After weeks of rumours Apple finally announced their worst kept secret, that O2 will be the soul network to carry the iPhone in the UK. The UK iPhone, identical to the US device, will ship on O2s network this November and will be available for £269 on an 18 month contract starting at £35/month.

Personally I was expecting a lower handset price than in the US which would only be available on a high-priced tariff (£40 to £50, the equivalent of between $80 and $100, per month) with unlimited internet use and a generous allowance of minutes and texts. Instead Apple and O2 have decided to do the complete opposite. So what is an average user looking at if they are considering an iPhone in the UK?

I’ll start with the full details of the base package you get when you buy the iPhone with an O2 connection.

Now let me put that into perspective.

To start off with the £269 price tag or the handset is by far the highest I can remember for a UK device on a £35/month contract. A good comparison would be the Nokia N95 (£380 sim-free) which both Vodafone and Orange offer for FREE on a £35/month contract. In fact the top-end Nokia E90 (£650 sim-free), which has only recently been released in the UK, is available for £85 on that same contract from Vodafone, a mere third of the price O2 are demanding for the iPhone.

What is also very strange is that the iPhone will still cost you £269 even if you go on the higher tariffs (£45 and £55 per month tariffs are also available), which is unprecedented in the UK market. Customers in the UK are used to getting either a free or a heavily subsidised handset and I’m sure the iPhones price tag will turn off most customers.

An 18 month contract is fast becoming the standard in the UK and is still shorter than the 2 years that AT&T users are tied in for in the US. The contact itself is a bit stingy, especially when you compare it to T-Mobiles similar Web & Walk package which, at £32.50/month, gives you unlimited internet plus 350 minutes and 200 texts. But that is a minor gripe, after all the O2 contract does also allow you free usage of The Clouds WiFi hotspots around the UK worth £7/month.

The £45/month and £55/month contracts do offer a bit more value for money in terms of added minutes and text, however this comes at a premium as you won’t be saving any cash on the handset price as you would usually do. It’s also worth mentioning that the usual the “unlimited” web usage is actually limited but instead of having a fair-usage limitation defined by data usage O2 have defined fair use as 1400 page-loads a day

This has been the mostly contested aspect of the iPhone since it was announced. Apple seem to have done OK with this in the US as AT&Ts EDGE network has been reported to deliver some great speeds and free WiFi access is becoming more common. However things are different in the UK and the fact is that O2 will only have EDGE available to 30% of the population at launch. Couple this with the fact that free WiFi hotspots is almost non-existent in the UK and connectivity isn’t looking too good. This is addressed with the bundled The Cloud subscription but the lack of decent EDGE support on-the-go will be a blow to many.

When you look at the raw numbers it’s hard to tell who is better off. The UK are paying more for the iPhone than the US, which is expected as this is always the case. The cheapest contract in the UK is more expensive than that in the US but it runs for 18 months instead of 24 months. However when you really add up all the costs the total you pay for an iPhone on contract is almost identical in both countries (In fact in the US you pay £20 more overall).

However the major difference I can see right now is that there doesn’t seem to be a sim-free option for the UK iPhone. In the US you can pick up a $399 IPhone and then not activate the AT&T contract. Now I’m not sure if that is strictly “legal” but the fact that you can’t do the same in the UK will be a pain for those (like me) that might want to unlock it to use on another network or on PAYG.

When you get down to it the UK iPhone customers aren’t going to be paying any more than the US customers. However I really believe Apple and O2 have gone about this the wrong way. Personally I’d my much rather have seen a £180 iPhone on an improved £40/month contract with more minutes and texts. I feel that kind of model would have appealed to more customers. But then again this is Apple, the Kings of hype, so it might just not matter!