Your Money : The hidden costs of mobile phones

Mobile phone ownership is growing exponentially, with more than 8 million users predicted by the end of the year.

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.

Annual costs

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

Call costs

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.

Annual costs

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.

Annual costs

Mercury Amstrad M600 pounds 49.99 Connection fee pounds 35.00

Line rental (pounds 17.63/mth) pounds 211.56

Call costs

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

News
people
Sport
FootballGerman sparks three goals in four minutes at favourite No 10 role
News
Rumer was diagnosed with bipolarity, attention deficit hyperactivity disorder and post-traumatic stress disorder: 'I was convinced it was a misdiagnosis'
peopleHer debut album caused her post-traumatic stress - how will she cope as she releases her third record?
Sport
A long jumper competes in the 80-to-84-year-old age division at the 2007 World Masters Championships
athletics
PROMOTED VIDEO
Sport
Radamel Falcao was forced to withdraw from the World Cup after undergoing surgery
premier leagueExclusive: Reds have agreement with Monaco
Arts and Entertainment
'New Tricks' star Dennis Waterman is departing from the show after he completes filming on two more episodes
tvHe is only remaining member of original cast
Life and Style
Walking tall: unlike some, Donatella Versace showed a strong and vibrant collection
fashionAlexander Fury on the staid Italian clothing industry
Arts and Entertainment
Gregory Porter learnt about his father’s voice at his funeral
music
News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
tvHighs and lows of the cast's careers since 2004
Life and Style
Children at the Leytonstone branch of the Homeless Children's Aid and Adoption Society tuck into their harvest festival gifts, in October 1936
food + drinkThe harvest festival is back, but forget cans of tuna and packets of instant mash
Sport
Lewis Hamilton will start the Singapore Grand Prix from pole, with Nico Rosberg second and Daniel Ricciardo third
F1... for floodlit Singapore Grand Prix
New Articles
i100
Life and Style
Couples have been having sex less in 2014, according to a new survey
life
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Senior BA - Motor and Home Insurance

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Market Risk & Control Manager

Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Head of Audit

To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

Day In a Page

Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam