• http://web.mac.com/jamesburland/Nokia_Creative/ James Burland

    Excellent post. It certainly helped me clear things up in my own mind regarding upgrading on the 19th.

    I have a feeling O2 will have to change their policy for up-graders, especially if they want the kudos (and sales) associated with a big launch day.

    I should imagine quite a number of up-graders will bight the bullet and go PAYG this time, if only to avoid the same issues come June 2010. Unfortunately, that won’t be an option for me, it’s just too expensive.

  • Mark Cooke

    Easiest way to get the new phone would be to pay the payg cost of the handset and move ur current contract iphone sim onto the new phone, sell the old iphone for maybe £100+ not sure of the current market value, then come next summer u could purchase a new contract with the new version if u so wanted.

    Althou £440.40 and £538.30 is a lot of money for a handset locked to o2.

    Thou im sure it will be on play.com soon enough unlocked

  • CYMR0

    Excellent post!

    I agree, I am going to hold off upgrading in December until June 2010, and who knows perhaps there’ll be an awesome android handset by then??

  • tri fin

    Thanks good post!

    I can’t justify the cost :( How ever much I ‘need’ it.

    Does anyone really think O2 will change their minds and offer a reasonable upgrade path? I think they should but I don’t think they will.

  • airmanchairman

    I’m hoping James Burland is right in predicting that O2 may relent in their steep rates for upgraders, as it is my intention to upgrade ASAP, and keep my iPhone 3G as well.

    The musical, optical and networking capabilities of these devices coupled with the amazing brilliance of App Store developers open up a fascinating world of possibilities for all manner of interesting uses far beyond the iPhone’s main function as a telephone…

    O2 would do well to anticipate the future and not let short-term profit madness get in the way of a long-term treasure trove…

  • http://www.allaboutiphone.net Matt Radford

    @Mark Cooke

    I see a lot of people are tweeting about doing just that. You can sell your unlocked 16Gb iPhone 3G for about £300 on eBay, so that would mean it would cost you another £140 to upgrade to a 16Gb iPhone 3G S.

    However, you’re right. You would still be stuck with a phone that’s locked to O2. The fact that they won’t allow you to legally unlock *your own phone* at the end of your contract is disgraceful. Unlock using Yellowsn0w from the iPhone Dev Team (http://blog.iphone-dev.org) instead.

  • http://www.usablecontent.co.uk Gerry White

    I am seriously considering going the Android route next time round, I love the iPhone – but lets face it, it is a bit too expensive…

    What I don’t get is that 8gb SD memory card (inc. micro ones) is about £10 how come we have to pay that much more for a small increase in memory …? I am missing something for sure.

  • Jamie

    You might like to check some of the maths on the “Total Cost of Ownership (over the length of the contract)” table. It seems to be the 18 month contract row that is incorrect, it looked abit dubious at first glance, being that a £45 ish contract is cheaper than the one previous (£35). Even o2 arent that silly yet.. nor am i that lucky!


  • http://www.allaboutiphone.net Matt Radford

    Thanks for pointing that out Jamie. Just to clarify, the error was in the 32Gb iPhone 3G S 18 month line, specifically the £44 and £73 tariffs. These have now been fixed. Apologies.

  • Alex

    The TCO as calculated is not a useful comparison between 18-month and 24-month contracts. It should compare the cost of owning and using the iPhone over the same period, but is comparing 18 months against 24 months. Calculating both over an ownership period of 24 months unsurprisingly results in the 24 month contract being approximately £100 cheaper – a benefit that increases with longer ownership.

  • http://www.allaboutiphone.net Matt Radford

    I understand what you’re calculating, but respectfully, its not the same thing. I’m working out how much it’ll cost you over the contracted period. After you’re out of contract, you can do what you like with the phone, although if you want to keep using it albeit on a different network, you’ll have to find a way of unlocking it.

  • Gerry White

    What is most depressing is that it is only guaranteed for ONE YEAR, so if your contracted for longer, that is not fair …!


