O2 plans free iPhone 3G upgrade and pay-as-you-go?

O2 is planning to hatch a series of attractive propositions to boost 3G iPhone sales in the UK, according to Macworld UK’s sources.

Macworld sources claim the device will cost £100 and be sold with an 18-month contract, but Apple’s UK network partner may harbour deeper plans for the launch of the device. Including free upgrades, free phones for high-tariff users and pay-as-you-go deals.

We have heard that O2 may sell the iPhone in the UK on a pay-as-you-go basis, offering the device contract-free at the same price as the preceding model, £269.

It is also rumoured that the iPhone will be offered for free to new customers signing-up to the most expensive tariff. That’s currently the £75 per month tariff that offers 3,000 minutes of calling and 500 texts.

And, in natural Apple style, there’s one more thing: Existing iPhone customers will be offered the chance to upgrade their mobile to the new model without charge – though they will be obliged to sign-up to another 18-month contract.

Some users may prefer not to do this, instead choosing to Jailbreak their older iPhone for use on other networks, handing on to friends or relatives or even selling the device on eBay.

This all seems to make a lot more sense as we have stated before, the mobile phone business model in the UK is based on highly subsidised handsets to entice you to sign into a long term contract. The idea of signing that contract and paying a high price for the handset does not sit comfortably which is why the iPhone has not been the success Apple had thought it would be in the UK.

via Macworld