Apple has reportedly allowed Telecom Italia Mobile (TIM) to sell unlocked iPhones without the mandatory 2-year service contract.

TIM Chief executive Franco Bernando apparently persuaded Steve Jobs to change Apple’s typical business model of signing a 2-year contract with a single carrier that would sell the iPhone exclusively, and split revenues with Apple. As a result, TIM would be able to offer the upcoming 3G iPhone with no carrier restrictions, making it more palatable to Italians, who are among the largest users of pre-paid plans.

Telecom Italia would

have exclusive rights to sell the iPhone for the first 6 months upon its release. As a tradeoff, the 3G iPhone is expected to have a higher price tag in Italy compared to other countries.

iPhone carriers in Europe has recently reduced the prices for the Apple device, fueling rumors that these providers are draining inventories as preparation for the launch of the faster iPhone, which is likely to ship by June.

Apple repeatedly stresses that it aims to sell “at least” 10 million iPhone by the end of 2008.