When is a 'free' phone truly free?

The mobile phone industry hit the UK in the late 80s and early 90s, but for most people, it was the launch of the Nokia 5110 in 1998 that piqued our interests in a more widespread consumer fashion. Before this mobile telephony was almost restricted to individuals of affluence and those that NEEDED one for their job or business.

Fast forward to 2020 and it is almost the reverse, most people I know have a mobile phone (I only know two people that don’t have a smartphone and they’re both in their 70s) some even have multiple devices where an employer has provided one.

The big question here is what cost is associated with that business mobile device?

When a mobile salesperson says to you, your IT manager, telecoms manager or procurement person that they have included ‘free’ phones within their quote, they are typically more likely to win the business as opposed to another provider or salesperson which doesn’t offer the same.

Now, this is purely because the word ‘free’ has been used with phone contracts for so many years, it is almost always assumed that this is so. However, this is never really the case as there are two parts to any mobile plan.

The service element – this is what you buy in order to use the network operators masts/signal/spectrum and the supplied call/text and data plan alongside any other additional benefits

The Device/Hardware element – while you don’t have the choice with the service element typically, you do with the hardware part. If the devices within your fleet all work as they should, meet the needs of your business and run currently supported software and operating systems – you don’t NEED to change your devices and you could keep what you have currently which will deliver a cost-saving benefit almost instantly.

If you decide to get new phones within your plan that are deemed ‘free’, the service charges will be inflated in order to cover the cost of the handset, and unless you know where to look within your contract or quotation you won’t truly know what you are getting, nor will he be able to make a comparison easily.

Salespeople will sometimes do some or all of the following in order to close the deal with handsets including:

  • Increase the cost of the data/call/text bundles that you receive or even the line rental and then provide you with some sort of discount.
  • Provide a hardware fund but include a “use it” or “lose it” clause within the contract meaning that you have to buy new hardware from them as opposed to getting a cash payout at the end.
  • Provide free minutes and or bespoke tariffs for things like non geographical numbers international numbers or roaming.
  • Issue different tariffs for different users.
  • Apply a data bundle over a number of additional SIM cards to give a lower cost per SIM to make the deal look more appetising to the customer.

But say that you do need new devices for your staff and you don’t want to pay massively inflated prices what can you do. Over the past few months we’ve seen Telco resellers and dealers adjust the way they are selling business mobile contracts and instead of providing hardware funds or various discounts they have moved to a leasing model where you lease the hardware for the term of the contract.

Recently we performed a tender for a customer and we were able to get then a deal whereby they would be spending around £15 a month for an iPhone SE2 per user on a two year lease and and £14 per user on an unlimited calls, texts and 10 GB data bundle. So for less than £30 per user per month, they received a handset that had just been released by the manufacturer and a 10 GB data plan. If you were buying a similar plan from a network operator direct – or from a consumer perspective you would be paying an upfront fee and increased line rental over potentially a longer contract term in order to get the same deal .

So to answer my question – “When is a free phone truly a free phone?” the answer is NEVER, but there are things you can do to reduce/remove any inflated pricing if you know what you’re doing . If you don’t, you should be speaking to someone that you can trust with knowledge within the industry, such as us for professional and impartial support and guidance. 

IT and procurement managers have generalised knowledge within their areas and don’t necessarily have the category knowledge in order to find the right service and hardware plans for their business and as such we recommend that these people utilise outsourced specialists such as ourselves in order to get the right deal.

If you feel that you are overspending on your mobile phone fleet - get in touch and we can arrange a review - or a full NO OBLIGATION review of your technology.