How much your mobile contract is nailing you

Vodacom subscribers received a shock recently when the mobile operator announced it would hike its contract fees from 1 May 2015, and that both new and existing subscribers would be affected.

Reactions from subscribers varied between outrage and questioning whether a mobile operator could hike prices mid-contract. Initial indications are that it is perfectly legal. Shady perhaps, but legal.

This followed recent price changes from Cell C, including a contract price hike. The mobile operator announced the increases on 22 December 2014, and implemented them on 1 February 2015.

Although Cell C announced the price changes on its website months before they were implemented, a number of Cell C clients said they did not receive any word from the operator that their fees would be hiked mid-contract.

Some good news for those affected is that the National Consumer Commission and the Independent Communications Authority of South Africa will reportedly meet to discuss the sudden price increases.

While it will be interesting to see what comes of this, these recent price hikes illustrate the many things that are wrong with mobile contracts and why it is far better to be on pre-paid.

The tables below summarise how the pricing of cellphone contracts from Vodacom and Cell C compare to what they have on offer on pre-paid.

These comparisons were put together using the pre-paid tariff plans from Vodacom and Cell C with the cheapest voice call rate, and bolting on bundles and adding ad-hoc usage costs where applicable.

For Vodacom, this is its 79c per minute pre-paid package, and for Cell C it is the 66C tariff plan which offers voice calls at 66c per minute.

Two comparative pre-paid costs are shown in the tables: one including SMS, the other excluding. This is because mobile instant messaging services have replaced SMS for many subscribers, and it often doesn’t cost operators a lot to tack text messages onto a contract.

The comparisons focus on in-bundle contract pricing, but it is interesting to note that the out-of-bundle per-minute voice prices on both Vodacom and Cell C are consistently higher than on pre-paid.

Something these comparisons also don’t take into account is the amount of breakage you might have on the kind of contract you take out to get a mid-to-high-range phone. In other words, the minutes, data, and SMS messages you pay for but don’t use.

Benefits of contract

While pre-paid can offer subscribers much lower prices, there are still benefits to having a cellular contract.

The handset subsidy is probably the feature that continues to hook most contract subscribers, offering them a shiny new phone that they pay off over the 2-year duration of the contract – often at a discount.

Another, less obvious feature that a contract provides is security.

If your SIM is locked into a contract with an operator, that means that would-be SIM-swap fraudsters can’t exploit potential weaknesses in the number porting systems offered by networks to get hold of your number.

It also means you are less likely to run out of airtime when on an urgent call to the authorities during an emergency.

When weighing up these benefits against the drawbacks of being stuck in a cellular contract, though, is it not time to settle for a cheaper phone (or use alternative financing options) and ditch the old contract when it comes up for renewal?

More on contract price hikes in South Africa

Shock mobile price hikes investigated

Vodacom prices to increase

Cell C contract price hikes on the way