O2 UK has launched a new way of doing business for its contract (or “post pay”) consumers. It’s called O2 Refresh and it completely decouples the monthly service plan from the handset cost.
With this approach you now choose your calling plan — which must be 24 months in length. You then select what phone you’d like and select a “phone plan” for paying that up.
So, for example, you can pick up unlimited calls, unlimited texts and 1GB of data for a highly reasonable £17 per month. That’s your service plan taken care of. You now need to choose a phone. Let’s say you opt for the super-gorgeous HTC One (with it’s wonderful HTC Zoe functionality). The HTC One requires a £49.99 up front fee followed by £20 per month. (So the phone will transparently cost you £529.99 — zero interest, zero APR, none of that jazz).
Your total per month with this configuration? £37. That’s exactly the same, by the way, as the standard 24-month Pay Monthly contract currently on offer from O2.
Why bother with O2 Refresh then? Well, because you can pay off the phone and upgrade whenever you like.
And here’s the science bit: O2 will not force you to pay off the existing line rental as a terminal fee.
That, I reckon, is the most important feature of the whole offering. This has been a flipping thorn in my side for a LONG long time.
Let me give you an example.
Let’s stick with the £37/month HTC One example.
You’ve paid £49.99 up front. You then have the HTC One for 9 months, right, until the HTC Two comes out and blows the One away making into a luddite overnight. Traditionally you’re absolutely screwed, especially if you’re an O2 customer. O2 have a long history of being first with lots of the top of the range devices.
If you had 15 months outstanding on your standard £37/month contract, you’d be liable for a whopping £555 to exit (or thereabouts).
Some people will do this if they’re that frustrated. But the majority have to sit and adopt a fake smile and watch whilst their friends turn up at the pub with their beautiful HTC Two devices.
As an O2 Refresh customer, it’s a much different situation. If you want to upgrade to a new device, O2 will waive the airtime fee. You’re still liable for the phone cost of course. In this situation you’d need to pay £20 x 15 (£300). This is fair enough. The handset costs a lot of money. It’s paying off the unnecessary airtime that annoys me about the old way of doing things.
You’re liable for this £300 — however, O2 will give you up to £260 for your old handset. Provided you’ve kept the HTC One in reasonable condition, there’s no reason why you shouldn’t be able to get a good amount back for it. Let’s assume you can get £200 for the HTC One because it’s had a few knocks and scrapes. You now only need to pay £100.
Is it worth paying £100 to quit everything and get yourself a new HTC Two from O2 when you’ve only had the HTC One for 9 months? I’d say yes. And I think, increasingly, a lot of other people would agree with me.
I love it.
I really, really like the flexibility.
For O2, it’s a boon. The number one thing O2 want is to keep your eyes facing them whilst Vodafone, EE and Three dance around seductively trying to tempt you. Remember you’re still committed for the 24-month period unless you upgrade, in which case, everything is reset.
For the consumer, the ability to chop-and-change to the latest iPhone, Samsung, BlackBerry or Nokia is likely to be very appealing.
The challenge for O2 will be explaining the benefits of this new approach in as clear a way as possible to the consumers.
I haven’t been an O2 customer for about a year. I have accounts on every other network but I got to the point with O2 that I couldn’t see a valid reason for bothering. O2 Refresh changes things dramatically for me given my requirement to always have the latest devices.
Nice work O2.
If you’re interested, pop into an O2 store. You’ll be able to get O2 Refresh online and via the phone at a later date.
The O2 Refresh site is here.
Here’s the full release with all the details:
O2 launches new tariff allowing customers to get the latest phone whenever they want
• O2 transforms the way consumers can purchase the latest mobile phones with the launch of O2 Refresh
• In an UK first, O2 Refresh offers customers the opportunity to get a new phone when they want, without having to pay out their airtime contract
• O2 Refresh will be available in O2 stores nationwide from April 16
O2 today announces the launch of O2 Refresh, the first 24 month tariff to decouple the cost of the phone from the cost of calls, texts and data. O2 Refresh has been designed for customers to get a new phone at any time, without having to pay out their airtime contract. Instead, customers simply pay the remaining balance for their phone and then start afresh.
