uSwitch has warned consumers that ‘flexi’ mobile tariffs that separate the cost of the handset and the airtime could end up costing them more than a comparable SIM-Only (SIMO) tariff.
A customer with one of these tariffs will stop paying the handset component of their contract upon the expiration of their minimum term and only pay for the airtime component.
Such tariffs have been marketed by several operators, including Sky, Tesco Mobile, Virgin Media and O2 with O2 Refresh, as a way of controlling cost or to allow customers to upgrade early to a new device by paying off their existing phone.
uSwitch looked at tariffs for the iPhone 8 and Samsung Galaxy S9 from four networks and found that customers would pay less if they moved to a comparable SIMO deal. Indeed, they could save as much as 38 per cent on average if they took out the cheapest SIMO tariff.
However some of the flexi tariffs are comparable with the SIMO deals, while customers can also choose to end their contract at any time as the minimum period has expired.
Instead, uSwitch wants mobile customers to be notified when they are out of contract, bringing the industry in line with the insurance and utilities markets. Indeed, Ofcom is set to consult on such measures in the near future.
“On the face of it, these contracts have two main appeals - they give customers the ability to upgrade to the latest smartphones early and they take away the risk of ‘double paying’ once the device part of the contract ends,” said Ernest Doku, mobiles expert at uSwitch.
“The issue is that once customers are only on the airtime part of the deal, they often are paying a significant premium compared to similar SIM-only deals and this is before you consider that this deal was likely taken out two years ago when the cost of data is likely to have been a lot higher.
“The fact that these deals reduce the risk of customers paying inflated out-of-contract prices is commendable - but they’re far from the best value deals, even with the same network. It is very clear that providers should be doing much more to let consumers know when they are about to drop out of contract. Ofcom is soon due to consult on how providers need to tell customers when their deals are coming to an end - with one in six mobile users currently overpaying for contracts, this can’t come soon enough.”
“Virgin Mobile offers a range of plans to suit our customers’ needs," a Virgin Media spokesperson told TechRadar Pro. "From flexible Freestyle plans to great SIM Only deals, we always try to provide the best value possible. When permitted, we will contact our customers before they reach the end of their contract.”
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