January 28, 2009

The future's dull… the future's a con

Writing about web page http://www.orange.co.uk/fund/

So I got a text off Orange yesterday, saying that they were going to give me funds towards a new phone. Well that sounds quite good, as my phone was an older model when I got it (a Nokia 3220 to be precise) and I’ve had it nearly 3½ years already. Then, like most things, you read the small print and realise this is all a bit of a con.

When VAT was reduced to 15%, Orange decided to pass this on to customers in a rather unorthodox way. They gave customers 25p for every £10 you top up to cover the change in VAT. Now in principle, this was actually a good idea.

A text message on Orange PAYG will rip you off 10p a time (assuming you have no offers running etc). This previously comprised 8.51p of cost and 1.49p of tax. Come December, the tax portion would have gone down to 1.28p, which would make the cost of a text 9.79p… or 10p. The VAT change is just too small to reflect on these prices, and so to actually pass on the cost to the consumer they gave extra credit to the phone instead.

The effect of this was actually that things got slightly cheaper. £10.25 of credit at 17.5% VAT would have comprised £8.72 of credit and £1.53 of tax. Cut that to 15%, and the tax falls to £1.31, making your £10 top up worth… £10.03. That’s right, consumers were up a whole three pence in the tenner. This clearly wouldn’t do.

And so Orange are getting rid of this. Instead, what they propose is that you have this fund which accumulate money when you top up, which you can then use to buy a brand new Orange phone. The cheapest of these phones is the Samsung B130, the specifications of which aren’t actually much of an upgrade (if at all) from my current brick. This phone is £9.50, but of course you couldn’t buy a phone without any credit, so you’ll have to shell out another £10 for the credit. So the least you can get away with paying is £19.50, which to cover entirely requires £190 of top-ups over the course of the year to fund (over £15 a month) plus fifty pennies on top.

For people who are looking for a budget phone, they almost certainly won’t be looking for something new – refurbished, second hand maybe, but not brand spanking new. If you can only afford extend your budget to £10 for a new mobile phone, then you are the sort of person who could probably do with getting a very cheap with minimal tacky extras for under a fiver. And if you want something swanky, then you’ll either go on a contract and get it for keeps with lots of call time, or the money you make towards it isn’t really going to sway you anyway.

Did I mention that you must use any bonus within a year? Or that they have this ridiculous upper limit of £200? (That’s £2000 of credit, if somebody is paying that much on PAYG they really need to think about their finances as a whole.) And that Orange can end this promotion at 30 days notice and then force you to use the bonus within 2 months?

Of course, for those who do get a few odd quid off a phone, it’s a little bit of help. For the 98% of those who don’t, it’s Orange yet again treating their customers with the usual contempt as merely people to line the pockets of the directors with gold. How many more reasons do they want to make me hate them? (And yet for “political” reasons I’m tied to them… :( )

Wish I’d never left Virgin or O2.

- 2 comments by 1 or more people Not publicly viewable

  1. O2 just give 23p extra (or maybe 22p) instead of 25p for each £10 topped up. Would that have been too simple?

    28 Jan 2009, 16:08

  2. Jennysis

    Orange = greedy muppets.

    wavles her o2 phone around Joiiiiiiiin maiiiiiiii… ;P

    04 Feb 2009, 12:20

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