  • http://alsutton.wordpress.com/2009/06/09/is-the-iphone-3gs-a-rip-off-in-the-uk/ Al Sutton

    You missed a trick here; If you’re not bothered about Wi-Fi you can get a PAYG iPhone and a £19.58/month Simplicity 12 month SIM-Only tarriff which gives you the option of upgrading to a new iPhone if a new one comes along next June without any contract pay-off costs with a 12 month TCO of £674.36. Over 18 months the TCO is £792.84 and it gives you 200 mins & at least 300 texts a month more than the iPhone tariff.

    You can check the calculations in my blog at http://alsutton.wordpress.com/2009/06/09/is-the-iphone-3gs-a-rip-off-in-the-uk/

  • http://www.allaboutiphone.net Matt Radford

    True, that will cut the cost down. Personally though, I use the iPhone for data more than voice or text, so the unlimited data is important. That’s not the case for everyone, but the internet-connected aspect of the iPhone is one of the main selling points.

  • http://www.allaboutiphone.net Matt Radford

    Oh, and nice post on your website BTW :)

  • David Burdon

    New details on the O2 website some people can upgrade 6 months early.

    Check out O2 site.


  • solomon

    hi apple people! yeah the price is ridicuuulous i dont know however if i want to upgrade?! i thnk it will be awsome, youv got to think the new iphones speed will be cool etc, CAN ANYONE HELP ME OUT THOUGH, IM USING MY 1GEN IPHONE, WOULD THERE BE ANYWAY I COULD UPGRADE!? LET ME EXPLAIN I HAVE HAD THE IPHONE 1 GEN SINCE RELEASE DATE BUT I STARTED A CONTRACT ON IPHONE 3G AND SOLD THE IPHONE 3G HANDSET THEN PLACED THE CONTRACT SIM INTO MY PHONE (1STGEN) CAN I UPGRADE TO ANYTHING…. EVEN 3G IPHONE!?

  • http://www.allaboutiphone.net Matt Radford

    @David. Thanks. That’s one thing I forgot to mention above – upgrades are available under the O2 Priority scheme, but it only really helps if you’re spending £50+ per month. Anyone can upgrade a month early if you ask O2 Customer Services nicely enough.

    @solomon. I promise to help if you don’t SHOUT! Regardless of which phone you’re using, if you’re on a contract then you’re subject to its terms and conditions. So your options are the same as any other upgrader on O2.

  • Ben Wright

    @ Matt Radford, re: Al Sutton’s remarks about simplicity.

    You can choose a free simplicity bolt-on with the £19.58/month tariff – one of which is unlimited web.

    So you get Unlimited web, 800 mins and 1600 texts (including MMS @ 4 texts each) for £20 per month plus the £440 up-front phone cost. You can sell the phone this time next year on eBay for £300ish and upgrade. Happy days!

    Only things you don’t get are, e.g. Visual Voicemail, Call Merging, Tethering (just as with the PAYG tariffs).


  • http://web.mac.com/jamesburland/Nokia_Creative/ James Burland

    This is turning out to be the best resource for O2 up-graders.

    I just finished a 30 minute conversation with O2. I’m trying to get the termination fee down to the absolute minimum. I didn’t find out anything that hasn’t already been mentioned here. But I did get the feeling that my 2 existing iPhone contracts my just give me enough clout to get me into the 6 month early upgrade zone. We’ll see…

  • http://www.allaboutiphone.net Matt Radford

    @Ben Wright

    I’d forgotten about the free Simplicity Bolt-On. If you’re not concerned about Visual Voicemail or Call Merging, then that makes for an excellent deal. There is a way to use tethering as well, albeit unofficially (by uploading the correct IPCC file via iTunes). Include the fact that you can flog your current iPhone 3G on eBay for about £300 (if unlocked) and it looks like a pretty attractive deal! I think I’ll update the article to include a table with these workings. Thanks again Ben and Al.


    O2 Priority has suddenly got a lot of press over the last couple of days. O2 have never really shouted about it before, but all of a sudden it’s the answer to every iPhone upgrader’s prayers. Or not, if you don’t spend enough with them… Fingers crossed you can get that early upgrade.

  • http://www.allaboutiphone.net Matt Radford

    I forgot to say: the only problem with breaking your contract to upgrade or switch to PAYG is this: how will you retaing your existing phone number? Once a contract is cancelled, it’s bye bye existing number, usually. That is, unless O2 are going to do anything “special” for iPhone upgraders.

