(Before I go any further, I should probably state for the record that I love my iPhone. This post is a dig at the network providers, not Apple.)
My biggest bug-bear is contracts. It's not so much the total cost which puts me off, I realise that nice things cost money. What puts me off is that the pace at which modern smartphone technology moves is too fast for a fixed term contract of 18 months or more.
I have an idea. What if fixed term mobile phone contracts were abandoned?
Rather than tie a customer in to an 18 month/ 2 year contract, what if the mobile phone companies gave or faciliated a loan? This wouldn't actually make much of a difference on a day to day basis, you'd still pay £x per month of your loan, plus whatever network fees. The user would then sign a contract effectively saying "I will pay back this loan, plus network charges of £y per month in return for however many minutes, texts and data etc. I reserve the right to fully pay off this loan at any time (with no extra costs) and cancel or change my network contract (up or down) within 30 days notice."
Surely that's what pay as you go (PAYG) is? No. PAYG doesn't add up unless you're a low-user. Let me explain with data. Hypothetically, let's say I want to buy a 16GB iPhone 4s tomorrow. I could go to any network provider, but let's stick with O2 for the moment. Let's say I use about 300mins, loads of texts, 500mb of data, and want to keep it for 18 months.
- If I pay monthly it will cost me £170 up front, plus £37 a month contract. Total cost of contract £836. (Interestingly this total cost of contract seems to have gone down a smidge over the last couple of years)
- What about PAYG? For this it gets a little more tricky, as O2 charge 25p per minute for the first 3 minutes, then 5p/min thereafter. Let's take an average call length of 10 minutes and forget non-O2 mobiles which will always cost 25p. Up front it would cost me £500, then another £33 a month (for which they'll throw in the texts and the data). Total cost over 18 months £1,094.
- What about PAYG with an average call length of 5 minutes? £51 a month, totalling £1,418
- But wait, none of my friends are on O2, and I rarely call landlines. This means I would have to pay 25p a minute for every call. 300 minutes at that price would set me back £75 every month. Total cost over 18 months would then be a staggering £1,850.
Ok, so the last example is unlikely to happen in the real world. My point is that PAYG isn't a practical alternative if you use even a moderate amount of the network provider's resources. This is deliberate. I mean, why let users leave at the drop of the hat when they have been so used to signing a contract since the beginning of time that they'll sign another one without even thinking about it? Why bother addressing a customer's complaint - however small - if they have to keep paying over their hard earned cash?
Continuing this specific example, my proposal would be for a loan of £500 up front, to be paid off over 18 months. Then there would be network charges of £18.67 per month. The monthly charge would be £46.44, and the total cost would be £836, the same as O2 are asking for pay monthly. Crucially, this could be cancelled at 30 days notice. At the moment the trade in price which O2 are offering for a 16GB iPhone 4s is £321.50. Doing the maths, you could trade this in and buy a brand new one after a little over 11 months at no extra cost - you pay off the £325 on your contract by indirectly selling your phone on to someone who isn't as bothered about getting it as soon as it's released. Maybe I would need to pay a few quid extra for interest, but essentially I would have paid £514 to keep my phone for a year. Then I would dish out even more money for the latest handset.
But wait, there's more! This would work for every kind of phone. No matter who makes it. It would mean that there was transparency over the cost of the device, and the cost of the network service. Is it just me who thinks that it's really fucking silly that 300 minutes on an iPhone costs more than on another kind of phone? Surely those minutes can't cost the network provider any more to provide? I know I'm paying more for the best phone out there, so why does the archaic and asinine pricing system make it so hard to benchmark phones against one another?!? Oh yeah, that's right, because if us consumers are baffled by seemingly similar deals, we'll probably be tricked into spending more money than we want to spend. They're hiding behind confusing pricing tactics, and I don't like it.
Of course, it doesn't make financial sense to end your contract until all of your 18 months sentence has been served. In the unlikely event of ending the contract after only 12 months you would still have to pay the full cost to the end of the contract. So in this example I would keep my iPhone 4S for a year, but still have to pay the full £836.
I know that network providers have started getting slightly better at sim-only deals recently. In particular, 3 seem to be offering some much better deals than O2 at the moment. Sim only is great and it's definitely a route I am going to explore when I renew my phone, it looks like I will be able to do exactly what I'm wanting to do. But it's not the default. You have to search a little before you find out that it's a plausible alternative, you have to find the rarely mentioned option hidden away at the bottom of the page, and even then you'll probably end up buying the handset from a different place than your network 'package'.
But wait, there's more! This would work for every kind of phone. No matter who makes it. It would mean that there was transparency over the cost of the device, and the cost of the network service. Is it just me who thinks that it's really fucking silly that 300 minutes on an iPhone costs more than on another kind of phone? Surely those minutes can't cost the network provider any more to provide? I know I'm paying more for the best phone out there, so why does the archaic and asinine pricing system make it so hard to benchmark phones against one another?!? Oh yeah, that's right, because if us consumers are baffled by seemingly similar deals, we'll probably be tricked into spending more money than we want to spend. They're hiding behind confusing pricing tactics, and I don't like it.
Of course, it doesn't make financial sense to end your contract until all of your 18 months sentence has been served. In the unlikely event of ending the contract after only 12 months you would still have to pay the full cost to the end of the contract. So in this example I would keep my iPhone 4S for a year, but still have to pay the full £836.
I know that network providers have started getting slightly better at sim-only deals recently. In particular, 3 seem to be offering some much better deals than O2 at the moment. Sim only is great and it's definitely a route I am going to explore when I renew my phone, it looks like I will be able to do exactly what I'm wanting to do. But it's not the default. You have to search a little before you find out that it's a plausible alternative, you have to find the rarely mentioned option hidden away at the bottom of the page, and even then you'll probably end up buying the handset from a different place than your network 'package'.
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What do you reckon? Is it unrealistic, or could it actually happen? I grant that my idea isn't perfect, but I think it would be a massive improvement on the what we've got now. I also think that it's totally achievable. I know people who drive cars that are worth less than the amount of money I've spent on my iPhone over the last 2-3 years, are modern smartphones really so different?
All it needs is for one network provider to give this a go. O2, Vodafone, Three, Orange - are you listening?
Surely we can change things.
Surely there's a #BetterWay.
