EU fiddling with mobile contracts brings good and bad news
It must be nice to be a Eurocrat, making changes to people's everyday lives and then watching what happens. Last year's EU agreement to reform mobile contracts has just come into force in the UK, bringing both benefits and costs for consumers.
The reforms centred on the length of mobile phone contract- the new rules effective from 1 May 2011 mean that contracts cannot exceed 24 months and that providers have to offer 12 month contract products, as well as demanding mobile operators keep their customers informed of available tariffs, their usage patterns, and be notified if their monthly bill exceeds a set threshold.
Back in 2005, 12 month contracts represented nearly 90 percent of new mobile connections, but by the middle of 2010, that figure had shrunk to a measly seven percent, as recession-hit networks attempted to entice customers into longer deals to keep them loyal.
Now, research by comparison site U-Switch shows that the number of 12 month deals available has rocketed from just 279 in February this year to 4,765 last week. As you might expect, however, the outlawing of 36 month contracts has meant that 3,300 products have necessarily been removed from the market.
While the abundance of shorter contract products is likely to be attractive to those looking to upgrade their phone on a more frequent basis, the sting in the tail is likely to hit the smartphone market hardest- where providers previously offered phones for free with a longer contract, customers may now find themselves having to shell out cash to buy the phone upfront.
And that is the other bit of bad news, before the new rules came in, the cheapest monthly mobile deal could be snapped up for a measly £5 per month with Orange on 30 April. Now, the cheapest deal is with Three, and while still less than a tenner at £9 a month (for a 24 month contract), that represents a whopping 80% price increase in the space of a few days.
So what do you think? Are the EU meddling where no meddling is required and should customers have the right to choose longer (and cheaper) contracts if it suits them? Or is this a valuable consumer protection measure?