Citing "sources," the news site reports that the incentives aim to boost sales of the next-generation Apple handset, following so-so sell-through of the company's first generation phone in the UK ahead of recent discounts because it did not operate on the faster third-generation networks that are more common in the region than they are in the US.
Specifically, it's claimed that Apple will charge only £100 (~$193) for the 3G iPhone expected to be announce next week, but that O2 may offer the handset at absolutely no cost to new subscribers who sign up for its most expensive tariff (service plan), which fetches £75 and includes 3,000 minutes and 500 text messages.
According to the report, O2 may also cater to would-be customers who wish not to be locked into a service plan, offering them the new touch-screen device for the same £269 price as today's model under a contract-free, pay-as-you-go model.
What's more, Macworld UK adds that existing O2 iPhone customers may be lured into an 18-month contract extension with the promise of a free upgrade from their existing iPhone to the 3G model.
Macworld UK has not traditionally been rumor outlet and therefore the accuracy of the report is unknown. However, Ars essentially reported the same thing in regards to a full subsidy over two weeks ago.