O2 is looking to reduce the cost of opting for a pay as you go mobile broadband service by cutting the price of the dongle for a limited period.

Until the end of May, customers will be able to sign up with O2 and receive a USB dongle to help them get online using O2’s mobile broadband networks for half of its original price.

The USB dongle was originally £19.99, but from now until May 31st the dongle is just £9.99, giving consumers even more incentive to pick up a mobile broadband package and see how it can work for them, without committing to an extended contractual period.

O2 has extended its pay monthly mobile broadband deals by adding a new laptop computer to its line up of incentives. The Asus UL30A straddles the line between netbook and notebook, with powerful hardware combined with light weight portability.

There is an up-front charge to pay for this cutting edge computer, but for your money you get 3GB of RAM, Windows 7, a large 320GB hard drive and of course O2’s award-winning mobile broadband service. Best of all, this laptop has an integrated mobile broadband modem, so there is no need to cover the cost of a separate USB dongle, or to plug in such a device in order to get online.

O2 is looking to compete directly with Orange mobile broadband free laptop deals and every major mobile broadband provider seems to be constantly refreshing their offers in order to win new customers in a highly competitive marketplace.

Simple Broadband’s Communications Manager Simon Gerrard commented “Pay as you go mobile broadband from O2 could be a great way to try out the service, especially as the new dongle offer makes signing up a low risk.”

Competition in the mobile broadband market does not seem to be slowing down, as O2 has just laid down yet another gauntlet in the price wars by halving the cost of some of its mobile broadband deals in order to attract new customers.

Users looking for a free laptop to accompany their mobile broadband package are in luck, as O2 has cut the cost of certain deals in half, resulting in packages that previously cost £50 now setting you back just £25.

For your money you can choose one of Asus’ popular Eee PCs, which are compact netbook computers that favour portability over high-powered software. You can also connect to the internet at up to 3.6Mbps using O2’s 3G networks and there is a 3GB monthly data allowance for this particular bundle.

For those looking for a little more power to go with their mobile broadband, the £35 a month deal that includes a Samsung R519 with the same download speeds and data allowance might be more suitable.

Both of these packages can be augmented with an additional data allowance for £10 more a month, giving you a total of 10GB usage.

Given that current statistics indicate that more people are interested in free laptop deals than ever, these price reductions could really help to bolster O2’s customer base.

Simon Gerrard, Simple Broadband’s Communication Manager noted that “O2 has really upped the stakes here by cutting the prices of its mobile broadband packages. Currently every major provider is scrambling to grab new customers and with the price of Vodafone mobile broadband USB deals falling, alongside the cost of other packages, there are now plenty of ways in which to get online without breaking the bank.”

LTE has been trialled by O2 at its Slough-based UK headquarters. LTE stands for Long Term Evolution and refers to the planned next generation of mobile broadband technology that will hopefully be available to UK customers over the next couple of years.

On paper the trials sound very exciting indeed. O2 has partnered with Huawei, the firm that produces the majority of the mobile broadband dongles currently used by mobile broadband customers and it claims that the successful tests of LTE in Slough provided download speeds of up to 150Mbps.

Obviously this sounds to be very good news for everyone, although the roll out of LTE networking technology around the UK is not expected to begin in earnest for a couple of years. When it finally arrives it will mean better download speeds without a fixed line connection and many consider mobile broadband to be the most financially viable next generation broadband technology because it does not require that streets are dug up to lay cables with the associated disruption.

If this is indeed the case, traditional fixed line broadband ISPs could face stiff competition in the coming years and an all-out exodus to the more convenient and faster LTE services might even be on the cards. BT broadband options will be seeing improvements over the coming years with fibre to the cabinet technology providing faster broadband speeds to many customers, but it is the flexibility of mobile broadband’s next generation that could see it dominating the marketplace.

LTE technology is already commercially available in Sweden, with network provider TeliaSonera having launched the service for customers only recently. For the moment, the UK is lagging behind with this cutting edge connectivity, but O2’s trials could well generate some sense of urgency in the broadband market, accelerating evolution.

O2 has been slow to improve the levels of 3G coverage that it can offer to its UK customers, with its current coverage levels of 84% putting it at the bottom of the pile when contrasted with other UK providers.

After recent studies identified Orange as the provider of some of the cheapest mobile broadband in the UK, as well as boasting 93% 3G coverage and a very satisfied customer base, other networks have had to react fast in order to save face.

O2 has therefore announced that it will be investing significant sums into expanding the reach of its 3G networks, with a total of more than 1500 new 3G base stations being built or converted to utilise the new technology.

It is not clear just how many new masts will go up around the UK, but converting existing 2G masts to 3G will certainly provide better coverage in the most underdeveloped areas.

London will of course be a focal point of the investment, with a total of 200 new base stations becoming active over the next year and a proposed group of 40 authorised for an update by Christmas 2009.

O2 has been famously nonchalant in its approach to 3G coverage up to this point and it was subject to threats of a potential fine back in 2008 when Ofcom reported that it was not adhering to the coverage levels dictated by its 3G licence.

According to O2 officials, the company did not fully appreciate the level of public demand relating to mobile broadband. It has therefore been focusing on its home broadband service, which has resulted in O2 becoming one of the most popular fixed line providers in the country.

Those looking for the cheapest mobile broadband in the UK could find their options greatly improved as a result of the increased competition offered by O2’s wider 3G coverage.

The increasingly popular route to getting your hands on a free or cheap laptop by signing up for a mobile broadband contract has got 2 additional options thanks to O2 Mobile.

The maths for these mobile broadband and laptop offers is interesting. The monthly costs for a contract with a laptop is higher than a ’standard’ contract and it does require a two year commitment. However, the incremental charge can be of the order of £250 over the term of the contract (although it can be more, so do the sums) – £250 or so for a laptop is a not a bad price but its notional cost being spread over the course of 24 months is what makes these offers rather attractive.

The latest deal from O2 mobile broadband is for either an Asus 1005H laptop or a Samsung R519 laptop with a 24 month contract – whichever option you go for there is a £29.38 charge for the laptop. The monthly charge is then £24.48 (3Gb download limit) or £34.36 (10Gb) for the Asus 1005H and £34.26 (3Gb) or £44.05 (10Gb) for the Samsung R519.

These types of mobile broadband and laptop offers are becoming more widespread and will appeal to a wide range of mobile broadband customers but particularly those who wish to avoid the upfront costs of a laptop. Students are a clear target here but in times or recession where poor cash flow affects many people these deals will have wider appeal.