- Spinach leaves transformed into bomb-detectors [VIDEO]
- Why Apple is the Biggest Brand in the World
- Upgrade for Sirius all-in-one DAQ
- Total immersive flying with Parrot Drone
In the lead up to the iPhone 7 going on sale this Friday, economist, John de Ridder has cautioned Aussies against being hoodwinked by the seeming simplicity of getting their hands on a shiny new smartphone.
De Ridder was commissioned by Australia’s mobile service provider amaysim to explore the true value equation of two year contracts.
Highlighting the steep hidden costs associated with purchasing the handset on a mobile contract, de Ridder has warned that Aussies are not factoring in the true ‘opportunity cost’ of committing to a two-year mobile contract.
“The opportunity cost – or the value of what you’re actually giving up by signing up to a two-year contract – is just too high,” he said. “Because you’re committing to a set plan, you have to be sure that your usage over the term of the contract will more or less stay the same, and that’s a tough call given the huge growth in data usage that’s expected in the future.”
De Ridder says that, while mobile contract inclusions may seem reasonable when customers sign on the dotted line, a lot can happen in the following two years that diminishes the value of those inclusions well before the contract ends.
“The reality is that a lot will change over the next two years, and what Aussies need from their mobile plan in 6, 12 or 18 months is likely to be very different to what they are using today,” de Ridder said. “If you can adapt your plan monthly – as you can with SIM-only plans – then that’s a major benefit that Aussies shouldn’t take lightly when they’re evaluating their mobile plan options,” he said.
The other enticement used to lure Aussies into a two-year contract, says de Ridder, is the so-called ‘subsidy’ of the handset itself.
“Don’t be fooled by handset subsidies. Two-year contracts which include premium handsets are constructed to look like the carrier is heavily subsidising your new smartphone, but it’s often smoke and mirrors,” he says. “By comparing the data allowance of a contract plan with its nearest comparable BYO SIM-only plan, it’s clear that the remaining handset costs are simply being offset in the monthly plan fee.