Tesco Mobile has launched 12 month mobile contracts in response to consumer demand. According to research for Tesco, a quarter of mobile loving Brits don’t want a long term tie in to their handset, but felt there were very few alternatives to 18 and 24 month deals.
From the research, Tesco found that 38% of people feel that their handset is considered out of date within a year of their contract start date. In May 2008, 12 month contracts made up 13.4% of the market, 18 month contracts 83.4% and 24 month contracts a mere 3.2%.
However, in as little as 12 months, 12 month contracts had reduced to just 2%, 18 month contracts decreased to 39% and 24 month contracts shot up to 59%. This trend has been fuelled by the rising availability of expensive smart phones which are generally only available on a long term contract.
Tesco Mobile has found that one in four people would opt for a shorter term mobile contract if they were more readily available, as 40% believe this would allow them to save money by sourcing better deals more regularly. A third of those surveyed said length of their mobile contract is a key consideration when picking a deal.
The network is bucking the industry trend and offering their customers 12 month contracts on all tariffs and plans as well as a range of longer term contracts to ensure customers get the choice they want.
David Taylor, COO of Tesco Telecoms and Tesco Mobile said: “There needs to be more choice in the market when it comes to mobile contracts. 18 and 24 month contracts are great for some people, especially when it comes to high spec smart phones, but financial uncertainty and rapidly advancing technology means that there are a lot of people who don’t want to be tied to their mobile.
“Tesco Mobile prides itself on customer service and by responding to consumer needs and we hope this move will shake up the market and give choice back to the consumer by winning back the space for 12 month contracts.”
A staggering 48% of those with an 18 or 24 month contracts are spending between £40 and £100 on the latest handset because they cannot wait until the contract renewal date, while 80% of people believe that the 12 month contract is their ideal contract, saying that this type of contract offers more regular handset upgrades. A further 33% said that this type of contract also offers peace of mind by not being tied into a contract that they may regret later.