This week’s announcement of a third generation of iPhone (the 3G S) has left existing UK iPhone users seething. You see, when last year’s iPhone 3G shipped, Apple’s UK partner (O2) let existing users upgrade regardless of the remaining contract length (they had to… it was in our contracts…) but, critically, the original iPhone was not subsidised – and its 3G replacement was. Now existing subscribers are waking up to the fact that they have to buy themselves out of their contracts if they want to move to a new device. Well, welcome to the big bad world of mobile telecoms guys – that’s the way it’s been for years and why should the iPhone be any different?

Don’t get me wrong – I have an iPhone 3G and I still have about nine months to run on my contract so I’m caught up in this with everyone else but I won’t be looking to upgrade to the 3G S. After all, Apple has committed to giving me the 3.0 software upgrade for free (something I wouldn’t get on a competitive platform – if I had a Windows Mobile phone I would have to wait for the telco to approve the software and, even then, they might not offer me an upgrade). I would like a better camera but I’ve managed with crappy iPhone optics for two years now and, anyway, I’m not convinced that the new one will be that good either – it’s still only 3MP and a camera phone is always hampered by a tiny sensor and poor quality glass (maybe even plastic!). I can live without a compass and, as for video… it’s hard enough to take a decent photo on an iPhone! Voice control will be good, but I don’t think that relies on the new hardware (I may be proved wrong on that). Finally, Apple claim that the 3G S is twice as fast as the 3G… but the network will still be the bottleneck!

The other gripe is the fifteen quid that O2 wants for using the tethering functionality on the iPhone. Here I think the complainers may have a point – after all we have unlimited data access on the iPhone already and why pay more (for what… more data than “unlimited” data!)? Then again, using a full-sized laptop (tethered) to surf with a larger screen will pull down larger graphics – which means more data – and a subsequent hit on O2’s network. The charge is broadly equivalent to that of taking out a contract for a 3G data connection but I would like to see a PAYG option for tethering – I’m simply not going to stump up fifty quid a month for a mobile phone contract (£35 for the base iPhone deal and another £15 for the tethering, minus a few pence from last year’s VAT cut).

If we’re lucky, someone will write a WiFi router application (like they did for Windows Mobile where the telco doesn’t know you are tethered – the laptop talks to the phone over WiFi and the phone looks like it’s using its 3G connection for its own data.

So, I’m sorry for my fellow UK iPhone users but this is the reality of signing up for a mobile phone contract – either buy an unsubsidised (expensive) phone and be free to move around or have a subsidised one with a contract that the telcos will enforce. As for tethering, it is an additional feature, so hoping that O2 wouldn’t charge for it was probably a little naive. With any luck there will be a 4th generation of iPhone this time next year and most of us will be freed from our contracts by then!

In the meantime, the iPhone 3.0 software is due out next week… it looks like I had better upgrade iTunes to 8.2 then…