The wonderfully low prices for the sexy new iPhone 3G ($199 for the 8GB model, and $299 for the 16GB) come thanks to generous subsidies by carrier AT&T - which will hurt the wireless operator's bottom line significantly, at least for the near term.

"AT&T Mobility CEO Ralph de la Vega says his company has signed an exclusivity agreement with Apple that has given AT&T the flexibility to drastically cut the price for the popular device and attract more users for its 3G mobile broadband services," writes Network World's Brad Reed. "Under the new agreement, AT&T will no longer share revenue generated by the iPhone with Apple, and will instead only give Apple upfront payments for the devices and will pay Apple a commission when a third-party retailer sells and activates the device within their stores."

In an interview with the WSJ's Amol Sharma, de la Vega said, "It seems like $199 is the right kind of price point to get significant mass-market adoption. It's going to impact earnings in 2008 and 2009 in a negative way, but will turn very profitable in the long term. We generate a lot of revenue from iPhone users, about twice as much as other customers. And I feel very confident that we're going to have very low customer turnover, based on what we've seen from the initial version of the iPhone."

More here from GigaOM ... more here from MacNewsWorld ... more here from the AP ... more here from the New York Times ... and AT&T's press release is here.