Macworld UK is reporting that O2 is planning to offer the new iPhone free to customers who sign onto the top tariffs.
The article also concurs with a rumour last week that the iPhone will cost £100 and be sold with an 18-month contract. But it appears O2 is also planning to offer free upgrades to some users and free iPhones to those on the top iPhone tariff which is currently £75 per month.
It is also expected that owners of the current iPhone will be able to upgrade their handsets without charge although they will be "obliged" to sign-up for another 18-month contract.
The 3G iPhone is widely expected to see a debut this coming Monday at WWDC but not ship until later in the month.