Using Mobile Phone Contracts To Your Advantage

Finance, Mobile Add comments

A freak accident occurred this weekend which left me without the use of a mobile phone. For the past five years or so I have mulled along with my present phone provider 02 which by and large has been more than satisfactory, collecting annual handset upgrade as and when they are available to me. Thanks to my handset being rendered useless however I was now in a position where I would be paying a monthly line rental fee for the remaining 7 months without actually being able to use my included minutes. Not only this, but the thought of seven months without mobile was not an option, being that it is essentially my only point of contact.

I did have the option of claiming off my mobile insurance, but with a £20 excess and lengthy claims process, I was looking down other avenues. It was then that somebody told me of the recent trend of third party mobile operators buying existing contracts out in order to get you to switch mobile phone networks.

After hearing about this option I popped into my local Jag shop at around 5.00pm on a Saturday and was quickly approached by two sales assistants attempting to make their last sale of the day. It is worth pointing out that I am very much a sceptic with scenarios like this, and in the past have mainly sorted out similar contracts online, allowing me to make a decision somewhat impartially without the sale banter that is thrown around in store.

As the friendly formalities passed I explained my situation and was promptly passed a sequence of four handsets, the Sony Ericsson K850i, W910i, a newer Nokia offering and the Samsung U700, pretty much the latest models currently available. I hadn’t recently looked at the latest offerings but they are newer models of popular handsets that I had previously come across, including my own the Sony Ericsson W850i.

Having seven months left on my contract the next step was to make a quick call to my existing mobile network provider. Currently on a the Online 30, a £30 monthly contract providing 400 talk minutes and 1150 texts, I was offered each handset on an Orange 18 month contract at a cost of £35 providing 500 minutes and up to 3,000 text messages. How anybody could go through the required 100 text messages a day and use 3,000 texts a month however bemused me.

So the drawback so far was entering into another contract, but as mentioned I would be likely to do so in seven months time anyway. Second my existing line rental still had to be paid. The next step was informing me that I would have to downgrade my current 02 contract to the Online 20, £20 a month, and they would give me the £140 cash up front to pay the remainder of the contract.

By including an up to date handset free of charge, and £140 cash back I couldn’t help but wonder where the money was for them. The entire contract would cost £630, minus the cash back leaves £390. Take the handset that retails for £299.95 on Pay as you Go, that leaves £90 for an 18 month contract. In terms of profit for the Orange this is more likely to take around the £340 mark over the 18 months as they possibly pay £50 a handset.

This still means that I receive an enhanced package for under £18 a month, which goes to Orange and for that they have to provide 500 talk minutes and near unlimited texts on my service. If text messages are deemed free this means for every anytime talk minute included on the package Orange will receive 0.27 pence. This doesn’t seem a lot to me.

To make things even better value three months insurance and a range of handset extras are also thrown in.

Add on top my existing insured handset retails for £100, and when the eventual claim came through if sold for £50 it would be the equivalent of nearly three months free line rental. Not stopping there the figures look even further out of Orange’s favour when you consider the option of reducing my contract after 12 months to £20 in a similar fashion, and moving to another network in tweleve months being bought yet out again.

After mulling this over I did ask the shop assistants where they make their money, not that I would believe their answer but having done my fair share of sales I find it interesting to see their response to such an awkward question. The response I got was that it was better to make a little profit than nothing at all, and at the moment it is more a numbers game with a drive to get people on to Orange in the hope of contract renewals in the future as opposed to short term profits. :|

I am interested to gage people’s opinions and similar experiences, as even as a sceptic, this deal looks very much in favour of the consumer.


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