Phone call minutes & text messages are paid for the same way as any other O2 PAYG phone (via top up vouchers etc).
You get 12 months free "unlimited" internet access from the day you activate your phone. Every month, O2 sends you a text message to remind you how many months of free access you have left. Once the free period is over, you can buy further access at a bolt-on rate of £10 per month, by texting a special number (the £10 is then deducted from your current PAYG credit). You also get free access to a couple of the more popular Wifi networks bundled with the internet access.
Obviously, if you have your own wifi network at home / work, then you can hook up to those networks free of charge whenever you're in range.
locational services/GPS is - technically - free. However, most of the applications that make use of this feature also require a live internet connection (to retrieve maps or whatever).
In summary, for the first year, you only pay for your calls and texts. From the 2nd year onwards, if you want to retain full functionality on your phone, you need to pay an additional £10 a month.
