Your Money : The hidden costs of mobile phones
Sunday 02 June 1996
But, in terms of the range of financial deals on offer, the market seems as bewildering as taking out a mortgage. And - again not unlike the mortgage market - many of the offers focus on heavily discounted upfront costs, while downplaying continuing costs and the degree to which you are tied in.
To "get mobile" you need to buy a phone and sign a service contract. The phones themselves would cost pounds 300-pounds 500 to buy outright. Rather than put people off with a large initial capital outlay, companies set much lower handset prices. But don't be fooled.
Colin Meek, a senior researcher at the Consumers Association, says: "We have objections to the way that the industry seems to be based on marketing "99p" phones at the moment, and recouping the money on tariff charges. We're not surprised the customers end up disillusioned, with such high charges which people are held to for such long periods." Some contracts tie people in for two or three years.
A recent report by the Consumers' Association savaged the mobile-phone industry for unfair contracts, misleading advertising and heavy-handed debt recovery tactics, as well as unreliable service. The association found almost 40 per cent of users would abandon their current contract if they could do so without paying a penalty. As a result, the Office of Fair Trading has written to nine mobile-phone companies, and has threatened court injunctions if these companies fail to clean up their act.
"In extreme cases the consumer was left with effectively no rights at all," says Terry Larkin, spokesman for the OFT. "Other cases have unfair hidden disconnection charges," he says. One example the Consumers' Association has referred to the OFT is Peoples Phone, where users have been faced with a pounds 50 termination fee regardless of when they stop subscribing.
The association's Mr Meek adds: "Some service providers are real cowboy outfits. They don't even give you the contract to take away and read, before signing it." At worst, phone companies have resorted to debt-collection agencies to enforce their contracts. The Consumers' Association reports one example where someone found it impossible to make calls and so returned the phone after a week. The company, Securicor Cellular Services, tried to levy a disconnection fee of pounds 135. The user refused to pay. Securicor employed a debt collection agency which threatened a visit from its "field force" to collect the debt. Only after the user complained did the company finally back down.
Trial periods, or the lack of them, are another bugbear. These, the Consumers' Association has shown, increase the chances of customers being satisfied with their choice. While Orange and Mercury allow a two week money-back guarantee for around a third of customers and Carphone Warehouse offers a two-week cooling-off period, with many other deals you are expected to like their phone or lump it.
You stand a far better chance of finding a deal that suits you, if you follow a few simple tips:
q Think carefully whether you can really afford a mobile. Although the UK is one of the cheapest places in Europe to run a portable, you should expect to spend a minimum of pounds 350 a year on one, and more usually in the region of pounds 500.
q Try to define your likely patterns of use. You will need a different service if your needs are mainly during hours of business, or during evenings and weekends. Or do you simply need something in case of emergency, with very limited usage? There are tariffs which charge heavily for line rental but a relatively small amount for calls (with free call periods a further complication); with others the reverse is true - line rental is low but call prices higher. There may be a charge for changing tariff although it is free with Orange.
q Some of the best comparative data to help you choose can be found in the catalogue at Carphone Warehouse, a large retailer which offers a range of different phones and deals. What Mobile magazine can also be helpful. Our table (left) shows some of Carphone Warehouse's suggestions.
q Before signing a contract take a good hard look at the small print, to avoid any nasty surprises. Check the following: connection and disconnection charges, length of contract, times of peak and off-peak periods, the cost to call you, how call charges are levied (by the second, half-minute or full-minute), and insurance costs.
Look who's talking: matching phones to customers
Customer: A business consultant who occasionally works abroad and makes more than 100 minutes of calls a month. Good battery life is essential, as is the ability to recharge the phone in the car.
Recommendation: The Nokia 2110 with a power cord on Cellnet's Frequent Caller Plus tariff, which allows use of the phone abroad.
Nokia 2110 (inc 20-hr standby pounds 99.99 battery and rapid charger)
Power cord pounds 18.99
Connection fee pounds 35.25
Line rental (pounds 29.38/mth) pounds 352.56
Inclusive call option (pounds 14.69/mth) pounds 176.28
80 minutes at 23.5p (pounds 18.80/mth) pounds 225.60
35 minutes at 12p (pounds 4.20/mth) pounds 50.40
Itemised billing (pounds 2.34/mth) pounds 28.08
Total pounds 987.15
Customer: Owner of a small company who is often away from the office at meetings and is contacted by staff several times a day. Rarely makes calls. Cheap line rental and call charges are important, as is a spare battery.
Recommendation: The Motorola MR20 on Talk 15 with a spare battery. The monthly line rental includes 15 minutes of airtime.
MR20 (inc 12-hr standby pounds 49.99
battery and rapid travel charger)
Spare high-capacity battery pounds 34.99
Connection fee pounds 35.25
Line rental (pounds 17.63/mth which pounds 211.56
includes 15 minutes of airtime)
Itemised billing (inc in rental) pounds 0.00
One year's insurance Free
Total pounds 331.79
Customer: Part-time student who lives in rented accommodation. Phone in the house restricted to incoming calls. Student has large network of friends and wants cheap calls and low monthly line rental.
Recommendation: The Mercury Amstrad M600 on the Bronze tariff for free off-peak local weekend calls and cheap evening calls.
Mercury Amstrad M600 pounds 49.99 Connection fee pounds 35.00
Line rental (pounds 17.63/mth) pounds 211.56
60 minutes at 17.6p (pounds 10.56/mth) pounds 126.72
100 minutes at 5.9p (pounds 5.90/mth) pounds 70.80
Unlimited local weekend calls pounds 0.00
Itemised billing Free
Total pounds 494.07
Source: Carphone Warehouse
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