New EU rules double cost of cheapest mobile phone deals
The EU banned the sale of cheap 36-month contracts to prevent people getting tied to one mobile network provider for too long. But as a result the cheapest contracts available now cost £9 a month, compared with £5 a month in February.
The EU ruling, which also obliges providers to offer a 12-month contract option, only came into force on May 1. But mobile phone companies have been aware of the change for several months, and have been altering their pricing accordingly.
Research from price comparison site uSwitch shows that people searching for the cheapest possible deals are having to pay a lot more as a result, while those keen to get their hands on the latest handsets are more likely to have to pay upfront for them.
The move has, however, led to an explosion in the number of shorter deals available, giving consumers more choice and freedom to move around. In February there were just 279 12-month deals on the market, but that figure has now jumped to a massive 4,765.
Ernest Doku of uSwitch said: "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 also compensate by stopping the offer of the latest handsets for free on shorter contracts, which is potentially bad news for those who can't afford the initial cost of a shiny new phone."
He therefore advises that consumers look into the possibility of buying a phone separately before signing up to a new network contract. "People need to consider what they want from their phone, how they will use it and ultimately what they can afford," Doku said. "Paying for the handset upfront could be the best way to get a cheap deal, but only for those who can afford it."
Longer deals attractive
As providers are still allowed to offer 24-month contracts, he also urges people on a tight budget to weigh up the pros and cons of signing up to a two-year deal, while taking the time to research the huge number of new 12-month options available.
"If low monthly bills are more important than getting a new phone or tariff every year, it may be worth considering the commitment of a 24-month contract," he added. "Thanks to the ruling, now is also a great time to shop around for one of the new 12-month deals, as there is plenty of fresh competition in the market."