At first take I was suspicious of O2’s new phone leasing scheme. On closer look, though, it does make sense for those who want a new phone every year. I now suspect it will be very popular. For £55 a month you can rent a 16GB iPhone 4S and enjoy 750 voice minutes, unlimited texts and 500MB of data. A 32GB model costs only £10 more. A bonus is that these monthly charges include insurance which is usually extra.
If you are flush with cash and buy your iPhone outright, you can get a similar allowance deal for around £20 a month without a long contract. The middle way is to take a substantial discount on the phone and commit to an 18- or 24-month contract, probably paying around £35 a month. Either way, there is an initial cost and you must find a buyer for the phone at the end of the period.
Under the rental scheme, given that you are not shelling out for hardware, the monthly cost is reasonable. For £660 a year you are always sure of having the latest phone in your pocket.