O2 launches new type of contract - splits airtime from handset cost

UK mobile network O2 is launching a new type of contract, which splits the airtime cost from the handset cost.

On a standard O2 deal the HTC One smartphone, with unlimited minutes and texts and 1GB of data, costs £37/month with a £49.99 upfront charge.

Buy it on O2 Refresh and you’d pay  £17/month for the airtime plan and a further £20/month, and £49.99 up front, for the phone plan.

Your total monthly cost will still be the same but on the O2 Refresh tariff you’ll be able to track how much money you have contributed towards your handset on your phone plan.  If you want to upgrade to a new handset,  instead of paying a termination fee, you just pay what you still owe for your phone plan based on the outstanding balance on your combined contract. Old handsets can also be traded in using O2 Recycle, which gives you up to £260 towards the cost of your new phone.

If you don’t upgrade and you pay off the total price of your handset, your monthly bill will be cut and you’ll only pay your airtime contract. In the example above you’d be left paying just £17 a month.  This doesn’t happen automatically with regular contracts – instead you have to ask your network to move you to a different Sim-only deal.

O2 Refresh deals

O2 Refresh will go on sale from 16 April and will be available with a range of phones including the HTC One, Sony Xperia Z, Blackberry Z10, Samsung Galaxy S3 and Apple iPhone 5 (it’ll also be available on the Samsung Galaxy S4 when it launches later this month). Phone costs will vary depending on the airtime plan you pick and whether you choose to make an upfront payment.

Three two-year airtime plans will be available. For £12/month you get 600 minutes, unlimited texts and 750MB of data; for £17/month you get unlimited minutes and texts plus 1GB of data; and for £22/month you get unlimited minutes and texts plus 2GB of data.

(Source: Which?)