I put this together to compare the cost of buying an iPhone 5 on contract with the major UK networks with the cost of getting an unlocked iPhone 5 from Apple and adding an equivalent SIM-only pay monthly service. (Note, I didn’t look at Pay As You Go, but 12 month contract SIM-only deals which seem to be the best value. Most of these are quoting special 12 month discounts, but as you can shop around for a new one after 12 months, I went ahead and assumed you could get the same price for a second year – you can always go somewhere else with an unlocked phone!)
Thanks to PC Pro who posted all the prices in a nice clear table first…
The cost made me go “ouch”
Somewhere in my head I’ve convinced myself UK mobile phones are free (at least most are on contract) and that the monthly contract price is just something I’d need to pay anyway. Multiplying it all out over 24 months was the only way to compare plans fairly, and it comes to a lot.
There’s no such thing as a free phone
And certainly not a free iPhone 5 – the premiums you pay for getting the iPhone 5 free upfront are eye watering. The way to pay the most money with each network is to get the cheapest upfront phone at the highest monthly rate. It’s a bit odd, because it looks like the networks are punishing their best customers. You could look at it like a loan which you’re paying interest on, and that interest looks really high if you’re determined to get a “free” phone. The more you can pay upfront, the more you save.
Some of the best deals are on contract
This is sensible – networks should give you an incentive to stay with them for 24 months, and that usually comes in the form of a subsidy for your phone. However, the iPhone 5 – like previous iPhones – never works out much cheaper with a contract, only for a few plans with a high upfront cost and low monthly cost.
Cheaper plans are actually good now
It used to be that UK networks would give customers the extra incentive to spend more each month by bundling better service with higher priced plans. But O2 offers the exact same package at every price point – unlimited calls and texts + 1GB data. The extra per month just gets you a discount on the upfront price of the phone and, as you can see from the charts, O2 makes more from you the bigger discount you want.
However, it is still cheaper to go on O2′s £26, £31 or £36 a month plan than to buy any of the iPhone 5 models outright and buy the equivalent SIM-only plan. It’s similar for other networks too.
If you want to save money, get a restricted plan
This year’s contract plans come with lots more minutes than they used to. “Unlimited” is the buzz word. Personally I think I talk less and use data more than I used to. I’m guessing the networks have gambled that giving away what looks like a massively valuable bundle of minutes isn’t really going to cost them much, because people won’t use many of them.
The new value squeeze is data, and this differentiates Orange’s contract plans – you can get up to 3GB a month for £46 or “unlimited” data for £51 a month. There is no SIM-only equivalent for these plans.
The biggest cost savings come from plans with limited amounts of data and minutes. (Texts are just about given away everywhere now.) If you can live with 500 minutes a month, 3 offer the cheapest ways to get the iPhone 5 on contract with a fairly small upfront fee, and there’s unlimited data there too.
Alternatively, buying an unlocked phone from Apple and a SIM-only plan resticted to, say, 600 minutes + 500 MB data will save money if you can afford the upfront cost. The more restrictions you can take, the bigger the savings. I’ve put a couple of reasonable examples onto the charts, but there are more available.
So what are the best deals?
Now, I’m going to assume that someone who wants the iPhone 5 is going to use it, so the REALLY cheap plans with 100 minutes and 100 MB of data won’t do (they’re for your gran), but those aside, here I what I reckon are the best UK deals available. (For info only, don’t sue me if I’ve made a mistake, terms and conditions apply, etc etc)
Cheapest if you want to buy an unlocked phone first
T-Mobile if you don’t mind 300 minutes + 750 MB data a month, because they have special offers on SIM-only plans right now. This looks like the cheapest way to get an iPhone 5 with a reasonable data plan (total cost £841 for a 16 GB phone and 24 months’ service), and you can get cheaper still if you can fit within 250 MB data a month.
If you prefer more minutes (600) and less data (500 MB), O2 and Orange have the best prices. If you’d like unlimited minutes and 1 GB data on the same sort of deal, O2 beats T-Mobile by £1 a month, again based on current special offers, but you would get a better deal on contract if you’re happy to pay a substantial upfront contribution towards the cost of the phone.
Cheapest contract deals locked to a phone operator for 24 months
O2 24-month contract, £26 a month with unlimited calls and texts + 1GB data, costs £250 upfront, total £874 for the 16 GB phone over 24 months. Similarly good deals on the 32 GB and 64 GB models, but they get narrowly beaten here by…
3 24-month contract – for the 32 GB phone it’s £37 a month with unlimited data, 5000 texts + 500 call minutes, costs £89 upfront (total £977). For the 64 GB model it’s £40 a month for the same package, £109 upfront (total £1069). These are easily the best deals for that fairly low initial cost, and close to the best overall (it’s only a bit cheaper to buy the phone outright then get the T-Mobile deal above.) And for £2 extra a month you can go from 500 to 2000 minutes, which is nice.
More deals are available from the service resellers such as Virgin Mobile, Tesco and Giffgaff, I know, and these things change quite often. If you spot a bargain, please post a comment about it.
And don’t get me started on 4G… if you want to get the highest roaming data speeds possible, you’ll need a plan which hasn’t been launched yet from EE and as they are the company which now owns Orange and T-Mobile in the UK, you’ll need to sign up with one of them if you want an iPhone 5 at launch.
I’ve decided it’s doing my head in and I’m going to stick with my iPhone 4 for a while at least. I use docks for sound and video which won’t work with the new phone’s chunky “Lightning” adapter, so I’ve switched to the £20 a month On & On deal on O2. This means I’m tied to O2 for a year but can move to a phone upgrade contract after 6 months if I like. By that stage, 4G will be more mature, available and useful (hopefully with competition to keep the price down), new docks will be available and affordable, and we’ll probably be getting excited about the iPhone 6 (or iPhone 5S perhaps) so I’ll procrastinate until then.