O2 stops offering 12-month contracts to customers

O2 has stopped offering 12-month contracts for customers across all of its handsets.

The change will apply to both of O2’s consumer channels: its own stores as well as Carphone Warehouse stores, and online and telesales.

The move reflects the broader tendency towards 18-month contracts within the market. Recent GfK statistics show that 18-month contracts dominate the market, with over 84% in July.

Most networks have tried to discourage 12-month deals by either not offering the most attractive handsets for free or by having less attractive line-rental bundles.

The trend towards longer contracts can also be seen in the increase in the uptake of 24-month contracts compared with 18-month deals, but the market share for two-year deals is still small. GfK found that between January and July the 24-month contracts increased from 1% to 6%.

Customers have resisted signing up to long deals because of how quickly handsets become out-dated in terms of design and features. The top-selling handset on contract two years ago was the Sony Ericsson W810i.

Meanwhile, 12-month contracts have decreased. GfK found that the market share of 12-month contracts did initially increase between January and July from 11 % to 17% in March, but declined to 10% in July.