36-month mobile contracts are dead. Long live Sim-only

The European Commission has rung the final bell for 36-month mobile contracts. But should we sign up to long contracts at all? Perhaps it’s time to buy our handsets outright and embrace the freedom of Sim-only deals.

Do you know what your financial position will be like in three year’s time? How about what job you’ll have, how much you’ll be paid, where you’ll be living, or how many children you’ll have?

You might know the answer to some of these questions, but certainly not all of them. And you probably don’t know how much you’ll be using your phone in 2014 either.

Farewell three year contracts

Thankfully, this won’t be as much of an issue as it used to be, with the European Commission now outlawing mobile phone contracts longer than 24 months.

The new rules also force operators to offer a 12 month alternative to the 18 and 24 month options that have become the norm.

Shorter contracts should help stimulate competition as we’re given more opportunities to switch provider. Then again, 24-month contracts often mean you get your mobile for free, letting you spread the cost of a handset over the length of your contract.

You can acquire a free handset on a 12-month contract, but you’ll have to pay through the nose for it though your monthly line rental. So getting a new handset each year is a nice luxury, but it’s an extravagance not everyone can afford.

Time to go Sim-only?

But some people are opting to bypass these contracts altogether, buying their handset outright and signing up to a Sim-only contract that only ties you into a month at a time.

After a quick browse, I found you could save £100 over a year by buying an HTC Desire S up-front and going for the cheapest monthly Sim-only contract, rather than getting it free at the start of the contract (though you’ll get more minutes and texts with the latter). This tactic does depend on you having a spare £360 or so lying about, but the savings and freedom over the following months are more than worth it.

Have you already jumped on the Sim-only bandwagon? Or is that ‘free’ new toy too tempting?

Mark says:

3 June 2011

As you’ve mentioned, the reality is that providers will make a 12 month plan so uneconomical so as to push consumers on to an 18 or 24 month contract.

From personal experience, it makes sense to go for a longer contract in order to get a handset effectively for free. You lose the perks of having the latest and greatest pretty quickly, but the reality is that you’re always going to need a mobile phone, because it’s expected.

frugal ways says:

What has been done about when a contract runs out?
It used to be that mobile contracts continued on a month to month basis once the original length had been reached.

There have been cases where a contract has completed its time limit, but instead of continuing month to month on original terms, mobile operators have removed key parts of the contract, like free texts, free minutes, etc.
This has cost the customer a lot more as prior notification has not been given.

This practice is against the law, as significant changes to a contract (in any area of business) should be notified in writing for 28 days before coming into force.
Those subjected to this without notification in writing and advanced warning would be entitled to a full refund of the difference if their original contract terms were applied.

Mikhail says:

I’m on sim-only 12 months contract with Voda for 6 years and every year it’s getting better and better I have 900 minutes, Unlimited Texts, Mobile Internet, Vodafone Passport, Vodafone International and Vodafone Data Traveller for £12.05 per month. I can’t imagine a better deal. I have to say I also have a household deal for my iPad £2.5 for 250MB via 3G and 1GB via BTOpenZone and another sim-only for my partner – £10 per month 600 minutes and unlimited text.

anne penhow says:

12 June 2011

I bought a mobile from ASDA for £ 17. I think the SIM was free. I pay as I go with ASDA. It probably costs me less than £5 monthly, to cover essential communications. There is no need to spend hours gossiping.
I can take photos with my separate camera and share those photos by e mail. This costs almost nothing.
If I had a business need to use something more complicated – then I would expect to pay more.