/ Technology

How much are you really paying for your handset?

Mobile phone on money

Our chief executive Peter Vicary-Smith says it’s time for a heads-up on hidden mobile phone handset costs. Wouldn’t it be easier if the cost of your handset was separate from charges for calls, data and texts?

The mobile phone industry recently reached an agreement with the Government to increase signal coverage across the UK. The industry now has a three-year deadline for tackling ‘partial not-spots’ in the countryside where, if you happened to be with the wrong network, you’d be utterly stuck if your car broke down, or you had an accident.

This is welcome news, but there are other gaping holes that this industry needs to address urgently, too. One of them is right in the middle of my mobile phone bill in the place where it should tell me where my money is going.

Any mobile phone company – and there are several – which fails to split out what you’re paying each month towards your handset from the amount you pay for your service is not being fair. It means that customers who have completed the contract period, thereby paying for the handset, then get the pleasure of paying for the handset all over again if they carry on, as many do.

Overpaying for your mobile phone

Here’s an example, based on an iPhone 6. On O2 Refresh you’d pay £48 a month for 5GB of data and unlimited minutes and texts. Of this, O2 is clear that the handset portion of the bill is £25 – so after the contract is up you pay £23 per month.

On a similar plan with Vodafone (4GB of data and unlimited minutes and texts) it costs £48.50 a month – but that price doesn’t change once you come to the end of your contract. So if a customer does nothing, they are overpaying by not moving to a Sim-only deal. If they decide to upgrade their phone, they sign up to a new contract so any ‘overpaid’ months don’t count towards the new handset.

There is good news in that four of the seven biggest mobile operators have started separating out handset costs: O2, Giffgaff, Tesco and Virgin.

Billions wasted on the wrong contract

Mobile customers are already overpaying to the tune of £5.4bn a year, because 72% of those on a contract are on the wrong tariff, wasting an average of £159 each a year. It can’t be beyond companies’ wits to help their customers find the right one. It’s time this industry filled in the information holes that are costing its customers dear. You can help by joining our campaign calling on all mobile providers to unlock better deals for customers.

Do you agree that the cost of your mobile phone handset should be split from all service charges?


I don’t have a great deal of trust for mobile phone companies, having looked at the thousands of comments posted on Which? Conversation and from the experience of friends and family. It is good to see that one of the network operators and several companies that make use of the networks have separated the handset cost and tariff for use.

My main phone was purchased outright and is unlocked. I wanted to go for a one month rolling contract but thanks to discount, it worked out better to take out a one year contract and I insisted on written reassurance that the monthly price would not be increased, and after about 10 months I have not been charged a penny more than I have expected.


I guess I’m the only person left on the planet that doesn’t have a mobile phone. I’ve never believed they’re good value.

And even though I don’t have a mobile, I still know more that them than many. e.g. Roaming charges.


I’m impressed you don’t have a mobile, William. I do sometimes wonder why people have them. My dad, for example, just keeps his in a drawer turned off – that’s no use to anyone! What’s your reason for not getting one? Do you think the benefits don’t out-weigh the monthly costs?


I have a mobile phone but seldom use it. It’s also turned off nearly all the time and I rarely give anyone my mobile number, especially not commercial organisations – why would they need it? Virtually everything I need to do in life is either face-to-face or landline-to-landline. I suppose I should get out more.


William, do you use phone boxes to contact people when you are out and about?

My brother does not use his mobile, it just sits in the car all the time but he supplies his mobile number in most cases when he is asked for a telephone number. He has not set up voicemail on his mobile and he never receives a nuisance call.


I have a simple PAYG mobile ‘phone which I carry only when I am out and about in case of emergency. Most of my outgoing calls are to my home ‘phone at appropriate intervals to make sure that my service provider does not disconnect me. I have had to top-up the payment once since buying the ‘phone several years ago so the running costs and the amortisation of the cost of the handset have been very low.


Judging by comments in this Conversation and various others, I reckon there’s a large number of mobile users like us who choose to have a portable phone mainly for exceptional and emergency purposes, bought the phone outright, and use PAYG. Anyone has the option of doing it this way and avoiding heavy charges, although having got into the mobile phone lifestyle the majority of users would not find this pattern acceptable since they enjoy being able to call people whenever it suits them and being open to interruption themselves. It’s good that we now have these choices. Personally, I feel liberated by not being at other people’s beck and call. Of course, the downside is that if I need to look for economies, curtailing my mobile phone costs is not an option – they’re already at rock bottom.


What forced me to switch from an infrequently used PAYG phone to a contract that included calls to mobile numbers was the high cost of calling mobiles from a landline. Although my landline tariff included calls to mobile numbers in the evening and weekend, I was having to make expensive daytime calls people who were hard to contact on their office phone and one who worked between offices and did not have a landline. The secretary of a charity I work for prefers calls to his mobile number out of respect for his wife.

Using the mobile to call landlines means that I don’t need to worry about the cost of making long calls. I’m looking forward to a time when calls to mobiles are treated in the same way as costs to other landlines.

One of the reasons I hate mobile phones is that there is only one handset for a number, whereas it is easy to have a landline handset in each room. I often use my handsets to play the game of ‘find the mobile’ by calling the number and listen for it ringing.


When at home I use my PAYG mobile to make relatively infrequent calls to other mobiles, as it is significantly cheaper than my landline tariff. My family have inclusive mobile contracts so they usually terminate our call and phone us back.

I must admit to the versatility of smart phones. Sat Nav, price comparison apps, mobile banking, restaurant deals, although I don’t think I’d bother with tv or films. But I think I already spend (waste?) enough time looking at information online – because it is so easy – and working on my laptop that another distraction would stop me doing more constructive things. Time to get in the garage and make some furniture, if only it wasn’t so cold!


John – I can identify with what you say about not wishing to be on call at all times. My friends know that I prefer to chat when I’m at home in the evening. If anyone persists in calling my mobile I ring them back in the evening unless they leave a message and it’s something urgent.


Separating out handset costs is a good start.
Splitting the contract into 2 independant parts is the next stage and would provide consumers with more transparent options.
24month handset contract, + monthly rolling contract for airtime should be one option.


I expect that the companies would offer a bundle of both contracts and maybe some other goodies at a significantly cheaper price than these separate contracts. If not, then a discount might only be available if the contracts are bought together.

I’m sure you know better than most of us what lengths companies will go to help make it difficult for us to make simple price comparisons. 🙁


Agree, we effectively have bundles now which is the problem, but this is true for other services such as broadband,tv & phone.
I suppose the main issue is the lack of stand alone contracts for buying a phone over 24 months.