O2 will launch its mobile broadband service on Friday, becoming the last major UK operator to do so.
However, the service initially will be made available only to O2's existing customers. Opting for an 18-month contract, users will get a free USB modem and pay £20 per month for a 3G broadband service with a 3GB-per-month "fair use" cap. Those who want a rolling month-on-month contract will have to pay £120 for the modem up-front.
O2's pricing for its mobile broadband service is not the most expensive — Orange charges £25 per month for a similar deal — but it does come with an important caveat. If the customer leaves their other O2 service, such as their mobile phone or home broadband service, then O2 will increase its monthly charge from £20 to £30.
"We're not going to be the cheapest, but we hope to bring a fantastic customer experience," said Jonathan Earle, head of customer acquisitions in O2's broadband division, on Wednesday. "We're positioning this for our loyal O2 customers." Users will also get unlimited Wi-Fi access through The Cloud's national network.
Earle added that O2 was in the process of a £500m upgrade of its 3G networks, which should see its speeds boosted from 1.8Gbps to 3.6Gbps across the country by June. He insisted that this investment was taking place for the benefit of O2's mobile broadband offering, rather than in preparation for the expected introduction of the 3G iPhone in the middle of the year.
A business version of O2's mobile broadband service will be made available "before the end of the year", Earle said.
USB modems, or "dongles", for mobile broadband have recently proved very popular. A study has suggested that the market for such devices will be worth £1.5bn by 2011, while the operator 3 — which provides the cheapest mobile broadband deals at the moment — says its data traffic has increased sevenfold over the five months since it started selling dongles.