EU rules may be death of free mobiles

Steve Dinneen
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SMARTPHONES with no up-front payment could become a thing of the past, with the EU poised to ban contracts that tie users in for long periods.

The number of people locked into two or three year contracts has rocketed as retailers try to claw back money spent on subsidising high-end handsets.

According to a new survey by uSwitch, 73 per cent of people are now locked into 18- or 24-month contracts, compared to just 12 per cent on 12-month deals. Six years ago 88 per cent of phone users were on 12-month contracts.

New EU legislation will outlaw deals lasting for more than 24 months and force retailers to offer 12-month options.

One senior industry figure told City A.M. this could have a detrimental impact on consumers and hit the UK hardest.

He said: “Across European markets there are different levels of handset subsidies. The UK is used to them in a way other countries aren’t. It’s as though someone has thought ‘The UK is the only place that’s going to suffer’ and just pushed ahead with it.”

Smartphones such as the iPhone 4 can cost as much as £600 and operators rely on long contracts to offset this, meaning so-called ‘free’ handsets could soon disappear.

Ernest Doku, technology expert at uSwitch, said: “It’s alarming to see how popular 36-month deals have become. It’s no bad thing that the EU is culling these in their infancy – three years is a lifetime in the world of tech.”

Vodafone, Everything Everywhere and O2 all said their deals will comply with the new rules.