  • http://me.com mr p

    *There is a way to use tethering as well, albeit unofficially (by uploading the correct IPCC file via iTunes).

    This was true prior to itunes 8.2 – it now stops you uploading the carrier file plugging this hole..

    Luckily I did it earlier on the beta program before 8.2 came out – tethering still working today..

    Once you have itunes 8.2 and gold 3.0 release code on there is no way back (simply) to get around this anymore…

  • Richard

    I’m four months into an eighteen month contract, so buying out the contract is too outrageous a price to pay on principle. Can one buy an O2 PAYG 3G S and put one’s O2 contract 3G sim card in it and use as normal, keeping the same number, functionality etc? Could one buy a PAYG 3G S in, say, the US and do the same thing with one’s contract sim? Thanks.

  • sc03tye

    1 thing I’ve picked up on and think you might well have missed? (I’ve been working it out to…nightmare or what).

    From the 1st Jan 2010 the VAT changes back to 17.5% ! so although when comparing the monthly rates, the cheapest stays the cheapest…., the price will hike up come next year for the monthly charges. Suppose this will also change the payg comparisons too….

  • http://www.allaboutiphone.net Matt Radford

    @mr p

    Oh, that’s a shame that it’s now not quite as easy as uploading the IPCC file. Should’ve expected it though. I wonder if you’ll still be able to enable tethering if your iPhone is jailbroken?


    O2 have confirmed on Twitter that you’ll be able to use a PAYG iPhone 3G S with a contract iPhone SIM, keeping the same functionality. You won’t be able to do that with a phone from the US though unless you can jailbreak and unlock. An iPhone 3.0 jailbreak & unlock hasn’t been announced yet, but I think there will be one on the way.


    Good point about the VAT! I had forgotten that. Damn. It just gets more expensive!

  • RollEyes

    Why are you comparing the AT&T hardware costs without taking into account their tariff terms, prices and what you get for your money?

    They may have “slashed” the 8gb to $99, but that’s for a 24 month, $70+ tariff. On the cheapest 24 month O2 tariff (£35/mnth) the same phone is free!

  • RollEyes

    Not sure what happened to my comment, it doesn’t seem to have appeared.

    What I said was, why are you comparing the AT&T hardware prices without looking at their tariffs (price, length, what you get)? If you did, you’d notice that to get a $99 8gb phone, you need to sign up to a 24 month, $70+ tariff (and that doesn’t include and SMS!).

    As your own tables show you, you get the 8gb free on O2’s 24 month tariffs, so how can they reduce the price any further (slashed, from free to… erm… free!)?

    Also, there is no pay and go equivalent in the USA so again you aren’t comparing apples with apples (pun intended).

  • http://www.allaboutiphone.net Matt Radford

    Thanks for the comment RollEyes. You’re absolutely right, and I’ve stricken the references to the AT&T comparisons.

  • Rolleyes

    Ta – didn’t mean to post twice :/

  • mrfinn

    you can just buy an iphone 3gs and buy a sim off ebay for about 3 pounds that gives you free web and wifi bolt on for 12 months. Its worked for me:) you can then sell iphone 3g on ebay and get a new 3gs and pop the sim in, costing about 200 pounds in all. then you can just top up each month however much you want, no 10 pounds for the web though, its FREE!!!

    hope this has helped!

  • Jason

    Apparently you can get £45 cash back through Quidco for Carphone Warehouse Iphone contracts.


  • Ashley

    I just popped into the O2 shop in Bath to ask about upgrades. They didn’t have a clue! I asked if I could buy my contract out and they said”no”. I could start a new contract, f course, but I’d lose my number.

    So I phoned O2. Because I upgraded in October I’m not eligible for the phone until March 2010! I CAN buy my contract out, for £450.

    It’s true that we all signed contracts. It’s also true that in a competitive market loyalty should have some sort of value. As soon as the iPhone is not exclusive to O2 I’m off.

  • Damien

    Hey all,

    I stupidly signed up for an 18month contract with the iphone 3g about 22 days ago. Is there any way i can return it to O2 and upgrade it to the new 3Gs? Didn’t realise they were releasing a new iphone soooo soon or i would of waited!!

