Phoney war, real choices

Thinking of buying a mobile phone? Research the costs carefully, advises Stephen Pritchard

Making a call on a mobile phone is cheaper than on an ordinary line - as long as you are ringing someone in New York. This anomaly is the result of the latest salvo in the mobile phone price war. Last week Orange, one of the four mobile networks, announced new prices for overseas calls from its phones.

A five-minute daytime call to the United States will from Wednesday cost 88p, including VAT, on Orange. BT's standard rate from a home phone is pounds 1.17. The same call on a Vodafone mobile costs pounds 3.99, and pounds 6.46 on Cellnet. A five-minute call to Berlin costs pounds 1.06 on Orange, against pounds 1.42 on BT.

Rival companies question Orange's motives, calling the cuts a "publicity stunt". There is a long way to go before using a mobile phone in Britain is as cheap as a fixed phone: a typical daytime mobile call costs between 20p and 30p a minute, against BT's long-distance rate of 8p.

Even on overseas calls, Orange faces stiff competition from other companies such as AT&T of the US and international call specialists such as Swiftcall and ACC. Swiftcall, for example, charges 14p per minute to the US, against Orange's tariff of 17.6p. Even BT offers discounts through its Friends and Family and PremierLine schemes.

Orange's new tariffs are just the latest in a series of cuts in the costs of mobile phones, as operators fight for market share. Competition in the high street means a subscriber can buy a phone for as little as pounds 10. Three years ago, a similar phone might have cost pounds 200.

Buying the set itself, though, is just the start. Customers have to pay a connection charge, typically pounds 30, and a monthly line rental, which ranges from pounds 17 to pounds 50 depending on network and price plan. Then there are call charges. All the mobile networks now offer tariffs that include some calls in the monthly fee. Anything more has to be paid for, and some calls - to other mobiles, overseas numbers or information services - are usually excluded from the "free" calls.

Buying a mobile phone at the cheap, advertised rates means signing an airtime contract. This is because the networks, or airtime resellers, subsidise the costs of the phones to encourage people to subscribe. If they did not a digital mobile phone would cost anywhere up to pounds 400. In return, the networks demand that you use the service for at least 12 months, and some resellers demand three months' notice to cancel the subscription.

Airtime contracts are also a hiding-place for additional charges. Orange and One2One sell directly to the public, through stores, so their terms and conditions are standardised. Until recently, Vodafone and Cellnet could only sell through a service provider such as BT Mobile or People's Phone (now part of Vodafone). Most phones are still sold that way. Vodafone and Cellnet have recommended prices, but resellers are free to set their own conditions. This might mean longer peak hours, or extra charges for itemised billing, or for not paying by direct debit. Vodafone alone owns six service providers, with 87 different tariffs between them. The company admits that there is "clear scope for rationalisation".

The industry still has some way to go to make buying a mobile phone simple and catch-free. People on the older, analogue networks can pay twice as much as new subscribers to a digital network.

Daunting as it might seem, there is no real alternative to comparing prices in detail. It is also worth thinking carefully about where and when you use your phone before choosing a network or tariff. Cellnet's "Social Life" tariff charges 5p for off-peak calls, making it one of the cheapest networks in the evening. But the daytime charges are a huge 80p per minute. One2One does not charge for accessing its answering service. For some users, this is a real saving; for others, it is irrelevant.

Mobile operators refuse to be drawn on future price cuts. "In terms of our digital offering, there is no change anticipated to these prices," says David Danielli at Vodafone. But for friends, relatives and colleagues of mobile users, there is good news. BT is expected to cut the cost of calling to a mobile next month.

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
Finacial products from our partners
Property search

Simon Read: The point of having protection insurance? The right cover can help reduce your financial concerns at a time of extreme worry

In May Nicola Groves got a massive shock. The 45-year-old mother of two was told, bluntly, that she had breast cancer. "When I heard the words, 'You do have breast cancer and you are going to lose your breast', I felt as if time stood still," she says.

Mark Dampier: Maybe boom, maybe bust, but we'll probably just muddle along

It's that time again when the media looks back over the past year and forward to the next. I am reminded of an old film, The Day the Earth Caught Fire (1961). Near the end of the film a newspaper prints two headlines – which one it uses will depend on whether the world is saved or doomed.

Sainsbury’s sank 7 per cent to 234p; Tesco fell 3.2 per cent to 180.2p ; and Morrisons dropped 5 per cent to 159.9p

Money Insider: Supermarkets: the real challenger banks

The supermarket banks have always excelled at offering simple, no nonsense products, and savings accounts is another area in which they fare well

Pat and Richard Astbury at their home in Norton Canes, Staffordshire. They have benefitted from the Community Energy Project aimed at helping council tenants with their energy bills. They have had solar panels installed.

