Mobile operator O2 has launched a new tariff that effectively splits into two, decoupling the cost of the phone from the cost of calls, texts and data.
Dubbed O2 Refresh, customers can get a new phone at any time without having to pay up the remaining airtime contract. Instead, they pay the remaining balance for their phone and then start afresh.
On sign up, customers choose a phone tariff and an airtime tariff. By signing up to and paying separately for their phone and airtime, customers are given transparency. O2 said that customers would still pay the same overall as they would on a standard 24-month Pay Monthly tariff.
Increasingly our customers are telling us that they don't want to be tied to the same phone
The plan could help customers save money by keeping the phone at the end of the two-year contract and then only paying for monthly minutes, texts and data. Customers can also sell their phone back to O2 through its O2 Recycle programme.
The Refresh plan will available for customers from 16 April with the operator offering 24-month contracts.
Customers will have a choice of three O2 Refresh Airtime Plans. For 12 a month, customers get 600 minutes, unlimited texts and 750MB of data; for 17, customers will have unlimited minutes, unlimited texts and 1GB of data and for 22 they receive unlimited minutes, unlimited texts and 2GB of data.
At launch, O2 Refresh will be available on a range of phones including the HTC One, Sony Xperia Z, Blackberry Z10, Samsung Galaxy S3 and Apple iPhone 5. Following the launch, O2 Refresh will be extended to include a wider range of phones, with a specific focus on high-end smartphones including the Samsung Galaxy S
"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," said Telefonica UK sales and services director Feilim Mackle.
Ernest Doku, telecoms expert at uSwitch.com said that the scheme was a "big step forward" in increasing transparency by showing customers exactly what they're paying for.
"However the sting in the tail is that people could end up paying over the odds for devices," said Doku.
"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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