    Many thanks

  • Marcus

    Hi Damien,

    in the states they do allow you to change to the new phone – you just pay a “restocking fee” to wherever you bought it from. Check with the store.


  • Louis

    Ok, here’s my plan. I have a 16gb 3G with 6 months left on contract. I buy a PAYG 32gb 3GS. I swap sim cards. I now have the 3GS with full functionality to the end of my contract, when I can switch to Simplicity. I also now have a genuine PAYG 3G, admittedly locked to O2, which I can sell on ebay. Can anyone see any reason this wouldn’t work? If so please stop me before I spend £500.

  • http://honestlyreal.com Paul Clarke

    Fantastic information – very clear – thank you.

    Any clues about whether terms may vary by the channel through which you buy the phone? In the past O2’s deals have been different in-store, by phone and online for exactly the same product (e.g. my current XDA).

  • http://www.allaboutiphone.net Matt Radford


    You’re absolutely right – people have signed up to binding contracts, but O2 has already set the expectation that people could upgrade. Not allowing this is a huge mis-step on their part.

    When O2 loses their exclusivity they will lose a few customers over this, I think.

  • http://www.allaboutiphone.net Matt Radford

    Damien – I’m afraid you’re out of luck. If you bought online or over the phone, UK Distance Selling Regulations permit you 7 days to return. Additionally, O2 have a right to cancel period of 14 days (note: 14 days total, not 7 + 14). But you’re outside both of those so you’re stuck with the 3G until the contract expires.

    The alternative is to buy a PAYG iPhone 3G S, unlock your 3G and sell it on eBay.

  • http://www.allaboutiphone.net Matt Radford

    Louis – I may do this myself. The only additional step would be to unlock the 3G using UltraSn0w (previously known as Yellowsn0w), in order to get more money on eBay.

  • http://honestlyreal.com Paul Clarke

    I currently have a 1-month rolling SIM-only SIMPlicity contract with O2, costing about £19.50 a month for 600 minutes, 500 texts and unlimited data. They’ve even upgraded my SIM to a 3G version for free (and I’ve tested it – it does work in a 3G iPhone).

    Key question: If I just buy the cheapest PAYG 3GS 32GB and pop in my SIM, have I fastracked my way to a much cheaper TCO deal, with no mucking about with changing the number or anything?

    What goodies might I miss out on if I did that? Tethering?

    I tried asking these questions in an O2 store. Assistant’s head rocked to one side and the letters “TI” appeared in her right eye, with “LT” in her left…

  • http://www.allaboutiphone.net Matt Radford


    It sounds like you’re on to a good deal if you buy yourself a PAYG 3G S. You won’t have any problems with keeping your number, as you’d be on the same Simplicity deal.

    You won’t get Visual Voicemail, nor can you officially use tethering. However, go to this website:


    You can then easily enable tethering on your iPhone. I’d advise keeping usage relatively low, and use a VPN if possible.

  • Jason

    Your pretty much in exactly the same boat as me mate, im on the same simplicity contract.

    There is advantages in what you propose. Namely you wont be tied into an 18 month contract but its really not going to save you any money.

    Based over an 18 month period the Total cost of ownership of the 32gig on an 18 month Contract is £879.98. Thats assuming you drop from the £45 a month tarif down to the £35 a month tariff after 9 months.

    Your outlay for the phone on PAYG and £20 a month simplicity over the 18 month period would be £898.30, so your a few quid more expensive.

    Not much in it at all but personally I’d still probably go for the contract because your initial outlay for the phone is only going to be £175.19 on the contract compared to £538.30 on the PAYG.

    For me its not like I’m going to miss the extra £25 a month for the first 9 month and the extra £15 for the next mine month. However the £363.11 difference between £538.30 and £175.19 up front is going to leave a big dent in my wallet in any given month.

    Id go for the contract personally unless you have a lot of spare cash lying around and are very disciplined when it comes to putting it back. Most people, myself included are not. :-)

    You could also try signing up to quidco and them following their link to mobiles.co.uk to get £60 cashback. That’s what I’ll be doing shortly if O2 cant offer me a similar deal.


    Hope that helps mate.

  • http://www.allaboutiphone.net Matt Radford

    That Quidco deal for the iPhone is only open until the end of the day today (Thursday 18th) AFAIK

  • http://www.usablecontent.co.uk Gerry White

    I am still trying to find willing McDonalds employees…!

