Why go SIM only?

Here, we examine some of the benefits of SIM (Subscriber Identity Module) card deals, in comparison to contracts with handsets supplied.

A standard contract obliges the user to pay a monthly fee, including payments towards the handset as well as airtime and a mobile data plan. When this contract finishes, there are often special promotions to persuade customers to extend for a further term, usually with a new handset. Users who opt for this do not really receive a free handset – rather, the supplier recoups its cost over time. However, is this the best choice?

Sometimes, the numerous different contract options do not make direct comparisons easy. Nonetheless, it could well be worth checking whether you are paying over the odds, with some arithmetic around the total cost of ownership (TCO). A panel of mobile phone experts recently came to some interesting conclusions, while the consumer association Which? ran an ‘Unlock better mobile deals’ campaign and found that mobile users often pay more than they need to – sometimes through inertia or forgetfulness. In fact, many operators do not remind their customers that they have fulfilled their contractual obligations.

Alternatively, customers may choose to purchase a handset that is not locked to a particular network. These handsets can then be used without being restricted (usually in the phone software) to one particular supplier. The choice is then between pre-pay (PAYG, or pay as you go) or a SIM-only contract. The latter frequently offer better tariffs than pay as you go, as well as avoiding low balance messages – or forgetting to top up and then running out of credit in the middle of a call. The regular monthly invoices are also convenient for business expenses, with no need to request copies.

Comparing the TCO of current twenty-four-month contract handsets with 2GB monthly data, many offer unlimited SMS texts and UK calls. An upfront payment adds to monthly costs typically between £21 and £49, totalling over £1,000 or as much as £1,350 (over two years) for some of the more recently introduced models.

Alternatively, finding the right SIM only deal can easily bring total savings of around £300 on the above figures over two years. Any SIM can be installed – especially useful when travelling unless roaming calls are free. In addition, these SIM contracts are often for just twelve months, offering greater flexibility.

In summary, buying a smartphone outright and choosing a SIM-only contract (or even PAYG) involves some initial outlay, but less over the long term. The savings are especially noticeable on premium and upmarket handset models. It also offers the flexibility of choosing the data package which best suits you – such as three’s ‘all you can eat’ data package for heavy internet users.

Finally, if you currently have a handset on a contract, you may wish to check the details and consider setting a diary note to review your supplier when the term expires, instead of leaving the monthly charging at a higher rate for longer than is necessary.

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