You’d think that having 5 major operators in the US would be good for competition. But international pricing on the iPhone would prove you wrong.

The upcoming 3G iPhone will go on sale at AT&T for $199. But that same device will be given away for free in the UK, and costs just 1 Euro in Germany.

The concept of free phones is nothing new in Europe, which is probably why the original iPhone wasn’t much of a hot seller. But when you start giving them away, things will be quite different for Apple.

In fact, resellers in some countries have had to resort to  free gifts in order to convince people to signup. And these gifts are not the kind you’d expect in the US (chip clips and caps). It’s not uncommon to get a free laptop of LCD TV when you signup for a 2 year contract.

The UK "free" iPhone plan costs $89 / $149 depending on your usage:

The $89 plan on O2 in the UK gets you 1200 minutes and unlimited data (cellular and Wi-Fi using a nationwide Wi-Fi network). The $149 plan has the same features, but comes with a whopping 3000 minutes. The UK plans come with free text messaging (up to 500 messages per plan), the new AT&T 3G iPhone plans no longer come with any free messages.

The AT&T 3G iPhone plan costs $69 for 450 minutes, $89 for 900 minutes, and $109 for 1350 minutes. The UK plan has the advantage of only locking you in for an 18 month contract, AT&T only offers 2 year deals. So, once again US customers get the worst deal possible.