iPhone Backlash Begins On O2

The latest Apple iPhone has prompted a web backlash as existing users demand cheap upgrades and new customers baulk at the price.

The iPhone 3GS, unveiled in San Francisco yesterday, will be available in the UK on June 19.

O2, which has the exclusive UK deal for iPhone, has been bombarded with criticism since details of the smartphone were announced.

More than 1,500 customers have signed an online petition demanding a "reasonable way" to upgrade their old handsets.

Many are partway into 18-month contracts with O2, meaning they must pay to break it and sign another deal.

A cheap deal was offered to customers upgrading from 2G to 3G in the past - fuelling the anger this time round.

An O2 spokeswoman told Sky News Online the firm was "deeply upset" and "quite shocked by the reaction".

"We heavily subsidise the iPhones, we can't afford to just cut these [contracts] off," she added.

She said the cheap upgrades for 2G customers had only been possible because the handsets had not been subsidised.

Customers can upgrade as much as six months early, she said, and advised people to contact O2 to discuss their tariff.

O2 has also come under fire over "tethering" - using an iPhone as a modem to connect a laptop to the internet.

It has announced a £14.68 monthly subscription fee for the service, which increases if you send more data.

O2's official Twitter feed has also responded to the furore.

"Minimum term contracts apply to all O2 Pay Monthly customers - it wouldn't be fair to allow some customers to change this," it added.

Luke Peters from T3 magazine told Sky News Online the decision not to offer those with older handsets a deal was "completely wrong".

He believes both Apple and O2 may regret the decision but that the 3GS remains a good buy for customers.

"We've got no hesitation recommending it, it's more than a mobile."

The 16GB 3GS iPhone is free on a £73.41-per-month 18-month contract or £44.05-per-month 24-month contract.

On pay as you go, it costs £440.40.