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Breaking the bank

Engadget reporting on UK contract pricing for the iPhone 5:

Vodafone will offer it on contracts from £25 per month – with an initial £249 outlay) or free on £47 per month for two years. That free deal will net you a 16GB iPhone 5, with 2GB of data, unlimited texts and voice minutes. On Orange, a 24-month contract at £46 will nab you the same 16GB model for free, with 3GB of data and unlimited calls and texts. If you drop down to the £20 rate, you’ll have to pay £320 upfront and pick up a lightweight bundle of 100MB of data, 50 texts and 50 minutes. EE stablemate T-Mobile aren’t offering any free iPhones on its carrier plans, but you’ll be able to glean unlimited internet (alongside 2000 voice minutes) on a 16GB iPhone 5 for £109 and £36 per month on contract.

Ouch. Let’s take a closer look at these numbers:

Vodafone with 2GB of Data

  1. iPhone 5 16GB handset cost: £249
  2. Monthly Contract: £25 per month
  3. Total cost of contract and handset over 2 years: £849

Vodafone with 2GB of Data and “free” iPhone

  1. iPhone 5 16GB handset cost: £0
  2. Monthly Contract: £47 per month
  3. Total cost of contract and handset over 2 years: £1128

Orange with 3GB of Data

  1. iPhone 5 16GB handset cost: £0
  2. Monthly Contract: £46 per month
  3. Total cost of contract and handset over 2 years: £1104

Orange with 100MB of Data

  1. iPhone 5 16GB handset cost: £320
  2. Monthly Contract: £20 per month
  3. Total cost of contract and handset over 2 years: £800

T-Mobile with 3GB of Data

  1. iPhone 5 16GB handset cost: £109
  2. Monthly Contract: £36 per month
  3. Total cost of contract and handset over 2 years: £973

Three UK with Unlimited Data

  1. iPhone 5 16GB handset cost: £79
  2. Monthly Contract: £36 per month
  3. Total cost of contract and handset over 2 years: £943

First of all, if you’re seriously looking for an iPhone 5, you can discount the Orange 100MB piss-take. 2GB of data is quite a lot and I’d wager the majority of iPhone users probably hover around the 2-3GB number.

Now, let’s compare it to the same amount of time with a pre-paid option:

GiffGaff

  1. iPhone 5 16GB handset cost (from Apple): £529
  2. Monthly Cost: £15 per month1
  3. Total cost of contract and handset over 2 years: £889

Three UK

  1. iPhone 5 16GB handset cost (from Apple): £529
  2. Monthly Cost: £15 per month
  3. Total cost of contract and handset over 2 years: £889

Both of these pre-paid plans offer unlimited data.

The price of pre-paid plans approach the costs of a contract, so why shell out the extra cash when you can opt for a contract instead? Several reasons, each of them a good reason alone to avoid a contract.

No minimum termsContracts require you to stay with the plan for at least 2 years. Pre-paid plans don’t adhere to a minimum contract term. Don’t like your carrier? On pre-paid, you can change whenever you want. On a contract? You’re stuck unless you buy out the rest of it.

iPhone unlockedOn pre-paid plans, you’ll most likely buy the iPhone from Apple. If you do this, it will be unlocked. Vodafone, Orange and T-Mobile lock their iPhones as standard. Orange offers unlocking at a charge, O2 doesn’t charge to unlock.

Upgrade Next Year

Let’s face it. If you’re an iPhone user, you probably lust after one every time Apple release one. As their release cycle hovers around 12-18 months, with pre-paid you can trade-in your old one with services like Envirophone and buy the next iPhone whenever you want. On a contract? You’re still locked to your minimum term.

Unlimited dataSaving the best to last. Both GiffGaff and Three UK’s £15 pre-paid plans are unlimited data. They don’t throttle and advertise it as truly unlimited.

Not to show any bias, I’ve also compiled a list of reasons why contracts seem to be a better choice than pre-paid plans.

  1. You’re an idiot.
  2. You’re a fucking idiot.
  3. You can’t afford the iPhone right now but are too impatient (see “idiot”).

4G

As you know from my previous link-post, the only networks that will support the iPhone 5 on 4G will be Everything Everywhere (EE) and shortly after, Three UK. If you’re wanting to get an iPhone 5 but must have 4G, then I’d recommend looking at Three UK. For starters, EE haven’t announced any pricing but expect it to be similar to Orange and T-Mobile. There’s been no word on data caps either.

No matter how you spin it, contracts offer less choice, value and flexibility than a pre-paid option. Carriers know this, that’s why they will use words like “free” to get people to sign contracts because they’ll target the impatient or the impoverished.

  1. GiffGaff up to now still offer a £10 plan with unlimited data though this will be phased out with an expected cap of £750MB.