little bit of good news and bad news. Its very nice to see that a “completely virgin iPhone 3G” will work as a PAYG phone, which means that all it will require is a simple switch of the SIM cards and that you will not have to jailbreak or modify the device in anyway. Now on the flip side, AT&T has not yet begun selling the iPhone 3G without a contract, which means that unless you hit the overpriced second hand market, the only way to get an iPhone 3G is by purchasing one which means you will be stuck with either a two-year agreement or have to pay that dreaded early termination fee.

So assuming you already have a contract free iPhone 3G or have an enterprising way to get one without shelling out the big bucks, then all you will have to do is get a PAYG SIM and make sure you sign up for the Media Net plan and enjoy being contract free.

[TUAW]