New O2 Refresh tariff sepearates the cost of price plan from the handset
O2 has revealed details about O2 Refresh, a new 24-month tariff that separates the cost of the handset from the price plan, allowing users to upgrade to a new smartphone whenever they want.
New customers signing up to O2 Refresh will be given a choice of voice, text and data packages, along with a range of the latest handsets. If a user wants to purchase a new smartphone during that period, they have to pay off the remaining balance on their existing phone, with the cost of the airtime package waived.
Users who choose to recycle their old phone, could be given as much as £260 towards the cost of a new one.
O2 claimed the cost of the new tariff would be the same as a standard phone contract, but will result in more transparency for its consumers and could even provide long-term savings for those who don’t want a new smartphone.
Under the current system, operators offer a handset at a heavily subsidised price on the condition users sign a contract lasting anywhere between 12 and 24 months, meaning that they are unable to upgrade their devices until that agreement has expired.
However, once the contract has run its course, many customers continue to pay the same amount, even though the cost of the device has been paid for. Once the smartphone has been paid off on O2 Refresh, users only pay for the cost of their voice, text and data package, which will range from £12 to £22.
O2 Refresh will be available in O2 stores from 16 April with a number of smartphones, including the HTC One, Sony Xperia Z, BlackBerry Z10, Samsung Galaxy S3, LG Nexus 4 and the iPhone 5. This range will be expanded in the coming months to include the Samsung Galaxy S4 and the BlackBerry Q10.
“Mobile phone technology continues to advance at a rapid pace, yet the way phones are sold has remained largely static,” said Feilim Mackle, sales and service director at Telefónica UK. “Increasingly our customers are telling us that they don’t want to be tied to the same phone for two years and, with 4G coming to O2 this summer, we want to make it easier for our customers to benefit from the latest technology.”
All good news?
O2’s move is similar to that of T-Mobile USA, which recently revealed plans to abandon conventional contracts entirely.
Analysts have welcomed O2 Refresh, claiming that it will result in more freedom and transparency for consumers but have questioned whether they might be paying too much for their new smartphones.
“O2 Refresh is also a big step forward in increasing transparency by showing customers exactly what they’re paying for. But the really consumer-friendly part is that customers’ bills will automatically reduce at the end of their contracts, once their handsets have been paid for,” said Ernest Doku, telecoms expert at uSwitch.
“However the sting in the tail is that people could end up paying over the odds for devices. Consumers can get hold of a HTC One for £489.95, but opting for O2 Refresh would see them having to part with almost £530 in total for the phone.
“Those who can afford a handset upfront could be better off buying the device and opting for one of the great SIM-only deals available.”
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