Old news in an hour, but iPhone will be free on 02

I just got it confirmed from an O2 source (hat tip to Will Harris at ChannelFlip – you know why), that the UK 3G iPhone will be free on an 18 month contract to new O2 customers, but £100 for existing customers. Although announced today by Steve Jobs at the WWDC (see TechCrunch’s live coverage), the iPhone will ship to customers in the UK on July 11.

The news is pretty astounding. From going from a device which costs over £300 to virtually free at POS will supercharge iPhone sales in the UK and make it a real contender for mobile web startups as a platform. It will also suck out early adopters from other networks.

The news means O2 must be very confident of its 3G network. Its Edge network previously creaked under the strain of its 100k+ 2G iPhone users. iPhone customers use up to 50 times more data because of the power of the device and its data applications.

UPDATE: I now just heard that new iPhone customers will have to register on the O2 web site and iPhones will be sent out as O2 get them from Apple. They must expecting huge demand for this to be the case.