  • Jason

    You can always just use the Carephone warehouse one Matt.

    It may not be £60 though but I think its good for £45 or so.


    And no I don’t work for quidco lol, just trying to find the best deal.

  • Thomas Bell

    There is a final piece of the puzzle for the perfect iPhone 3GS deal:

    1. iPhone 3GS PAYT, O2 £342.50-£538.30
    2. O2 Simplicity Deal, £20 per month, rolling contract
    3. Boingo Mobile (http://mobile.boingo.com/) which covers your WiFi access not just on the BT Openzone but over 100,000 locations worldwide, £3.95 per month

    You then have a cheaper iPhone with:
    1. Equal minutes*
    2. More texts*
    3. Equal WAP access (assuming you choose the unlimited web free bolt on)
    4. Better WiFi coverage

    *Based on the £35 per month iPhone tariff

    p.s. I don’t work for Boingo!

  • http://www.allaboutiphone.net Matt Radford

    Thomas, there’s one more bit to add. Here’s a quote from Martin Lewis’ MoneySavingExpert site:

    many people are suggesting buying an iphone on payg, binning the supplied sim, then buying a 12 month sim only pack with the free web bolt on. if thats what youre going to do then dont forget that you’ll get £35 cashback from quidco when buying a 12 month simplicity sim only pack on the O2 site. there is also a double texts incentive for buying online (1600 instead of 800) Otherwise, its £23.33 cashback for other sim only products.

    p.s. dont be fooled where its says ‘excl. iphone’ – that only applies to 18/24 month contracts.


    (Taken from http://forums.moneysavingexpert.com/showthread.html?t=1062363&page=8 )

    So you can save yourself an extra £35 quid!

  • Andrew

    Major flaw in your costing calculations showing that you will always pay more for the 24 month.

    1.) The total cost of the 24 month contract is over 24 MONTHS! If you pro-rata it to 18 month (so 75% of cost), it is ALWAYS cheaper then the 18 month contract!

    2.) Apple iPhone releases work in 1 year cycles, so if you get a new iphone now, you don’t want an 18 month contract. You’ll either get a 6 month out of date model, or have to wait 6 months more.

    Therefore, 24 months is the best contract.

  • http://www.allaboutiphone.net Matt Radford

    Thanks for the comment Andrew, and you’re quite correct on a pro-rata comparison. However, my tables compare TCO over the life of the contract – that is, how much you’re locked in to pay, and whether it’s most cost-effective to pay up-front. As the tables show, it’s cheaper to pay a higher initial price for the device plus you’re locked-in for a shorter period.

    This does ignore the fact – with any O2 iPhone – that the device is perpetually locked to that carrier. So unless you unlock unofficially, then your options even when out-of-contract, are limited.

    And, whether you get a 18 month or 24 month contract, you’ll still be waiting two years until the next (but one) iPhone in 2011. By getting an 18 month contract you can at least minimise the cost when you’re out of contract.

  • Taity

    iPhone 3.0 Tethering for free!

    Chap at work sent me the link.

    On your iPhone 3.0 go to safari


    Choose “mobile configs”

    Choose UK (Obviously)

    Choose your provider..

    Download the settings – JOB DONE!

    And not a penny to O2!

  • http://www.allaboutiphone.net Matt Radford

    I saw that site via Twitter. Great stuff. However, people using tethering unofficially do run the risk of disconnection. I’ll have a post up about it ASAP.

    Unless the jailbreak is released tonight, in which case I’ll be busy updating to 3.0 :)

  • Taity

    Hi Matt,

    Look forward to your post on the disconnection that o2 are threatening. I’d like to know how they are going to:

    Firstly determine whether the traffic is from the iPhone or the laptop it is tethered to?

    Using there current terms and conditions, enforce the “abuse” of tethering without using there ridiculously expensive bolt on.

    Justify the tethering of other phones on their network, like the Nokia N-series, yet single out the iPhone?

    Keep us updated on the Jailbreak, all my uber-nerdy techy mates know the score, but us mere mortals need it broken down into pretty pictures and single syllable words! 😉


  • J A

    Cheapest way of getting an Iphone is definetly the following:

    Buy a Pay as you go iphone, or one of ebay. Most expensive this is going to be is £360.

