Cost of mobile phones will fall for millions of customers2 min read

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Cost of mobile phones will fall for millions of customers as companies vow to cut rip-off monthly charges

  • Most customers pay a set charge over 24 months for their airtime bundle
  • Up to two million stay on same monthly charge even when they own the phone
  • ‘Loyalty penalty’ costs customers who keep same provider £182million a year 

Mobile phone companies are to cut bills for millions of customers who are out of contract but still paying for smartphones via monthly charges.

Most customers pay a set charge over 24 months for the latest model in a bundle with airtime, covering calls and internet usage. But up to two million stay on the same monthly charge even when the purchase price has been paid off.

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The ‘loyalty penalty’ costs customers up to £182million a year. But regulator Ofcom believes the rip-off will end following voluntary moves by all major companies – except Three.

Most customers pay a set charge over 24 months for the latest model in a bundle with airtime, covering calls and internet usage. But up to two million stay on the same monthly charge even when the purchase price has been paid off (file image)

Most customers pay a set charge over 24 months for the latest model in a bundle with airtime, covering calls and internet usage. But up to two million stay on the same monthly charge even when the purchase price has been paid off (file image)

Tesco Mobile will cut monthly charges for those overpaying to its best airtime tariff; Virgin Mobile will shift out-of-contract customers to the equivalent of a cheaper 30-day SIM-card only deal; O2 will do the same for its own direct customers. Vodafone and EE will cut prices for those out of contract for more than three months to align with a SIM-card only tariff.

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Ofcom welcomed these measures, but highlighted Three’s refusal to follow suit. It said: ‘These customers will continue to overpay and will not receive similar protections if they stay on their current deal.’

The watchdog had suggested it could legally force companies to switch out-of-contract customers to their cheapest deal. But the EU refused to accept this and outlined a series of alternative measures.

Now customers entering into a bundled contract will be told the cost of the handset and airtime separately. This should help buyers see when they can trigger a switch to a calls and data contract.

Ofcom’s Lindsey Fussell said: ‘All major mobile companies – except Three – will reduce bills for millions of customers past their initial contract period.’

Gillian Guy, of Citizens Advice, said: ‘Most mobile phone providers have realised the game is up – they cannot take advantage of loyal customers.’

Three UK said Ofcom’s proposals would not encourage people to shop around, saying it risks creating ‘a stagnant market’. 

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