UK Operators Tap Longer Contracts to Reduce Churn

UK mobile network operators are increasingly pushing their subscribers towards two-year contracts, offering the allure of additional benefits, higher specification handsets and lower monthly rental charges.

According to Teligen, the Strategy Analytics tariff department, Orange has made the boldest moves so far by introducing the first ever 3-year plans to the UK market. Following the lead of O2, Orange has introduced a new range of 18 month SIM-only plans.

Angela Toal, Senior Tariff Analyst at Teligen, said, "This is in response to the continued demand for low-cost monthly plans in the UK market. Operators are being driven to offer plans at ever-lower monthly prices, or with increased inclusive allowances. With this move, operators are hoping to reduce customer churn and attract new customers to their services, as long as consumers will accept a longer contract in exchange for these extra benefits."

Phil Kendal, Director of the Global Wireless Practice at Strategy Analytics, added, "Having previously succeeded in switching customers from 12 month to 18 month agreements, operators will now focus on subsidies as a means of driving the transition to 24 months. Consumers wanting large handset subsidies will be forced to choose between signing longer contracts at lower price points and accepting higher-priced contracts at the existing 18-month term."

Posted to the site on 23rd June 2009