O2 Fire first Shot in iPhone Price War

In a move that appears to be designed to upset Orange’s apple cart, O2 have just announced that users of their iPhone Internet Tethering bolt-on  who sign up on or before 31 December 2009 will be entitled to the standard Home Broadband package for free. Tethering – which enables you to use your iPhone as a 3G modem when you’re out and about – costs £9.79 a month with a 3GB allowance. Now you can get online for free at home as well.

The “Total Connectivity” offer applies to new or existing customers – who can also choose to have heavily discounted Home Broadband Premium or Pro access instead.  The standard broadband package includes up to 8Mbps speeds and “unlimited” usage.  Premium users get an up to 20Mbps home broadband connection for £2.45 a month when they buy the iPhone Tethering bolt-on as well for £9.79.

That iPhone price war might be kicking off after all…
UPDATE – 10th November:

Orange begin selling the iPhone today, and O2 respond by starting a scheme to unlock Pay Monthly phones that are out of contract for free… a fee of £15 will be charged to PAYG iPhone customers. More details at O2’s “ Unlock Your iPhone” microsite.