U.K. mobile phone giant 02 has just introduced one of the most innovative service plans we’ve seen, with the introduction of the 02 Refresh plan. Unlike other multi-year lock-in contracts, where you pay a monthly fee for a set amount of months, this plan is remarkable because it lets you upgrade your phone at any point in the contract with no penalty. No lock-in at all.
The mobile phone business is becoming a cut-throat, no holds barred fight for survival and nowhere is this more obvious than in the tussle to woo smartphone users. These are the people that spend money on stuff like data, offers and accessories, so it makes sense to grab these punters and hold on to them as tight as you can.
What makes this new 02 Refresh plan so interesting is the fact that the company is being totally transparent with pricing, and what’s more they’re splitting the monthly fee into two sections, airtime and hardware, so you can choose which parts of the equation you pay more for up front. The idea is you can choose to pay a lot more for your hardware up front and get a cheaper overall cost at the end of the contract, or pay less up front and end up with a higher final bill but better cash flow.
The monthly price remains the same as current pricing plans, but this transparent view of what you’re paying for, and ability to pay off your outstanding hardware cost at any time and just continue with the airtime portion is really a bold move. As you’d expect, the plan incorporates all of the latest smartphone models, and the plans are set for 24 months. Once the contract period is over, you keep the phone as usual and just pay the airtime fee, or you upgrade as you wish.
If this move is followed by the other UK majors, we could see a very interesting situation where service plan lock-ins disappear altogether and the customer really does get to choose where and how they obtain and pay for their mobile phones. Very interesting.