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14 March 20120 Comments by Jon M

Does the mobile phone industry in the UK need a top-down shakeup?: Part 1

This is a question we’re often asked – do we need a top-down shake up in the mobile phone industry? Many would say yes we do – here’s part one in our new series by looking at what exactly is happening right now, along with some of our opinions as to how improvements could be made in the industry.

Before you start, don’t forget to check out all the articles in the series:

Contract or Pay As You Go?

When you buy a mobile phone from a store the chances are that the sales person is just there to sell, and they won’t have any knowledge about the phones they are selling, unless they have the phone themselves. The sales person would probably be equally at home selling double glazing. They have very limited knowledge if any at all; they are supposed to go on an extensive training course which includes product knowledge when they’re recruited by the retail store they applied to work for.

There are two ways of paying for your mobile services; one is with a lock-in Contract and the other is Pay As You Go. Contract allows you to get a handset with a tariff that gives you an allowance of calls, texts and sometimes data. The handset is normally free unless it’s the very latest model in which case you may have to pay a one off upfront cost. The contract length is normally 24 months (2 years). Most networks make contracts 24 months or longer to absorb the high cost of the handset – some handsets can cost up to £700 if they were bought outright. To get a contract you have to be over 18 and pass a standard credit check; remember that you are actually signing up to a credit agreement. You may have to pay a small fee as a deposit which is separate from the upfront payment for the handset as sometime networks ask for this if you’ve had no credit or a bad credit history. What you are signing up to is an agreement that will pay a certain amount per month for the duration of the contract. In return, you receive a given number of minutes, texts and a certain amount of data. You may sometimes get some extras thrown in, such as music downloads; again this depends on the terms and conditions of the contract.

Another type of deal is SIM only. This is where you already have the handset (you’ve bought outright, or you own it already). SIM only deals are cheaper than the contracts with phones. You can get sSIM only contracts from as little as 30 days rising to 24 months. The longer you are prepared to commit, the better the deal you are likely to get.This means you receive better allowances, such as more minutes, texts, etc. These deals are particularly useful for people with a poor credit history, or no credit history at all, as they allow you to rebuild your history, or establish a history from scratch. This may allow you to move up to a full contract, with a phone included, further down the line. You still have to pass a credit check to get SIM only deals though.

PAYG is a different deal altogether; you can get a SIM for free and just top up maybe every 30 days, or whenever you wish to do so. Sometimes you have to buy calls, text and data separately. For example, you can top up with £10 and then buy the services (calls, text, and data bundles) from that £10. Some people top up with £10 per week; that equates to £40-£50 per month. It would actually be better value to get a contract with a pretty good handset for £40-£50 per month. There may be a reason why they may not be able to get a contract as they may have a bad credit history; this could be why they go down the PAYG route.

The other PAYG method is where you get a phone and SIM card where you have to typically buy an extra £10 top up voucher to buy the phone at the subsidised price; but if you have a SIM card on that network you don’t actually have to top up to get the phone at that price. For example, the phone may cost £80, plus £10 top up – making a total of £90. The handsets are often locked to the network and cost upwards of about £20 to get them unlocked, sometimes the network will unlock it for free if you’ve topped up regularly enough for a given period. The network will have recouped the cost of the handset, which they have sold to you at a subsidised price.

New phone Sir? That’ll do nicely

How many times have we signed the contract or bought a PAYG handset before bringing the phone home to put it through its paces? Quite a few times I would imagine – but how many people really know what they are actually signing up to? Do we read the small print, scrutinise the terms and conditions? Not many people do I can tell you. The worst thing you can do is get a contract over the phone; after you’ve been cold called. As we all know mobile phone networks like to sell your information to third parties. The way to tell is when the sales person calls you and says they are phoning on behalf of said network. The clue in there is “on behalf of”; if the sales person says this it’s a third party company.

I don’t really want a 24 month contract – can I cancel it?

We see this question crop up on almost a daily basis. There’s not really a straightforward “yes” or ”no” answer to this one. It all depends on the circumstances; for example you can cancel within the first 7 days if the handset was purchased in store. The timescale is 14 days if bought online or over the phone, this is called “distance selling” and is covered by the Distance Selling Act. Some networks or stores may allow you to return the handset outside of the cooling off period, but that is at their discretion. Networks have very strict criteria with regards to returns – for example if you have simply changed your mind, as long as you haven’t activated the SIM card or switched the phone on then you should be able to return it for a full refund as long as the return is done within the timescale. All items that were included with the phone would have to be returned to, including cables, accessories and any free gifts, to be eligible for a refund or a cancellation.

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