An annoucement from O2 suggests the operator is going to attempt to fight the competition, as well as rivals, for iPhone customers by adding value through bundle packages, rather than any price cuts.

O2 has launched the "Total Connectivity" plan for iPhone customers that sees new and existing iPhone customers buying the iPhone Internet Tethering bolt-on and getting the standard O2 home broadband package completely free.
Pay monthly iPhone customers who shell out for the £9.79 per month 3GB Internet Tethering Bolt On before 31 December 2009 will be entitled to the O2 Home Broadband standard package for free, presumably on a month for month basis.

Alternatively, customers can claim a £7.34 per month discount against any other O2 Home Broadband product including Premium, Pro or O2 Home Broadband Access.

The deal goes live from 10 November at which point we'd imagine there'll be more info (including the small print) over at