Locals in Staffordshire to save hundreds after new council-backed project to install solar panels

The sun is shining on people who struggle to heat their homes and it’s thanks to a sense of community

Gross household debt reached a historic high of around 160 per cent of combined incomes in 2007

Simon Read: Give people struggling with debt some breathing space

Struggling people need help, understanding and forbearance, not ill-thought-out pronouncements

A person walks through the City of London during the early morning rush hour in London

Simon Read: Caught up in the scandal about leaks at the regulator

You won’t find me bashing the banks for the sake of it, but sadly they’ve deserved all the criticism that’s been sent their way in recent years

There were around 750,000 victims of mobile phone theft in England and Wales last year, according to official figures

Money alert: Stolen mobile phones

Gillian Guy, chief executive of Citizens Advice: 'The injustice of shock bills for crime victims must end. The Government must stand up for consumers and cap bills from lost or stolen phones at £50'

Indian workers boil sugarcane juice to make jaggery, a traditional cane sugar, at a jaggery plant in Muradnagar, Uttar Pradesh's Ghaziabad district

Mark Dampier: A hot investment story is taking shape as India lets the light in

Stirring the pot: the Indian Government’s reforms of labour rules offer hope of a brighter future for businesses 

An AA patrol man helping a woman whose scooter had broken down.

Bargain hunter: Whisk up those leftovers instead of just throwing them in the bin

Knight of the road, look out: you’ve got a new rival 

How to raise money for charity this Christmas

There are so many ways you can raise money - and awareness - for charity. Rob Griffin explains how easy it is to donate and reap financial rewards

Simon Read: The Chancellor has stamped on an unfair tax. But will the delight of homebuyers mean misery for others?

Were you surprised by the sudden reform of the rules for stamp duty on property purchases? I certainly was. I've been calling for ages for a change in the tax to make it more fair – and, at a stroke, George Osborne did just that on Wednesday in his Autumn Statement.

Santander, whose ads have been fronted by the Olympic gold medallist Jessica Ennis-Hill, was among the banks where there were potential pitfalls with shared licences

Best savings rates are not all they might seem

Consumers can sometimes think they are shopping around for a rewarding account when in one important aspect, writes Samantha Downes, they are not
The sunlit uplands: switching out of a final salary pension may seem like madness, but there could be cases where it makes sense

Gold-plated pensions – the key to retirement freedom?

With some people are weighing up whether they will be better off cashing in their final salary pension next spring, Samantha Downes asks the experts

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Selby Jennings: Oil Operations

    Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

    The Jenrick Group: Night Shift Operations Manager

    £43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

    SThree: Trainee Recruitment Consultant - LONDON

    £20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

    Day In a Page

    Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

    'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

    Yazidi girls killing themselves to escape rape and imprisonment
    Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

    Ed Balls interview

    'If I think about the deficit when I'm playing the piano, it all goes wrong'
    He's behind you, dude!

    US stars in UK panto

    From David Hasselhoff to Jerry Hall
    Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

    Grace Dent's Christmas Quiz

    What are you – a festive curmudgeon or top of the tree?
    Nasa planning to build cloud cities in airships above Venus

    Nasa planning to build cloud cities in airships above Venus

    Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
    Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

    Clocks, rifles, swords, frogmen’s uniforms

    Surrounded by high-rise flats is a little house filled with Lebanon’s history
    Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

    Four months after the bombardment, Gaza’s wounds are yet to heal

    Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
    Gastric surgery: Is it really the answer to the UK's obesity epidemic?

    Is gastric surgery really the answer to the UK's obesity epidemic?

    Critics argue that it’s crazy to operate on healthy people just to stop them eating
    Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

    Homeless Veterans appeal: Christmas charity auction

    Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
    Pantomime rings the changes to welcome autistic theatre-goers

    Autism-friendly theatre

    Pantomime leads the pack in quest to welcome all
    The week Hollywood got scared and had to grow up a bit

    The week Hollywood got scared and had to grow up a bit

    Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
    From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

    Panto dames: before and after

    From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
    Thirties murder mystery novel is surprise runaway Christmas hit

    Thirties murder mystery novel is surprise runaway Christmas hit

    Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
    Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

    Anne-Marie Huby: 'Charities deserve the best'

    Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
    The botanist who hunts for giant trees at Kew Gardens

    The man who hunts giants

    A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there