Why the EU is causing your mobile bill to go up

The EU has banned 36-month mobile contracts, in the name of choice and flexibility. But there will be a price to pay.

The mobile phone bills we face each month are likely to rise, and it’s all down to our European cousins.

A changing marketplace

New EU legislation has banned mobile phone networks from offering 36-month contracts on their tariffs, a move that has led to a whopping 3,300 deals disappearing from the market.

What’s more, the new rules have also obliged providers to offer 12-month deals, to cater for users who are not happy about signing long-term contracts. This move has seen the number of 12-month contracts jump from just 279 in February to 4,765 at the beginning of May.

So why has the EU stepped in? And why will it end up costing us?

Locked in

I remember the first time I was offered an 18-month contract on my mobile phone tariff, and I was taken aback. Did I really want to sign up for such a long time? Sure, it was only six months more than my old contract, but it just felt a lot longer.

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Before too long 18-month contracts didn’t feel that peculiar, with 24-month and even 36-month contracts popping up all over the place, to the point that to sign a contract for a solitary year was no longer the norm.

And that is a little problematic, in the eyes of the EU. It doesn’t believe that locking ourselves into a contract for such a long time, by which point the phone accompanying the contract has probably broken, is in the interests of the customer. Instead, we should have a little more choice and flexibility when it comes to our mobile phones.

So 36-month contracts are out.

Rising bills

It’s undoubtedly a good thing that the number of (relatively) short-term contracts is on the rise. After all, with technology developing so quickly, the last thing you want is to be lumbered with an out-of-date piece of kit for a couple of years. Besides, who knows how competitive (or not) that contract will look 12 months down the line.

However, for all the benefits of ditching 36-month contracts, it’s inevitable that the result will be higher mobile phone bills.

The longer you sign up to a contract for, the cheaper that tariff tends to be – after all, the provider has a longer timeframe to make money out of you. By ditching 36-month contracts, the EU’s new rules have eliminated many of the cheapest monthly tariffs in the market. And that means the average tariff costs across the market will be increasing.

Not so smartphones

My first mobile phone was amazing. I could make calls, text my friends, but coolest of all, it flipped open, revealing the keypad. I was the cat that got the cream. That was about 11 or 12 years ago.

These days, my phone is a little bit more advanced. I do my grocery shopping on it, order takeaways, shop on eBay, check the TV schedules and Tube updates, I can tweet and Facebook (is that even a verb?) to my heart’s content. I even downloaded an app to help me measure my wife’s contractions when she was in labour. My current phone also has a larger memory than the computer I took to university.

But that doesn’t come cheap.

You see, like many people, when I sign up to a mobile phone contract I expect to get a mobile phone included, for free. It’s been ingrained in me for years that that’s how it works. But it’s been the growth in smartphones, that can do almost anything, that has led to the increase in typical contract length – in order to offer the phone for free at the outset, the mobile network needs to be taking money from us for longer in order to pay for that phone.

With the demise of 36-month contracts, it’s going to become ever harder to get a smartphone for free the next time we sign up to a new deal. And if you are going to get a handset for free, the tariff you pay will likely be higher than was previously the case.

A price worth paying

However, I think that’s no bad thing. When I signed up to my last mobile deal, I was completely irrational. I was determined to get the handset in question for free. To do that, I signed up to a two-year contract with a a tariff offering me more than double the number of texts I normally send and at least five times the number of minutes I use in an average month as part of my monthly inclusive allowance.

I could have signed up to a shorter tariff, or a tariff that better reflected my own mobile phone use. But that would have involved actually paying for the handset, and I couldn’t bring myself to hand over a couple of hundred pounds to do that.

It’s stupid. We should all assess exactly what we need – not just want – out of our mobile phones, and what we can justify paying for the privilege. The EU has stepped in to stop us from signing up for daft long-term contracts that may not meet our needs after the first year, and lumber us with an obsolete phone. Now it’s up to us to be a little more sensible and realistic when signing up to a new tariff.

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