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O2 Gouges Customers For New iPhone 3G S

Peter Judge has been involved with tech B2B publishing in the UK for many years, working at Ziff-Davis, ZDNet, IDG and Reed. His main interests are networking security, mobility and cloud

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When O2 starts selling the new iPhone 3G S in the UK on 19 June it will charge much more than it did for the iPhone 3G did when that arrived a year ago – and existing customers will have to pay dearly to upgrade to the new phone.

According to O2’s site O2 the new iPhone will cost £184.98 up front for a 16GB version on a plan of £29.38 a month. It will also be “free” if subsidised by an 18 month contract running at £73.41 a month, or a two year £44.05 contract. The 32GB model starts at £274.23 on the lower contract, and is only available for no upfront charge, on a massive 24-year contract at £73.41.

In America, the new iPhone came out at the same launch price as last year’s iPhone 3G, but with twice the memory, according to ZDNet’s David Meyer, with the 32GB costing as much as last year’s 16GB.

O2, by contrast, has added a 72 percent increase (£115), to last years 16GB price on the lowest tariff, to get this year’s 32GB price, and an 87 percent increase on last year’s 8GB model for this year’s 16GB device.

“One explanation for the higher new prices could be the strengthening of the dollar against the pound since last year’s launch,” says Meyer, “but that would only account for an increase of around 25 per cent”. O2’s standard form response is that it is subsidising iPhones less now than it used to.

Meanwhile, The Telegraph reports that O2’s existing iPhone customers are outraged at the price of upgrading their contract – requiring them to pay for the entire remaining time on the existing contract, as well as for the new phone. One user has started a petition.

One comment to Meyer’s story suggests another possible explanation: perhaps O2’s exclusive contract with Apple, originally scheduled to run till 2011, could be about to run out. “Is this behaviour that of a company about to lose a lucrative contract and who is trying to get as much money from its customers knowing it is going to lose them?” Asks the reader.

Apple could terminate the O2 agreement early, it has been rumoured, to get more sales through multiple agreements. Meanwhile, O2 is rumoured to be seeking an exclusive deal on the new Palm Pre.