Orange dashes iPhone price war hopes

However, it has failed to significantly undercut 02's prices, meaning the handset remains an expensive luxury (see the iPhone guide).

Orange will sell both the iPhone 3G and this year's 3GS phones on 18 and 24-month contracts, and on pay-as-you-go.

You'll have a choice of virtually identical contract tariffs to 02, with Orange only under-cutting prices by just 1p per month in some cases.

Vodafone will sell the iPhone next year and it is hoped its market entry will finally drive down costs (see the Cheap Mobiles guide).

Similar prices

The 18-month contracts range from approximately £30 a month to £73 a month via both providers. The handsets range from free to £274 depending on the tariff and type of phone.

A 2-year deal ranges from £30-£122 (Orange) and £35-£73 (02). Again, the handset price depends on which handset you choose and what tariff you plump for.

The call and text allowances are also similar but Orange limits 'unlimited' internet browsing to 750MB a month, which could be a problem for heavy users.

The handset cost on a pre-pay deal via both networks is virtually identical at £343 (3G), £440 (3GS, 16GB memory) and £539 (3GS, 32GB).

See the iPhone guide for full 02 tariff details and the Orange website for its terms.

Daniel Lawrence, MoneySavingExpert.com consumer products analyst, says: "We were all hoping Orange would undercut O2, or at least offer some novel tariffs, but this sadly hasn't happened.

"Now all eyes are on Vodafone, which may yet instigate the iPhone price war many are waiting for."

Improve your deal

On a contract, 02 allows you to downgrade your tariff after nine months, while Orange allows you to do the same half-way through your term.

This means you can plump for a monthly price one level up from what you are intending initially, but it makes the handset cheaper.

The overall cost is virtually the same if you then downgrade but this trick means you spread the phone cost over nine months on an 18-month deal and gives you more minutes and texts for that initial period.

Further reading/Key links

Slash mobile costs: Cheap Mobiles Sell old mobiles: Sell Old Mobiles iPhone guide: Cheap iPhones