iPhone Rumour Update: O2 Wins UK Contract?

Well that's gone and thrown a bloody great spanner in things.  After all the hints, rumours and "convinced analysts" braying that Vodafone and T-Mobile would pick up the lucrative European iPhone contracts, multiple sources – including print heavyweights such as The Times and The Guardian as well as online – are reporting that UK carrier O2 will be exclusively selling Apple's already-iconic cellphone in time for Christmas.

However with O2 and Apple refusing to comment – and nor will the other operators confirm or deny the agreement - and each story using unnamed sources, it's difficult to trace back the origins of the rumour.  Apparently the final contract is to be signed "imminently" (something we've heard before, to be honest) and O2's success was primarily through Apple's desire to partner with the strongest operator in each company; similar deals are promised for T-Mobile in Germany and Orange in France.

Negotiations still continue, we're told, with retailer Carphone Warehouseamong others, regarding who can sell the iPhone once O2's exclusivity contract expires.  The handset's launch will mark a turning point in cellphone sales, in a market where phones are normally free with a new contract; the UK iPhone is expected to launch at around £300.

Since EDGE, the type of data connection used by the iPhone, is currently only operated by carrier Orange in the UK, O2 will have to make network changes before the handset will be able to take advantage of what have already been criticised in the US for middling internet speeds.  However unlike the move to 3G, industry specialists tell us that it's a relatively simple software upgrade rather than a full hardware roll-out.  That's disappointing news to anyone hoping for a jump to 3G in the Euro iPhone, as the advanced cellular broadband networks on offer outside the US were a key factor in arguments that Apple would offer a version of the handset capable of faster connections.

Hopefully we'll have an official announcement sometime today to either confirm or deny this latest in a number of iPhone rumours.