O2 Under Fire for iPhone Pricing

1:30 PM -- While American iPhone lovers are annoyed at not being able to use the new and improved 3G device as a laptop modem yet (aka, tethering), their fellow fans across the pond are spitting mad over the prices operator Telefónica UK Ltd. plans to charge for the speedier devices. (See Apple's New Speedy iPhone.)

It is possible to get the 16-Gbyte version of the Apple Inc. (Nasdaq: AAPL) device for free, if you're prepared to lock in to a 24-month contract paying at least £44 (US$72) per month. Otherwise, on an 18-month contract at £29.38 ($48) per month, the 16GB device will cost £184.98 ($301). The version with 32 GB of storage will cost £274.23 ($446) on an 18-month contract at £29.38 ($48) per month.

According to Trusted Reviews's Gordon Kelly, the new prices are "ludicrous, barmy, batty, recession-timed-madness."

On top of all that, O2 will charge extra if you want to use your new iPhone as a modem with your laptop. It will cost £14.60 ($24) per month for 3 GB and £29.36 ($48) per month for 10 GB, which are the same prices that O2 charges for mobile broadband use via dongles.

And if iPhone owners want to upgrade to the newest, faster 3G model, they will have to pay up to the end of their monthly contract before they can purchase a new device. O2 is doing away with the early upgrade program it had in place for the first versions of the iPhone.

— Michelle Donegan, European Editor, Unstrung

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