As of today, Apple’s iPhone 3G will be available on “pay-as-you-go” via O2 for those of us in the UK. Many have waited for this day — an opportunity to get their hands on the iPhone 3G without being tied in to an 18-month contract. For an 8GB iPhone, UK customers will pay £342.50, and for the 16GB model, just under £50 more at 391.45. Both include 12 months free unlimited 3G data and WiFi access through the thousands of hotspots throughout the UK.

The “pay-as-you-go” iPhone will require activation just like an iPhone purchased with a contract. Users will need to connect their iPhones to iTunes on their computer, then follow the onscreen instructions before purchasing a minimum £10 top-up to activate. Presumably users won’t be required to top-up every time their iPhone needs activating — this would be a pain when activating your iPhone after a restore, and could prove quite costly if your iPhone often requires a restore.

Features that won’t be included with the pay & go iPhone include Visual Voicemail and call merging — these are available only to customers on a contract.

The release of the pay & go iPhone in the UK has come at a great time before Christmas. I believe those wishing to purchase an iPhone as a gift would be much more likely to buy a pay & go iPhone so that the recipient isn’t left with a contract to keep up for many months after. Once purchased, it’s up to the user to top-up as and when they wish.

I expect the release of the pay & go iPhone will result in even further demand for an iPhone 3G unlock. Many people will have cheaper contracts with other networks that, until now, could not be used on an iPhone without being tied in to an additional contract on top. Unless of course the iPhone was purchased contract-free from somewhere like eBay. However users can now purchase a pay & go iPhone contract-free, unlock it and pop in their current SIM.

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