Revolution coming in mobile phone purchases

It appears the elimination of handset subsidies by mobile carriers won't necessarily mean being slugged the full price of a new handset upfront.

Telstra's phase out of handset subsidies will be finished at the end of January 2002, the Australian Financial Review reports. This will see the end of $0 and $1 mobile phone offers – which saw providers' high monthly access fees recoup the cost of a handset over the term of a contract.

Various alternative payment options are being considered fees to pay the phone off over time (usually a 12 or 24 month period). However, InfoChoice warns such options are certain to include interest payments with handsets being financed via traditional hire purchase-style agreements. It will be cheaper to pay the full price upfront, if you can afford it.

On the positive side, the move away from subsidies is expected to allow more competition from other retailers such as Harvey Norman and in the sale of handsets. This may see retail prices coming down.

Ms Lynne Morgan, a telecom analyst from JP Morgan said that the elimination of handset subsidies would reduce costs for operators, but how it will affect customer retention and acquisition remains to be seen.

There is no word yet whether Telstra will change its service plans offered to customers, ie. whether call rates, etc will be altered.