AT&T on Tuesday started selling refurbished Apple iPhone 3G smartphones for $50 less than new phones.

The used iPhones come in black or white and are available in both the 8-GB and 16-GB models. With a two-year service contract, the smaller model costs $150, while the larger one costs $250.

AT&T has made the phones available on its Web site for first time customers. People who currently use AT&T will have to go to one of the company's stores in order to upgrade to the iPhone. There's no guarantee the store will have refurbished iPhones.

AT&T and Apple this month made it possible for people to buy an iPhone 3G online, have it shipped to their home or office, and plug it into iTunes to activate the service. The service is available only to new customers and current AT&T subscribers who want to add a line.

People who don't activate within a certain time frame will be charged an early-termination fee.

Apple has been gradually expanding the number of outlets for the iPhone 3G since its release in July. While the original iPhone was sold only at Apple and AT&T stores, the 3G model also is available in thousands of Best Buy stores, and is expected to be sold at Wal-Mart stores soon.

During Apple's fiscal fourth quarter ended Sept. 27, the company sold 6.9 million iPhones, making the company the third-largest mobile phone maker in terms of revenue behind No. 1 Nokia and Samsung, Apple Chief Executive Steve Jobs told analysts during a conference call in October.