    Buy O2 Simplity tarrif giving you 600 mins, 1200 texts, and add the unlimited web bolt on all for £20 a month.

    Only difference between that and iphone contract is iphone includes wifi at hotspots but 3G will do fine and you’ll get wifi free most places anyway.

    Iphone monthly is £36 on 24 month contract. Simplicity is £20 on 30 day contract. Iphone gets you much less minutes and texts. Over the 24 months the differenece is £384, making similicity option cheaper with buying the iphone PAYG straight away without adding the benifits of many more mins and texts.

  • http://web.mac.com/jamesburland/Nokia_Creative/ James Burland

    I’m convinced. Monday I’ll be picking up the 3GS on PAYG and swapping over to Simplicity plus bolt-on in December. Massive thanks to everyone who contributed to this thread.

  • Jason

    Anyone buying a PAYG Iphone and using a simplicity contract would do well to read this thread if your insuring the phone through O2.


    You just need to dot all the I’s and cross all the T’s to make sure your covered.

  • http://www.allaboutiphone.net Matt Radford

    They’re not making it particularly easy, especially as there seems to be confusion within Customer Services, depending on who you talk to. Hey what’s new?!

    If you buy an iPhone 3GS on PAYG, and stick your existing SIM in it, your tariff will be unaffected.

  • http://www.allaboutiphone.net Matt Radford

    By the way, I’ve just remembered something else with O2 Open. If you have access to this discount, you can also get:

    * £20 off any Pay and Go phone, costing over £80
    * 20% off accessories

    So that PAYG iPhone 3GS just got a little bit cheaper :)

  • rizwan shafiq

    i work for one of them special companies the ones that get 30% off
    so if i get the 18 month contract i pay £87.11 for the phone and then for the £44.05 per month i pay only £30.85 in the end the tco is around £650

  • http://www.allaboutiphone.net Matt Radford

    30% off is a pretty good deal, I think.

  • Jenny

    Hi, if I have an old O2 sim card, with a current £35 tariff of 600 mins, 1000 texts, and Unlimited Web Browsing bolt on,
    Can I buy a PAYG Iphone 3GS and use the sim card with it?

    How can I know if my SIM card will be compatible with iphone 3gs?


  • Alex

    As of Friday last week (June 26th). O2 have stopped the 30% discount with O2 Open on the 3GS handset until further notice.

    I found this out the hard way, by finally getting my discount card from work and biting the bullet to get a 32GB model. I went to the store, filled out all my details, and as the guy in the shop came back with my new iphone, he suddenly remembered that it had been stopped and showed me the internal mail stating this. Gutted.

    They might re-instate it but no-one could tell me when or even why this has been done. I know why, to make more money on the new model……simple.

  • Stevie

    Would be interesting, for those with non-iPhone contracts about to end, with o2’s current £150 credit deal for renewing contracts.

    I’m at the end of an 18month deal on my N95, and wondered if they’d accept moving to a 12 month simplicity contract as ‘another contract’ to obtain that £150 credit. At which point, you could offset the cost of a PAYG iPhone so your pay quite a chunk less….

  • darren

    hi, i have an existing o2 sim tied into a business tariff. can i but a PAYG Iphone 3G S and use my existing o2 sim and still use all the apps and features etc??

  • http://www.allaboutiphone.net Matt Radford

    Sorry for the late reply – I’ve just noticed your comment and yep, the 3GS is now not included in the Open deal. Very poor. The blurb from O2 is as follows:

    * O2 reserves the right to make selected exclusions. The new 3G S iPhone is NOT included in O2 Open.
    * The old 8GB 3G iPhone tariff is still discounted.

    Please see the latest update below on O2 Open:
    * The iPhone 3GS is not currently included in O2 Open. However, customers can choose the 8GB iPhone 3G.
    * You may not use this offer online.
    * SIM only deals are not included.

    However, this may be temporary because of stock shortages. Word has it that Open will be extended to the 3GS again as of 19th July.

  • Ben_parko

    The best place to see the best iphone contracts are comparision sites like http://www.cheapestiphonecontracts.com they remain up to date with the best deals

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