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Tuesday, January 29, 2008, 07:00 am PT (10:00 am ET)

O2 sweetens service plans for UK iPhone customers

In an effort to spur more sales of Apple's iPhone while simplifying its pricing structures, European wireless provider O2 announced Tuesday a 'radical shake-up' of its monthly tariffs that will see most of its iPhone customers awarded with three times as many wireless minutes without a fare increase.

Beginning February 1st, iPhone customers on a £35 per month contract will
get 600 minutes instead of 200 and "more than double" the plan's current 200 text message allotment. Meanwhile, the £45 per month plan will see its offerings upgraded to those of the existing £55 package, which includes 1200 minutes and 500 text messages.

As a result, O2 said it plans to completely dissolve its existing £55 plan, replacing it with a "super-tier" £75 offering that will include 3000 minutes and 500 text messages per month. The £269 cost of the iPhone, as well as the 18-month contract requirement will remain unchanged.

Customers who were on the £55 tariff will have the option to either save £10 per month or take the new £75 tariff. O2 said it plans to transition all its iPhone customers to the new tariffs in February, allowing them to benefit from the rate reductions by mid-March.

Thus far, sales of the iPhone in the UK — like that of Germany and France — have underperformed. According to a published report earlier this month, O2 managed to sell 190,000 of the touch-screen handsets in the two months following its launch on November 9th. That figure, however, is said to have fallen short of a "conservative" 200,000 internal unit estimate by the carrier.

While O2 has not published any official figures on iPhone sales, it did say the device has help triple its retail store traffic. The spike is believed to have provided a surge in the carrier's sales for the end of 2007 regardless of how many customers eventually chose the iPhone over an alternative.

O2 iPhone Plan Compare


O2 is expected to capitalize on the revised iPhone plans beginning next month, as the rate reductions are likely to finally sway some fence sitters towards the Apple handheld.