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As if to rub salt in the wounds of O2 UK customers, angry at the high charges and the restrictions associated with the new iPhone 3GS, disruptive rival 3 UK has, once again, set a new bar for low cost mobile broadband. Users can now get a 5Gb SIM-only dongle service for £15 ($25) with only a single month's commitment. This follows a series of moves by 3 to attract customers with good broadband deals, and it was the first to offer dongle data services on a pay-as-you-go basis, a tactic now copied over the Atlantic by Virgin Mobile USA.

3's most recent eye-catching offer was a 15Gb for £15 proposition, and now users can choose a one-month commitment - with a rolling 30-day cancellation period - as a midrange option between the relatively low charges that come with a one-year or two-year deal, and the higher per-Gb tariffs for pay-as-you-go. Operators also hope the risk averse will eventually take the plunge, if they have a good experience on the monthly deal, and sign for a longer lock-in.

The month-by-month offer - which mirrors the sort of flexible tariffs that other disruptive providers like the US' Clearwire are testing to steal a march on incumbents - gives 5Gb of data for £15 a month. The dongle costs £19.99. This undercuts O2, which also has a month-by-month rolling deal, but with just 3Gb for the £15 outlay, and with the modem priced at £60.

Usage of dongle-based services has been, so far at least, less intensive in the US than in Europe, although all the major operators offer such an option. This is partly because the prices are higher, but the first salvoes in the price war have been fired, notably by Virgin, which has taken US consumers into prepaid dongle territory for the first time. Its new service, which relies on an MVNO deal with Sprint's CDMA network, is called Broadband2Go and uses Novatel's USB modem, the MC760. The prices are far higher than 3 UK's though there is now activation fee or tie-in. The dongle costs $149.99 and tariffs range from $10 for 100Mb to $60 for 1Gb.

Back in the UK, O2 has already upset its iPhone users by making it expensive for them to upgrade early to the new 3GS model, and by charging high fees for the new tethering capability. Now it has further angered consumers, with plans to double the price of the 3GS, making it far more expensive than the iPhone 3G was at launch. O2 says it needs to reduce its outlay on subsidies and is now prepared to take on less of the cost of the handset, perhaps bracing itself for the potential end of its exclusive, which could happen next year. O2 says it will raise the retail price of the 32Gb iPhone 3GS handset to £274 ($450), more than 70% more expensive than the old 16Gb iPhone 3G, introduced at £159 (both prices apply to the lowest monthly tariff). The new 16Gb model costs £185 on that tariff, compared to the former low end model, the 8Gb iPhone 3G, at £99.

An O2 spokesperson told newspaper The Guardian: "We set the pricing on a variety of factors - not least of which is the wholesale price that Apple charges us."

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