Tesco moves to 12-month mobile contracts

The mobile operator will allow consumers to pick between a 12, 18 or 24-month tie-in on any contract they opt for from today. Until yesterday, you could only get the iPhone on a one-year deal from Tesco.

Despite Tesco's concession, it won't necessarily make its deals the best value (see the Cheap mobiles guide).

In May 2008, 12-month contracts made up 13.4% of the market, 18-month contracts made up 83.4%, and 24-month contracts accounted for a mere 3.2%.

However, a year later, the proportion of 12-month contracts had dived to just 2%, 18-month contracts fell to 39%, while 24-month contracts shot up to 59% of the market.

Tariff trapped

When you're stuck on a long-term deal, it can prevent you from switching to a cheap tariff, when they become available. What's more, you may also be stuck on an out-dated phone.

For instance, most mobile users who bought last summer's iPhone 3GS on a pay-monthly contract won't be able to upgrade to the iPhone 4 without paying a substantial fee as virtually all tariffs were sold on an 18-month or 24-month contract. Only Tesco offered a 12-month option.

Archna Luthra, MoneySavingExpert.com consumer products analyst, says: "An 18 or 24-month contract is fast becoming the norm, so this is good news for consumers. 

"A year gives much more flexibility and allows you to make the most of price shifts. However, it's not a reason to switch to Tesco.

"By far the biggest saving comes from picking the right tariff which can be speedily done using comparisons."

Switching speed

The news comes on the same day telecoms regulator Ofcom announced those switching mobile providers will have their number transferred to their new provider within a day from next April, rather than the current two-day maximum. In 1999, it took up to 25 days.

To keep your number when switching, you must contact your existing provider and ask for a code, call a Porting Authorisation Code (PAC), which is given to your new provider.

However, critics say this is still too slow.

Ernest Doku, from price comparison site uSwitch.com , says: "Britain remains the only country in Europe where consumers need to go cap-in-hand to their existing mobile company when switching.

"Ofcom should have eliminated the need for customers to make contact with the network they are leaving, but instead has missed this opportunity to make the process as quick, easy and consumer-friendly as possible."

When switching contracts, if you don't need your old phone, you can get up to £230 by selling it (see MobileValuer.com).

Further reading/Key links

Slash mobile costs: Mobile Roaming, Free Texts, Mobile Phone Contracts, MobileValuer.com