O2 Refresh: a cheaper way to exit a phone contract?

O2 has unveiled a new smartphone contract that “decouples” handsets from airtime, making it easier for customers to get the latest phones.

O2 Refresh: a cheaper way to exit a phone contract?

The two-year contracts will have a separate phone plan and airtime plan, so if a customer wants a new handset before the end of their contract, they only need to pay out the remainder of the phone plan, not the airtime too.

“To get a new phone, simply pay any balance due on your phone plan and we waive the remaining months of the airtime plan,” the company said.

To get a new phone, simply pay any balance due on your phone plan and we waive the remaining months of the airtime plan

For customers who don’t want to upgrade to a new phone, the Refresh system will still offer savings, O2 said. “Once the customer has paid the full balance of their phone plan, monthly payments dramatically reduce to just the cost of the airtime plan,” the company said.

There are three Refresh airtime plans: £12 a month for 600 minutes and 750MB of data; £17 a month for unlimited minutes and 1GB of data; and £22 a month for unlimited minutes and 2GB of data. All plans have unlimited text messages.

The price of the phone will be added on, but the overall total cost can be reduced if the customer pays more up-front.

The plans aren’t more expensive than a standard contract, the company claimed. “By signing up to and paying separately for their phone and airtime, customers are given complete transparency, while paying the same overall as they would on a standard 24-month pay monthly tariff,” O2 said.

Buying an HTC One on O2 Refresh, for example, would cost £50 upfront and then £20 a month, plus the airtime cost. Add the 1GB of data and unlimited minutes, and it will cost £37 a month for the two years.

On the existing On & On contract, O2 offers the same airtime package for the handset for the same £37 price.

Good deal?

The complicated nature of mobile contracts makes it difficult to compare exactly what the best deal is, said Ernest Doku, telecoms expert at uSwitch.com – and as usual, buying a smartphone upfront often remains the cheapest option.

“Those who can afford a handset upfront could be better off buying the device and opting for one of the great SIM-only deals available,” he said. “But for those who want to get their hands on the latest devices or who can’t afford to pay for one upfront, or less-savvy consumers who may have in the past wasted money by over-paying once out of their contract, this deal will be a real help.”

“And while some will want to upgrade to a shiny new handset, those happy with their current phone can cut their monthly bills dramatically by getting a SIM-only deal – which start from less than £7 a month for a decent amount of minutes, texts and data.”

O2 Refresh is initially available on a selection of smartphones including the Samsung Galaxy S3, S3 Mini, Note 2; Blackberry Z10; HTC 8X and One; Sony Xperia T and Z; iPhone 4, 4S and 5; Nokia 820 and LG Nexus 4, and will also be available on other smartphones in the future, including the BlackBerry Q10 and Samsung Galaxy S4.

The contracts will be available in store from 16 April, and online in the coming months.

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