Consumers have been forced to accept crappy contracts for too long – but could you be finally in line for a change?
The problems users run into with mobile contracts are too great to list – but there's a real sense that networks aren't giving real value for money.
Most are seen as money-grabbing cesspits that offer a paltry amount of minutes for the equivalent of a third of your monthly salary just to own the latest and greatest smartphone - a slightly unfair notion as at the heart, they're just businesses that serve the needs of users wanting to talk and web on the go, although it can be hard to know the best deal for you.
And what's more, you're forced to lock into the deal for two years, and if the price rises during that time, well, there's not a lot you can do about it. Read the small print people.
But with the launch of O2 Refresh, a tariff that separates out the cost of texts, minutes and data from the cost of actually owning the phone, at least users can see where their cash is going and get a tangible sense of what's being 'bought' when throwing the best part of £40 at a network each month.
At least it's a better deal than O2 Lease, which was being pimped to consumers for a while, encouraging expensive short term contracts just for the privilege of getting a new phone sooner – and you didn't even own the device at the end of it.
Time is money
With O2 Refresh you're getting clarity on what you're buying, and if you just can't wait for the new iPhone 5S, then you know just how much of the phone cost you'll have to hand over to own your handset outright.
The good thing is, and this is something that has caused me much umbrage in times gone by, customers wishing to cancel their deal don't have to pay for minutes they can never use. So when you paid £40 a month before and wanted to pay up with 12 months to go (which is fair, as the cost of the phone is spread through the contract) you still had to pay the network for all the minutes and data.
So with this deal, you're properly just spreading the cost of the phone out over 24 months, safe in the knowledge the cost to leave, should you want to, can be partly offset by just selling the phone, and the contract is far fairer now through O2 Refresh.
While all this is excellent, there's another problem that's not being addressed: the length of time people are tied into these deals – and it's important to note we're talking about all networks, not just O2. We need to see a return to 12-18 month deals being pushed, rather than locking consumers into the longer-term contracts to reduce churn, the dreaded word networks use to describe the act of a customer no longer being able to stand poor customer service / insufferable costs for data / lack of signal and jumping to another provider.
Of course it's going to cost more to provide these tariffs, and we as a nation need to wise up to the cost of actually owning a smartphone - which a understandably expensive when you see the technology contained within. But it's still so much cheaper to buy a phone outright, throw in a SIM-only plan for 12 months and then sell the handset at the end of the term to get a newer and faster version.
The fact people fork out £45 for an iPhone tariff shows that the networks are playing on the fact people hate to pay more up front to buy a new phone - more 'lifetime cost' layouts should be used
Time to go SIM-only
Regulators should get involved when it comes to upgrades as well. Time and again I hear about people waiting a bit longer at the end of their contract to see how nice the new iPhone / Galaxy is, only to find out they're still paying £42 a month when the phone is already paid off.
As soon as your contract period is run, your network provider should be forced to offer you a range of SIM only deals that significantly lower your monthly outgoings rather than letting you effectively wander into their shop and throw £20 onto the counter before sauntering out every payday.
(And if you're someone in this situation, get on the phone RIGHT THIS SECOND to your provider and ask what SIM only deals are on offer. You can go onto a rolling one month deal for as low as £7 a month while you wait for the iPhone to appear.)
So we applaud O2 for Refresh – it's a model that more closely mirrors other countries, where bundling together the cost of handset and phone is prohibited, and means consumers get a better idea of where their money is going.
But let's see 12 month contracts properly pushed and explained, and up the data allowances too. The likes of O2, EE and Vodafone offer fairly low amounts of data with their deals compared to competitors, yet GiffGaff, which is owned by O2's parent company, Telefonica, happily throws out unlimited data.
O2 has proven you can still offer quality tariffs with transparency. Let's see other networks step up and push the notion further.
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