Consumers choose long contracts to get better phones

 

Consumers are choosing to sign-up to longer 24-month phone contracts in exchange for a cheaper monthly tariff or better mobile handset, new figures reveal.

The number of people signing a long two-year contract jumped a massive 37% from the previous year, the telecom regulator’s latest Communications Market Report has revealed.

Almost two-thirds of new mobile phone contracts now come with a 24-month contract, according to new research from Ofcom.

Mobile providers are increasingly offering long 24-month contracts in exchange for cheaper monthly tariffs or free phones. Just 3% of contracts offered in 2008 had a 24-month tie-in, compared to 63% during the second quarter of 2010.

These long-term contracts have made smartphones more affordable for consumers, because they spread the cost of the phone over two years, said Ofcom.

Smartphone numbers increased 81% from 7.2 million users last year, to 12.8 million in May 2010.

But increasing competition means that although people are signing ever-longer contracts, they are actually spending less on their mobile phones.

This year saw the biggest decline in mobile phone spend since 2004, said Ofcom.

Simon Piper, business development manager at Mobilechoices.co.uk, said: “Whether you're after a basic handset or one of the latest smartphones, you'll be able to find a mobile phone package to suit your needs.

“Although 24-months is a long time to sign-up for, these deals can dramatically cut the cost of your new phone - and if you find a good value tariff that suits your needs, it could well be worth holding on to.”

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