UK mobile retailer Phones4u has launched its new Just Update My Phone (JUMP) tariff for UK consumers that allows customers to potentially upgrade their handset every six months by splitting the handset and network cost for ownership of their device.
Phones4u will allow customers to take out two separate rolling 2-year contracts, paying one monthly amount for the handset and services provided by JUMP and a separate monthly amount for the network airtime agreement.
This can be renewed every six months, taking the hassle out of one-off costs and high upgrade fees. However, the network airtime agreement remains unaffected.
The new Phones4u has been trialled across 100 of its stores, carrying a premium of £3.99. If a user wants to change their phone after 6 months, they must first contact Phones4u and work out how much is outstanding on their current agreement and determine the worth of their handset that they wish to trade in.
Customers then agree on the phone they want to upgrade to and the operator will work out the amended cost that will be charged each month. By trading in a handset, the amount is reduced. If the customer is happy, they then visit their nearest Phones4u store and trade in their old phone for a new one.
The Telegraph reports that users will be able to trade in up to three handsets each time they upgrade, and their existing device will be worth at least £100. It also noted the typical cost of the tariff:
Phones4U said a typical two-year tariff on Jump might cost £37.99, divided between a £15 network charge and a £22.99 phone agreement. If a phone were traded in after six-months, at a new value of £175, then £240 would remain on the 18 months Jump tariff. On a new two-year tariff, this would equal an extra £10 per month, on top of what is effectively a brand new tariff.
The initiative will appeal to those who want to have the latest smartphone but it will cost them to do so. Monthly charges will be increased for the more desirable smartphones, ensuring that the retailer is able to recoup costs on the handset it is providing.
That said, operators are turning to longer, more expensive contracts to secure customers, locking them to a device for the duration of their agreement. This offers flexibility, but consumers will surely pay for the privilege.