When a customer signs up to O2 Refresh, they choose a Phone Plan and an Airtime Plan. 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.
For those customers who want a new handset before the end of their contract term, O2 Refresh enables them to pay off the remainder of their Phone Plan and end their Airtime Plan with no termination fee. To make it even more affordable to get the latest smartphone, customers can trade in their old mobile for cash using O2 Recycle, getting up to £260 to put towards their new phone.
O2 Refresh also offers great long-term value for those customers who don’t want or need a new phone before the end of their contract term. Once the customer has paid the full balance of their Phone Plan, monthly payments dramatically reduce to just the cost of the Airtime Plan.
“Mobile phone technology continues to advance at a rapid pace, yet the way phones are sold has remained largely static,” said Feilim Mackle, Sales and Service Director at Telefónica UK. “Increasingly our customers are telling us that they don’t want to be tied to the same phone for two years and, with 4G coming to O2 this summer, we want to make it easier for our customers to benefit from the latest technology. For the first time in the UK, O2 Refresh will make it possible to get a new phone part way through a pay monthly contract, at any time – quickly, easily and cost-effectively.”
Customers will have a choice of three O2 Refresh Airtime Plans, which have been tailored to meet varying call, text and data requirements. For £12 a month, customers get 600 minutes, unlimited texts and 750MB of data; for £17, customers will have unlimited minutes, unlimited texts and 1GB of data and for £22 they receive unlimited minutes, unlimited texts and 2GB of data.
O2 Refresh has also been designed to give customers the flexibility to choose whether to make an upfront payment. The overall cost of the phone may be less depending on whether a customer chooses to make an upfront payment toward their mobile and which O2 Refresh Airtime Plan they opt for.
At launch, O2 Refresh will be available on a range of phones including the HTC One, Sony Xperia Z, Blackberry Z10, Samsung Galaxy S3 and Apple iPhone 5. Following the launch, O2 Refresh will be extended to include a wider range of phones, with a specific focus on high-end smartphones including the Samsung Galaxy S4*. O2 Refresh will be available in O2 stores from Tuesday 16 April and will be available online and over the phone in the coming months.
How O2 Refresh works
A customer buys a HTC One on O2 Refresh and chooses to pay £17 per month for their Airtime Plan and get unlimited minutes, unlimited texts and 1GB of data. They then choose to pay £20 per month for their Phone Plan and pay £49.99 up front, meaning their combined O2 Refresh tariff costs £37 per month, the same as they would pay on a standard 24 month Pay Monthly contract**. The total amount they will pay for the phone is £529.99.
Notes to editors
* O2 Refresh is available on Samsung Galaxy S3, S3 Mini, Note 2 and Ativ S, Blackberry Bold 9900 and Z10, HTC 8X and One, Sony Xperia T and Z, iPhone 4, 4S and 5, Nokia 820 and LG Nexus 4. It’ll also be available on the Blackberry Q10 and Samsung Galaxy S4 as well as other new smartphones in the future.
**This is a representative example; wherever you mention pricing for O2 Refresh please include this and the terms below. Representative example for HTC One: Duration of agreement 24 months. Cash Price is £600. Upfront cost is £49.99. Credit amount is £480. Interest rate is 0% fixed. Representative APR is 0%. Monthly phone payment is £20. Total amount payable for the HTC One is £529.99. The monthly airtime payment is £17.
O2 Refresh includes a 24 month Airtime Plan on our Pay Monthly Mobile Agreement and options to pay for your phone upfront or on a 0% APR consumer credit agreement. To get a new phone, simply pay any balance due on your Phone Plan and we waive the remaining months of the Airtime Plan. Subject to status, credit check, and payment by Direct Debit. Applicants 18+. Subject to availability. Airtime Plan prices may go up. Standard UK calls and texts, special numbers chargeable. UK data only. Credit provided by Telefónica UK Limited trading as ‘O2’, 260 Bath Road, Slough, Berks SL1 4DX. Telefónica UK Limited is regulated by the OFT, consumer credit licence number 0518589. Terms and fair use policy apply, visit o2.co.uk