02 drops unlimited mobile data offer

The O2 has become the first UK operator to ditch its tariffs offering customers unlimited mobile broadband, with senior management saying the model is "broken".

Orange and 3 are understood to be preparing to drop their unlimited data packages, T-Mobile is understood to be looking closely at the issue while Vodafone does not offer the so-called "all you can eat" deal.

O2's announcement comes just two weeks before the release of the new iPhone, which is likely to increase the demand for data. AT&T dropped its unlimited package in the US last week, a model that O2 thinks "may be widely adopted by the industry".

The rise in mobile data is putting an increasing strain on the mobile networks, forcing costly investment to cope with demand.