Carriers withdraw subsidised handsets

Telstra is to begin phasing out subsidies for mobile phone handsets from November 2001. The move means consumers will have to purchase handsets upfront rather than pay them off over time via their monthly access fees over the term of a contract.

The Australian reports that upfront charges for new mobile phones will increase from that time, with the subsidies due to end altogether in early 2002. Optus and Vodafone, the two other main mobile phone providers in Australia, are also in the process of phasing out such subsidies. Telstra says that the abolition of the subsidy would allow the mobile phone industry to offer much less complicated contracts. The subsidies also masked the true cost of a phone.

It is yet to be seen what will be offered to customers who want to upgrade their handsets but payment plans and trade-in deals are expected to be offered. Service providers such as Virgin already have in place offers involving no subsidy on handsets.
However, it does offer a payment plan over 12 or 24 months. These sort of options (although you are not signed to a contract), will enable mobile phone users to purchase the handset they want, without having to pay for the whole thing up front.

The Australian Consumers' Association has welcomed the end of the $0 price plans that the subsidies made possible.