O2 has announced plans to offer the iPhone for free on cheaper contracts as expected... but only if you're willing to sign up to a two year contract.

Amid strong speculation that the network operator would start lowering the cost of the handset to shift stock, ahead of the rumoured new iPhone, O2 has decided to tie customers in for longer in order to get the iPhone for free on cheaper deals.

This would cast aspersions on the probability of the iPhone being free on cheaper contracts in May, as it would lead to real anger from all those who tied themselves in for a 24-month O2 boat ride, only to find out if they'd waited 50 days they could have shaved six months off their sentence.

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Lovers of the 8GB iPhone 3G can now get it for £34.26 per month without paying a penny extra on the new longer-term deal, and if 16GB is more your style, you can expect to pay £44.05 per month to get it gratis.

Previously users would have to stump up nearly £75 a month to pick up the 16GB variant without paying for the handset, or shelling £57.74 to get it on an 18-month deal, which seems like a much better deal for six months less commitment.

"This new 24 month tariff option will meet the demand of customers who are looking for added value in exchange for committing to a longer contract," said Peter Rampling, Marketing Director at Telefónica O2 UK.