The budget phone contract 'scam'

Now, let me emphasise the quotes above - what I'm describing (ok, ranting about) here isn't illegal, it's simply.... misleading. And I'm not singling out any one phone network here, I'm simply using Three UK as an example - all the others do the same.

Look, I get the idea of contracts, especially at the upper end of the price spectrum - you get a nice, cheap, subsidised handset, you get more minutes, texts and Megabytes than you need, and all is rosy. You're paying £30 or more a month, but you're happy and, essentially, sorted.

However, down at the budget end, there's little or no subsidy in terms of hardware, yet there's massive possibility for swinging overage charges. Let me explain.

I'm looking at a Three UK run down of plans. They offer one at £6.90 a month. Which sounds great. 500MB of data, 200 minutes and 5000 texts. Perfect for a teenager, perhaps?

Maybe. Except that you can bet he or she will occasionally go over, with 'that' long call to a girlfiend or streaming 'that' movie. In which case, you could be looking at 300 minutes used in a month and perhaps 1GB of data used.

Only a bit over, right? You'd expect a few quid more to be charged to your card/account? Actually, the overage in this case is 45p/MB, which is £225, plus £25 for the calls.

Let me state that again. £250 overage on a £6.90/month account.

It's INSANE. Now, obviously, the networks will say that the user should simply switch to the next tiered contract, in this case at £9.90/month. Which is fair enough, but the user will have learned the hard way already, plus with data use increasing across the board, who's to say the teenager won't rack up 1.5GB, with another £225 overage charge?*

* Yes, apparently there's an option to get the network to cut off the account once the limit has been reached, but then what if there's an emergency and use is needed? It's a tough call to turn that on!

45p/minute is almost criminal and it's amazing that networks get away with it. Especially as, in this case, Three's normal pay-as-you-go rate for data is 1p/MB, on their excellent 321 plan. FORTY FIVE TIMES CHEAPER for data!

The upshot is that everyone's encouraged to go for a contract whose details include ANY possible usage. Just in case. Meaning that the margin of profit is kept high for the network, which I guess makes business sense.

Just be warned in case you're thinking about cheap contracts for members of your family. We've been there, done that, and been stung. (Thankfully not to the degree mentioned here.)

For the record, everyone in our family is now on the '321' pay-as-you-go deal. Some months my wife or daughter will go through £10 of credit, or even £15. But never £225! And some months, their balance hardly goes down at all. We average about £25 worth of vouchers for all three of us.

Comments welcome. Am I being overly critical here? Or should overage charges be a lot less severe?!


Moto said…
Agree 100% I have never and will never have a contract for jus the reasons you stated , I buy my phones outright and then sell when I want to change WAY cheaper than ANY contract . Currently on giffgaff for 12 quid a month with unlimited internet , great for my Netflix fix .

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