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Pretty sure it wasn't with the introduction with the iPhone 4 since I remember checking early upgrade pricing during that time and it was still $499/32GB. Besides, I don't think Apple released full MSRP for the iPhone back in those days. The first iPhone released factory unlocked in the US was the iPhone 4S so I think your first statement is correct.

Retail price of the iPhone 3GS was 599/699
Retail price of Verizon iPhone 4 was 649/749

So if it wasn't at the iPhone 4 launch, it was at the iPhone 4 Verizon launch and then it changed across the board.

There was always a full retail price because you could purchase the phone without an upgrade. Just because it wasn't unlocked didn't mean you couldn't buy it full cost without signing a contract. It was called the "no commitment" pricing.

iPhone 3GS
https://forums.macrumors.com/threads/717252/

iPhone 4:
https://community.verizonwireless.com/thread/601170?forceNoRedirect=true

After doing more research it turns out that for AT&T, the retail price went up to 649/749 with the introduction of the iPhone 4S. But like stated above, with he introduction of the Verizon iPhone 4, retail price went up for the iPhone 4, but that was strictly Verizon. So in a way we are both correct.
 
There was always a full retail price because you could purchase the phone without an upgrade. Just because it wasn't unlocked didn't mean you couldn't buy it full cost without signing a contract. It was called the "no commitment" pricing.

iPhone 3GS
https://forums.macrumors.com/threads/717252/

iPhone 4:
https://community.verizonwireless.com/thread/601170?forceNoRedirect=true

After doing more research it turns out that for AT&T, the retail price went up to 649/749 with the introduction of the iPhone 4S. But like stated above, with he introduction of the Verizon iPhone 4, retail price went up for the iPhone 4, but that was strictly Verizon. So in a way we are both correct.
I know about the no commitment pricing from AT&T but carriers so often inflated cellphone pricing that I didn't really consider it as MSRP from Apple. In hindsight, I guess that it was.

Didn't really pay attention to Verizon prior to the iPhone 5 with LTE. I had a Verizon MiFi before and where I needed it, 3G was just 1Mbps down at best compared to 5Mbps from AT&T not to mention it often dropped down to 1xRTT.
 
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