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Mobile Phones Tied to Contracts?: How Passé

I don’t want to harp on about it, but I recently bought a Treo 650 (an upgrade for my my broken 600) and I love it dearly. I got it on Ebay because my service provider, T-Mobile, doesn’t offer the Treo in the UK.

I was staggered by the number of phones being sold without a contract each week on Ebay in the UK - over 30,000 versus 500 with a contract (I have assumed an average 5-day listing).

Assuming most of these sell, this equates to around 120,000 mobiles sold a month or nearly 1.5 million a year. All of these are sold without a contract and most have been unlocked or can easily be unlocked (I unlocked my Treo from Orange for £12).

Historically, the great cry from operators has been that people want cheap or free subsidised phones (which they pay for over the life of the 12 or 18 month contract that they are locked into).

The massive growth in phones being bought at much higher prices on Ebay (I paid £230 for my Treo) without a contract indicates that consumers are voting with their feet. 1.5 million phones is 7.5% of all mobile phone sales in the UK and this number is rising fast.

It seems to me that consumers are saying that they are very willing to pay a higher up-front charge for the phone OF THEIR CHOICE and then search around for a sim-only contract package that suits them.

Telco 2.0 is all about changes like this. The vertically integrated business model that operators have adopted so successfully is slowly being unpicked. Operators are working hard to defend their integrated model in the UK. One example of this has been their move into the high-street to ensure that the independent retail channel does not exert too much control over devices and service plan sales. Just this week, we hear that O2 is apparently looking to buy out The Link.

However, that Ebay number makes a move like this sound like a rear-guard action. I wonder just how long the operators can hold back the tidal wave?

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Mobile contracts is an invention of the west. Here in India we buy cells and then a sim and it works like a breeze.

Hmm, so can I take the liberty in saying that mobile markets are more developed here. :)

Mobile phone contracts are really useful to mobile phone customers because these contracts make mobile phone affordable.

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