Sim-only deals are dominating store windows and billboards as operators become embroiled in a price war over minutes and texts.
The four main operators are all heavily pushing Sim-only deals, with many making them the central offers of current marketing strategies.
Operators are juggling the balance between taking a hit on their margins from lower average spends (at least halved in many instances), with the benefit of not paying out on a new handset.
Even O2, the strongest performing network by some distance, said its contract ARPU was 2.5% lower year on year in the third quarter of 2008, caused by the increase of Sim-only tariffs.
3 is the only network not to offer Sim-only deals in store, but the operator will begin promoting them from mid February. Its cheapest Sim-only online offer is £9.99, which includes a £10 starter top-up card.
O2’s Sim-only tariff, Simplicity, costs £15 on a 30-day contract. Packages with over 600 minutes include a free ‘bolt on’, where consumers can choose between unlimited O2 to O2 calls, unlimited texts, a web bolt on, unlimited weekend calls or 200 anytime minutes.
Meanwhile, Orange’s cheapest offer is £15 and its most expensive is £30, on 30-day rolling contracts.
Vodafone has Sim-only plans starting at £10 per month for 100 minutes and 500 texts.
An Orange spokeswoman said: ‘Interest in Sim-only offers has grown significantly, largely due to the value they provide. Customers who are not handset driven can benefit from cheaper tariffs, and they appreciate the flexibility of Sim-only as they are not tied into contracts.’
She added: ‘Our Sim-only deals are proving extremely popular with customers, and we expect there to be further innovation in this space over the next few months.’
A Vodafone spokeswoman said: ‘In these economic times, people like the flexibility of a 30-day rolling contract as they can budget effectively, but don’t have to make an 18-month commitment.’
T-Mobile improves Sim-only deal
T-Mobile has refreshed its Sim-only Solo promotion from the start of February, and is now offering unlimited texts and 350 minutes for £15 per month. The deal caps customers’ monthly bills, so if the minutes allowance is reached they then have to top-up in a conventional prepay method.
It resurrects T-Mobile’s U-Fix tariff, which originally blended contract and prepay, and targeted parents looking for value while controlling their child’s spending.
However, this time there is considerably more value, albeit with no handset, and still no contract.
Bottom end: £10 per month – 100 minutes, 500 texts
Top end: £25 per month – 700 minutes, unlimited landline calls, 250 texts
Bottom end: £15 per month – 350 minutes, unlimited texts
Top end: £35 per month – 1,800 minutes, unlimited texts
Bottom end: £15 per month – 200 anytime minutes, unlimited texts
Top end: £30 per month – 1,200 anytime minutes, 500 texts
Bottom end: £15 – 300 minutes, 300 texts
Top end: £30 – 1,200 minutes, 1,200 texts, plus bolt on