Cruddy Contracts

Published on Tuesday, 30 August 2011 08:44

 By Jay McGregor

On the face of it mobile phone contract deals save us from huge, unaffordable upfront offline mobile costs.

For years the contract marketing machine has peddled press release after press release about cut rates and cheap brand new handsets, whilst denouncing the expensive out-of-date Pay As You Go model. And, might I add, very successfully. Pay As You go has become a dirty phrase associated with adolescence, uninformed foreigners and those with a credit rating so bad they can’t even get into a pyramid scheme.

Pay As You Go was cast to the latrines to wither and die as people began to wise up, and, simultaneously, contracts started to become very reasonable. PAYG lost its way with greed and paid a suitable punishment. Running out of credit was no longer funny or necessary. Remortgaging your house for a measly sniff of data turned into sniffing all the data you could handle. But, as the cycle of life continues, so do the patterns.

Contracts have started to collapse under their own weight. As of summer last year contract subscriptions were around 5 billion worldwide. 5 billion! Minus the Western Union Money Transfer scammers, that’s not a bad figure. But, just as Uncle Parker knows, with great power comes great responsibility – responsibility subscription providers well and truly shirked. As the greed machine churned insatiable profits, the level of arrogance rose exponentially.

© Image courtesy of Icebar

The smart phone era marked the beginning of the end for contract phones. We now face lengthy sentences dressed up as bargains because of their low monthly rate. 18 and 24 month contracts are standard, especially if you want to acquire some of the latest tech. But now, with an influx of smart phones flooding the market, consumers can pick decent level tech for a reasonable upfront price. In some cases for as little as £160.

Some providers, realising the hunger for smartphones but the lack of interest in 24 month contracts, have capitalised on this market and introduced cut rate PAYG tariffs to rival early subscription deals. The most impressive deal so far comes from GiffGaff, a Virtual Mobile Network Operator, who are offering 250 minutes, unlimited data and unlimited texts for £10 a month.

A close second is Three who are admirably offering ‘all you can eat’ data, 300 minutes and 300 texts for £15 a month top. Finally, Orange, who is now part of T-Mobile, is offering a 400 texts and unlimited internet for £10 a month top up. All pretty impressive deals and considerably cheaper than their subscription counter parts if you include a smart phone in the mix.

Naturally, if you want to buy a brand new handset, it’s going to cost. And subscription deals usually offer a ‘upfront’ cheaper option – but you will almost likely pay more over the course of your contract. Subscription deals are essentially like buying something on finance, monthly instalments at a reasonable rate but ultimately costing you more then if you had bought the product outright. Let’s take the New Samsung Galaxy S2, generally regarded as the best smart phone on the market at the moment. If you want to buy it outright it will cost you £470 (cheapest I found on Amazon).

Include GiffGaffs £10 a month top up, unlimited internet and unlimited texts over a 24 month period and you’re looking at an overall cost of £710. Now, let’s compare that to some of the cheapest subscription offers:*

Provider	Contract Length	Minutes per Month	Data per Month	Texts per Months	Cost per Month	Total Cost
	24 Months	500	1 GB	500 Texts	£30	£720
	24 Months	600	500 MB	Unlimited	£31	£744
	24 Months	700	500 MB	Unlimited	£35	£820
	24 Months	1200	Unlimited	500 Texts	£35.75	£858
	24 Months	900	500 MB	Unlimited	£41	£1008

Granted, the contract deals generally offer better minutes than the PAYG offers and if I wasn’t reviewing tariffs for smartphones I’m sure the results would be different. But I am, and the fact is that this, as with other smartphones, is a data heavy device.

If you want unlimited data for those not offering it above, expect to pay some pretty astronomical figures. What can be ultimately learnt here is that the appeal of a shiny new ‘free’ phone is too much for some people, but taking the hit early on will eventually save you money and the heartache of a 24 month contract.

* Figures obtained from Carphone Warehouse