Congratulations, mobile phone industry! After years of painstaking effort, you've finally done it – rendered smartphone contracts the worst purchase this side of a second-hand backscratcher from an abandoned leper colony.

Shall we count the ways? Why, yes. Yes, we shall.

Let's start with two-year contracts as the standard, for devices on – at most – a yearly update cycle. Android phones are especially problematic for this, as there are at least three steps between you and even software updates – Google making them, a manufacturer like HTC fixing them up for its range, and finally your carrier pushing them.

If any of them suddenly deem your phone obsolete, you're auto-screwed.

After that, you're not even saving much on the phone itself. Even if you agree to a £30 a month contract, the phone's going to be around £100 minimum, which only makes financial sense if you do actually spend more than 10 hours a month talking into the thing. I'm sure many do, but for my part, the only reason I've been paying has been for the data package.

I've been paying £35 for the last just-under-18-months to have instant access to my email, Google and… uh… TV Tropes… but if I set up a new contract now, most providers would limit me to just 500MB. Having played with the camera on the iPhone 4S, and the surprisingly-good Siri, I see myself breaking that limit on a regular basis.

The thing is, there are more reasons than that to hate the status quo – those are just the biggies. It's a spectacularly horrible, customer-hostile situation, which mostly survives because most of us don't think we have any real choice in the matter.

£30+ a month is treated as an unofficial smartphone tax, and we accept that cost because all the major networks unsurprisingly like to push the idea that we have to.

Except we don't, which is why this contract cycle, I took myself out of the game and bought an unlocked iPhone 4S directly. Expensive? Yes. Did it involve standing outside an Apple Store at 7:30am on 8 October? No comment, but I regret nothing!

Is there another way?

And rather than signing up for 24 long months, I've gone PAYG via a cool little service called Giffgaff. Giffgaff is an odd company. It acts like it's small, indie and proud, though really it's O2 and runs on the same network. Its gimmick is using the community to market and offer support, being handled completely online, and using the savings to offer better services.

How much? 10p/minute calls, 6p texts, 20p for up to 20MB a day internet. Already pretty good. There are no contracts to sign and no minimum terms. At worst you lose £10 for your initial top-up if you decide to PAC it in and go with a different service.

Those prices can be capped to save them getting out of hand, with auto-top up for convenience. Best of all though are the 'Goodybags', which let you spend between £5 and £25 on bundles that last a month – £10 buying you 250 minutes, unlimited texts and – yes – unlimited mobile internet. Going to be out of the country for the month? Save your money. Going to be working on a heavy project? Pick one up. Easy.

To compare the value, its parent company's nearest equivalent, Simplicity, is £13.50 a month for 100MB of data, and £16.50 for the sadly-standard 500MB. By going with Giffgaff's £10 a month deal, my choice of unlocked iPhone will pay for itself in a year. At most.

The community focus makes pretty good sense, and has produced several handy things – a forum full of helpful people, and an iPhone app for keeping track of my balance.

The handiest thing about it though involves SIM cards. Giffgaff doesn't provide the Micro-SIMs used by the iPhone 4, but it does reward people for sending cards to people. The result? A cottage industry of users who cut and mail them to new users, completely free.

I ordered one from the Giffgaff site on a Friday and it arrived on the Monday, along with the rest of the card. No complaints so far. If they develop later, I'll just jump ship.

The PAYG model isn't right for everyone, but it's at least a viable choice that's finally worth considering. I've never wanted an expensive contract. It's just always been the best of a bad bunch of well-pushed offerings, which is even worse now we can't at least guarantee getting a cool new phone out of it.

Next contract renewal, it's worth at least seeing if something else will fit you better before locking yourself into a bad deal until 2015. You might be surprised to see how many other options you actually have.

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First published in PC Plus Issue 314. Read PC Plus on PC, Mac and iPad

Liked this? Then check out Who's making money from your smartphone?

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