iPhone 3G S: The secret one-month contract

We're going to tell you how to get a significantly better deal on an iPhone 3G S, without tying youself down to any more than a one-month O2 contract if you don't want to. And you get hundreds of extra texts and minutes, too.

First, some background. The outrage over the new model's sky-high prices prompted many of you to vehemently berate O2 and Apple in the comments of our stories yesterday. For the shortest contract term of 18 months, and on the lowest-cost contract of £29.38 per month, the lowest-capacity iPhone 3G S will cost you an enormous £184.98, while the 32GB version will set you back a staggering £274.23.

Worse still, for all that, you still only get a pathetic 75 inclusive minutes, and 125 texts each month. No, we're not kidding, and they aren't typos.

If you can be persuaded into signing up to a two-year contract, the least you can pay per month is £34.26 -- a total of £822.24 over the length of the contract -- and the 16GB model will still set you back £87.11 when you sign up, or £175.19 if you choose the 32GB version. For this you get a decent 600 minutes, but a poor 500 texts.

So how do you get a better deal? If you can afford to stump up for the £440 pay and go iPhone, you can sign up for O2's Simplicity contract. This is a SIM-only plan, with just a one-month or 12-month contract period, and we can confirm this can be put in your pay and go iPhone. Plus, you could get hundreds and hundreds of extra texts and minutes. Here's how it breaks down:

Pay and go 16GB iPhone with 12-month Simplicity plan versus 24-month contract iPhone

• 16GB iPhone 3G S
• 12-month contract (instead of 24-month)
• 800 minutes (instead of 600)
• 1,600 texts (instead of 500)
• Unlimited Web via inclusive bolt-on (same as contract iPhone)

Over 24 months, this will cost you just 97 pence more than getting the iPhone 3G S on a 24-month contract. You get significantly more minutes and texts, as you can see, and just a 12-month or one-month contract. You could even sell the phone should a better model come out in 12 months' time.

To get specific, the 16GB pay and go iPhone 3G S will cost you £440.40 up front. Then, sign up for the £19.58 per month Simplicity plan (one-month and 12-month contracts cost the same, though the former gets you fewer texts and minutes), which will cost you £469.92 over 24 months (should you use it for that long). In total, this will cost you £910.32 over two years, and you could sell the phone 12 months down the line and get some of this money back.

In contrast, the 16GB iPhone 3G S on a 24-month contract at £34.26 per month, will cost you £822.24 over two years, plus the initial £87.11 cost of the phone. In total, that's £909.35. Technically 97 pence less expensive than the pay and go method, but with significantly fewer inclusive minutes and texts, and a two-year contract to be tied into.

We have confirmed this with O2, and this is a legitimate process that will work without problem. Note, however, that you won't get visual voicemail as included on the contract iPhone 3G S, and you won't get unlimited Wi-Fi from The Cloud's hotspots, in hotels and airports, for example.

So, a better deal? It seems so. And truth be told, we're going to be going Simplicity as a result of researching this story. Will you? Let us know in the comments below.

Update: The number of texts quoted as coming with the Simplicity deal in this story, refer to when you sign up online, not in store. In-store sign-ups don't come with as many extra texts.