Shorter Mobile Phone Contracts Come Into Force

A ban on the sale of 36 month mobile phone contracts came into force on 1st May, however the price of twelve month contracts has increased as a result.

With mobile phone companies no longer offering 36 month contracts, there has been a proliferation of twelve month deals, which is ideal for those who do not want long contractual commitments, but the costs per month has increased.

uSwitch has found that the number of 12 month contracts on the market has rocketed from just 279 in February to 4,765 at the start of May, however the cost of the cheapest available pay monthly deal has almost doubled from £5 to £9 a month.

It is not just the monthly costs that have increased, as companies look to make profits over shorter term contract lengths. It is now becoming difficult to find deals that offer free handsets, particularly the more desirable smartphones.

Whereas phone companies were offering valuable smartphones for free when the customer signed a 24 or 36 month deal, consumers are finding that they are having to pay a larger contribution for their handset now, particularly if they are only entering into a 12 month contract.

For example, consumers can lay their hands on the popular HTC Desire for free with a £15 a month contract if they sign up for 24 months, but those looking to take advantage of the new shorter 12 month contracts will have to fork £35 each month – more than twice as much.

The Apple iPhone 4 and Samsung Galaxy S II aren’t available at all for free on a 12 month contract. The penalty of a short contract is a £299 or £309.99 cost for the handset up front.

“This new ruling has not only culled the growth of lengthy contracts, but has also opened the door to a new wave of 12 month deals – great news for those savvy customers who want the freedom to move around each year.”

“However, it isn’t all good news. As a general rule, the longer the contract, the lower the monthly fee, so it’s possible that average contract costs will now rise. Providers may compensate by stopping to offer the latest handsets for free on shorter contracts, potentially bad news for those who can’t afford the initial cost of a shiny new phone.” Ernest Doku, technology expert at uSwitch.com said.

MoneyHighStreet.com Comment: Consumers often see this chain of events – a move to help them by banning long term contracts results in knock on effects with higher monthly fees and the withdrawal of free handsets.

As usual, it pays to shop around both online and offline, before signing on the dotted line. There are some great deals available but you have to find them or ask for them!