Smoke, mirrors, and 36-month mobile contracts

Mobile contracts come in all shapes and sizes – different terms, with and without phones, direct with a network (Vodafone, O2 etc) or via a distributor (‘partner’) – there’s a surprising amount to take in.

Sometimes, businesses will get a discount – this may be in the form of a reduction on invoices from the network or, quite commonly, paid directly to them by the partner, funded by the commission they receive from the network.

This is all perfectly normal and above board. At the end of the minimum contract term, the discount will expire, and the customer will usually sign up to another contract in order to continue receiving a discounted rate. This could be with the same partner if they are happy with their price and service, or another one – i.e., if they are not happy, they can vote with their feet. Which is how it should be.

So far so good.

But there’s a type of contract that has become increasingly prevalent in recent years. It’s not illegal, but it’s certainly caused a lot of stress and anger amongst those that have fallen for its charms.

This is how it works…

1. The partner offers a 36-month airtime contract via one of the major networks, usually including a phone. The quoted rate will be heavily discounted from the standard network rate.

2. So, what’s the problem? Well, the partner’s discount is only good for 18 months. Once it expires, the customer is still committed to the contract for another 18 months – at the much higher network rate, and without the discount.

3. Unless they want to be paying a substantially higher monthly fee for the next 18 months, the customer’s only choice is to sign up with the same partner for another 36-month contract, at which point the partner will reinstate the discount.

4. But you’ve guessed it, once again the discount is only applied for the first 18 months of the new contract.

5. So, 18 months further down the line, it’s the same situation all over again. In fact, it never ends – unless the customer keeps signing new 36-month contracts every 18 months, they will be hit with massively increased bills.

Unfortunately, to many of the organisations that continue to be hit by this, the structure of the contract only becomes clear after they are locked in. After all, how many people would sign such a contract if the terms and implications were genuinely made clear to them upfront, rather than just tucked away in the small print or glossed over by a slick sales rep.

They are taken in by the attractive discounts on offer and find themselves stuck. If they ever want to reduce the number of phones, change network, switch to a different partner – well, it’s going to cost – a lot.

At Your Comms Group, we do things differently:

• Our standard mobile contract term is 24 months. We believe this gives our customers the flexibility to review their requirements every two years and re-negotiate from a position of power, not from a position of weakness where they are effectively locked into one supplier.
• Our customers have the option of a ‘kit refresh’ every 24 months – new phones where required, within the monthly contract fee. The warranty on most of the mobile phones we provide is 24 months, so we think this makes sense. Whereas, with a 36-month contract, any phones needing replacing or repairing in year 3 are the customer’s responsibility.
• Our discounts are always valid for the entire duration of the contract.

Some industry feathers might be ruffled by us talking about the smoke and mirrors of mobile contracts so openly but, as you might have gathered, it is a topic we are passionate about.

We want our customers to stay with us because they want to – because they like our service and appreciate our keen pricing – not because they are obliged to by punitive price increases hanging over their heads.

Having operated in the care sector for many years, we’re very aware of the impact of how we, as suppliers, treat our customers – and of all people, they deserve a fair deal.

Ian Horman
Commercial Lead
Your Comms Group
Ian@yourcommsgroup.com