New iPhone Priced 87% More by U.K.'s O2

O2 (TEF) has announced its UK pricing for the upcoming version of the Apple (AAPL) iPhone, the 3G S.

The iPhone 3G S will go on sale on 19 June, costing much more than the iPhone 3G did when that model was launched a year ago.

On an 18-month contract, the 16GB version of the 3G S will cost between £184.98 (with a service plan at £29.38 per month) and free (with a service plan at £73.41 per month), while the 32GB model will cost between £274.23 (at £29.38 per month) and £96.89 (at £73.41 per month).

Those opting for a longer, 24-month contract can get the 16GB handset for £87.11 if they pay £34.26 per month, or for free on higher tariffs. The 32GB model will cost between £175.19 (at £34.26 per month) and free (at £73.41 per month) on a two-year contract.

In the US, AT&T's (T) pricing for the new iPhone matches the launch pricing for older versions, allowing for upgrades in specification. For example, the new top-of-the-range 32GB model costs the same as the old top-end 16GB handset did, and the new 16GB version costs the same as the old 8GB version did.

In the UK, however, O2 has gone for higher launch prices. While the old 16GB handset was introduced at £159 on the lowest monthly tariff, the new 32GB model costs £274.23 (a 72 per cent increase). The new 16GB handset costs £184.98 on that tariff, compared with the old 8GB model's £99 – an 87 per cent increase.

One explanation for the higher new prices could be the strengthening of the dollar – Apple is US-based – against the pound since last year's launch but that would only account for an increase of around 25 per cent. A spokeswoman for O2 told sister site ZDNet UK on Tuesday that iPhones are now "less subsidised [by O2] than they were before". O2 did not respond to a request for further comment.

Business pricing for the iPhone 3G S has not yet been announced. Pay-as-you-go customers will, however, be able to get the 16GB version for £440.40 and the 32GB version for £538.30.

The iPhone 3G S was announced on Monday at Apple's Worldwide Developer Conference in San Francisco. The device looks entirely similar to its predecessor, the 3G, but has a faster processor, a built-in compass and a higher-megapixel camera that can shoot video in addition to stills.

O2's pay-monthly tariffs for the iPhone include the operator's International Traveller Service, which gives discounts on some charges while roaming across different countries. Unlimited UK data and wi-fi is also included.

Customers can also get a bolt-on tariff for tethering their iPhone to a PC or Mac as a mobile broadband modem. This costs £14.68 per month for a 3GB allowance, or £29.36 per month for a 10GB allowance.

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