I am not a lawyer nor do I have any legal training, but I read that mail from BT as follows.
1) Your current contract with BT expires on 1st October 2009....and you must pay to BT the normal contractual costs accruing against you (your monthly BB payment) until and including that date.
2) If you do not cancel your current contract with BT on or before the 1st. October 2009, then you will be automatically "rolled on" into a new 12/18 month period contract commencing on 2nd October 2009.
3) If you cancel your current BT contract 30 days or more prior to 1st. October 2009 and request your MAC 30 days or more prior to 1st October 2009, your contract is terminated on 1st October 2009 without penalty.
4) If you fail to give that 30 day notice (as above) and/or fail to request your MAC within the time scale as above....you will face a penalty of £25.00 in addition to any rental for BB due until 1st. October 2009.
If my interpretation is correct..............cancel now(...today...) your current BT contract citing 1st October 2009 as your desired termination date and also request your MAC today.
That will comply with the 30 day notice of termination period and thus avoid any penalty.
You MAC should arrive within five working days and will be valid for a period of thirty days after issue (do not confuse that thirty days with the contractual 30 days talked of above...they are seperate issues)
When you get your MAC pass it to O2......but emphasise with them that you do not want migration until a date (specified by you) which lies between your return from holidat and the 1st. October 2009.
That way you may pay a small overlap in costs as your O2 and BT contracts may run side by side for a few days, thus incurring an overlap in costs....but that overlap is a lot less that the BT penalty ( especially at the good rate you have negotiated with O2)
UnkyUb....I said that I have no legal training, and the above is merely my understanding of the content of that e-mail. Hopefully someone wiser and more knowledgeable than I will comment.
edit..Ah, wiser and more knowledgeable kitizens have already responded..