Despite being popular with customers, O2 has withdrawn its 12-month contract option and moved to a minimum of 18-months. The company, which stated that this move will be implemented within its own stores and independent retailers, reflected a broader tendency towards longer contracts, albeit they were disliked by consumers.
Most networks have tried to discourage 12-month deals by either not offering the most attractive handsets for free or by having less attractive line-rental bundles. However, customers have complained signing up for 18-month or longer contracts left them with outdated handsets and possibly locked into uncompetitive contracts.
But the move towards 18-month contracts has proved successful for operators, with recent statistics from the market research firm GfK indicating 18-month contracts now dominate the market, with more than 84 per cent being sold in July 2008.
A few weeks ago GfK released data claiming subscribers churning from contracts halved in the first quarter of 2008 compared with the same period in 2007 -- dropping from 26 per cent to 13 per cent. This shift is perhaps the first indication that the major operators' priority this year to stop contract customers leaving their networks is paying off.
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