This is fantastic news. £35 is the sweet spot for mobile phone tariffs in the UK. O2's iPhone tariff at that price point now represents real value, and with the unlimited data the whole package suddenly looks very attractive. Sales of the iPhone in the UK should undergo at least a moderate surge in February in response to this move.
I wonder if Apple has had anything to do with this? Perhaps they have revised their revenue cut in exchange for the saving being injected directly into the tariffs.
Whatever has happened, it's overdue, and I'm glad somebody has realised that 'rip off Britain' doesn't mean we'll just bend over and take it.