Opinion: Mobile phone deals aren't call for cash

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Jon_smal.gifJonathan Weinberg writes…

They’ve always said you don’t get anything for free in this life, but flick towards the back of any of the tabloid newspapers in this country and you’d have to question that view.

FREE Xbox 360, FREE iPod, FREE laptop, FREE Wii, FREE PSP, FREE HDTV, FREE money – and all you have to do is sign up for a FREE mobile phone. In fact, some of the deals even give you a FREE handset with your FREE handset. Please, tell me, where do I sign??

I’m becoming increasingly concerned by these adverts. How on earth can companies be offering so many lucrative gratis gifts in return for signing up to a mobile phone contract. It’s common place now to get yourself a handset at no extra cost – Apple iPhone apart – when you take on a new deal. Britain is one of the only places in the world where the mobiles themselves are so heavily subsidised you simply pay the monthly tariff and your phone is bundled in.

But even that’s not strictly true, because really you just pay for it within the monthly tariff charge as there are also deals where that would be cheaper if you choose not to take a handset. Confused? You won’t be by the time I am finished.

A recent Watchdog programme on the BBC looked at the issue focussing primarily on cashback deals offered by some middle-man firms. They’d heard of offers of up to £1,000 in cold hard notes if you signed up for a contract. But these were no shady-looking email cons direct from Nigeria, these were proper fully-fledged offers supposedly backed by the networks.

As it turns out, the networks are just as worried as me but for those flicking through the papers and not in the know, who is going to argue or question it when you’re being offered the earth, moon and stars to sign on the dotted line.

But ask yourself this, how on earth can anyone give you a grand simply in return for you paying them even £40 a month for a couple of years. They are a business, not a charity!

Watchdog viewers had complained they hadn’t received their cash and had been left tied into high-cost contracts with the networks. What a surprise! Some firms have gone bust before paying out money and others simply can’t afford to keep up with the demand.

It’s a worrying state of affairs and no-one seems to want to take responsibility. In the meantime, as ever it’s the poor customer who is left out of pocket. A new code of conduct – a voluntary one unfortunately – was agreed in August by Ofcom with the networks. But this doesn’t seem to have worked. Ofcom say it will enforce regulations if it has to, and that’s surely the only way to go.

The problem lies more with these intermediary companies springing up left, right and centre rather than the networks, although surely they can assert some authority on them. No-one should be tantilised with meaningless offers.

When you sign up for a new mobile phone, the pricing structure should be simple. You should know what handset you are getting and how much, if anything, it is costing. You should know how much you’ll be paying per month, what the bundled minutes and texts are, the price of any extra calls and how long you are tied in for to the contract. And you should be safe in the knowledge that any free gift is actually going to be supplied.

You can moan about the total cost of the Apple iPhone pricing on O2 but at least it is crystal clear. The handset costs you £269 and a contract is £35 a month. There’s nothing hidden and O2 even came out yesterday and said they were removing the ‘fair usage’ limit on the tariff to make it even more open and transparent.

The networks themselves do a good job when they sell direct to the consumer through their own stores or websites and so do the reputable high street chains. And not every middle-man seller is making a fast buck at people’s expense. But some are, and the sheer number of companies competiting against each other for the business is what causes all the problems. That is why the offers are getting more and more ludicrous in a bid to lure in customers.

According to Watchdog, 3 and Orange are both taking steps to deal with the issues raised by the show. I’m sure Vodafone, T-Mobile and O2 also have plans in place to ensure they are not tarnished by fly-by-night businesses perporting to act in their name.

Buying a new mobile should be a pleasure not a chore and my advice is to play safe and get yours from a network or proper store. Usually when an offer is too good to be true, it is… and you can have that bit of advice for FREE!

Via Watchdog – where you can watch their report on video

Jonathan Weinberg