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As we reported yesterday, O2 has won the exclusive contract to sell the device in the UK and will be offering a choice of three 18-month contracts beginning at £35 per month, which will include unmetered mobile data usage and free use of the Cloud Wi-Fi network which covers 7,500 locations across the UK.

"We are coming to the UK and wanted to pick the best carrier and that is O2," says Apple boss, Steve Jobs. "It wasn't an economic choice, it was a cultural choice. They think the way we do, work the same way as us. O2 are doing the best job here."

O2 is not offering a business tariff and business users will not be able to transfer their existing tariffs over to the iPhone. According to O2, if business users want an iPhone they'll need to pay for an 18-month consumer contract, just like everyone else.

Where a Wi-Fi connection is not available the iPhone will roam onto the Edge network, though O2 admits only 30% of

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the UK will be covered at launch, with further coverage dictated by customer demand.

Speaking about the lack of 3G on the iPhone Apple CEO Steve Jobs says, "It's actually pretty simple. The 3G transistors are real power hogs. Our phone has a talk time of eight hours and that's really important when you start to use the internet.

"People won't use it if they're worried it's going to drain their battery and they'll miss that important call they've been waiting for. You make a really big trade-off to go 3G. Edge is a really great network for mail and maps. The only thing you'd like to go faster is the internet, so we built in Wi-Fi which is way faster than any 3G."

The 8GB device will cost £269 at launch, which may put off some UK consumers used to getting their handsets free with the contract, but Matthew Key, O2 UK CEO, says the iPhone requires a different mindset.

"This is a great phone, but it's not just a phone," he responds. "What you'll do with it is leagues different from what you can do with a phone. Think of it as three devices in one, and one of them is an iPod."

Concerns that the recently announced iPod touch might step on the toes of its big brother were also brushed aside with Jobs describing the touch as "training wheels for the iPhone."

He also confirmed that the company "had no plans to change the pricing" as happened in the US but was quick to add that in "technology there's no guarantees."

The iPhone will be available through O2 stores, the Carphone Warehouse and Apple's own high street branches.