If you’re thinking about buying an iPhone on O2, there is a page on Martin Lewis’ MoneySavingExpert site that looks at the monthly tariffs. But it’s well out-of-date now, so I’ve put together a quick guide highlighting the total cost of ownership.
Read on for the cheapest way to get your hands on Apple’s shiny mobile, short of nicking it!
There are four tariff bands at the moment.
| Cost | £29.38 | £34.26 | £44.05 | £73.41 |
| Minutes | 75 | 600 | 1200 | 3000 |
| Texts | 125 | 500 | 500 | 500 |
All minutes are cross-network, and tariffs include unlimited voicemail and data. Depending on your chosen tariff and length of the contract (either 18 or 24 months), there may be an up front payment.
| Initial Cost of iPhone | Monthly Tariff | ||||
| iPhone version | Contract Length | £29.38 | £34.26 | £44.05 | £73.41 |
| 8GB iPhone 3G | 18 | £96.89 | £96.89 | – | – |
| 8GB iPhone 3G | 24 | £96.89 | – | – | – |
| 16GB iPhone 3G | 18 | £155.61 | £155.61 | £57.74 | – |
| 16GB iPhone 3G | 24 | £155.61 | £57.74 | – | – |
Adding the initial cost of the phone to the monthly tariff (over the life of the contract), the total cost of ownership for each model of iPhone is as follows:
| Total Cost of Ownership (over the length of the contract) |
Monthly Tariff | ||||
| iPhone version | Contract Length | £29.38 | £34.26 | £44.05 | £73.41 |
| 8GB iPhone 3G | 18 | £625.73 | £713.57 | £792.90 | £1,321.38 |
| 8GB iPhone 3G | 24 | £802.01 | £822.24 | £1,057.20 | £1,761.84 |
| 16GB iPhone 3G | 18 | £684.45 | £772.29 | £850.64 | £1,321.38 |
| 16GB iPhone 3G | 24 | £860.73 | £879.98 | £1,057.20 | £1,761.84 |
What can we see from this?
If you want an 8Gb iPhone
- Providing you can weather the up-front payment of £96, there’s no benefit at all in taking a 24-month contract. TCO is lower with an 18-month contract.
If you want a 16Gb iPhone
- Providing you can weather the up-front payment of £57 or £155, there’s no benefit at all in taking a 24-month contract. TCO is lower with an 18-month contract.
8Gb or 16Gb?
- You’re better off getting a 16Gb. A 16Gb iPhone is cheaper (in some cases significantly cheaper) over the life of an 18 month contract compared to an 8Gb iPhone over a 24 month contract. You can take a 16Gb (with an initial payment) on an 18 month contract, and it’s cheaper than an 8Gb on 24 month every time. The only exception is on the £73.41 tariff, where there is no TCO price difference.
How to have your iPhone a bit cheaper
But here’s a neat little trick. O2 Terms and Conditions allow you to drop your tariff by one tariff band after 9 months. Presuming you have enough minutes and texts on a cheaper bundle, you could (for example) drop down from the £73.41 tariff to the £44.05 tariff.
| Total Cost of Ownership (dropping tariff at 9 months) |
Starting Monthly Tariff | ||||
| iPhone version | Contract Length | £29.38 | £34.26 | £44.05 | £73.41 |
| 8GB iPhone 3G | 18 | N/A (can’t drop down) | £669.65 | £704.79 | £1,057.14 |
| 8GB iPhone 3G | 24 | £778.32 | £969.09 | £1,497.60 | |
| 16GB iPhone 3G | 18 | £728.37 | £762.53 | £1,057.14 | |
| 16GB iPhone 3G | 24 | £836.06 | £969.09 | £1,497.60 | |
The above table shows “monthly tariff” as the starting tariff when you sign up for the contract, and assumes you drop down by one tariff band for the remaining term of the contract, e.g. You sign up for an 18-month £44.05 monthly tariff, choosing an 8Gb iPhone , then after 9 months, drop down to £34.26. TCO over this contract length will be £669.65.
Savings over the contract term, compared to sticking with your starting monthly tariff, are therefore:
| Savings (dropping tariff at 9 months) |
Starting Monthly Tariff | ||||
| iPhone version | Contract Length | £29.38 | £34.26 | £44.05 | £73.41 |
| 8GB iPhone 3G | 18 | N/A (can’t drop down) | £43.92 | £88.11 | £264.24 |
| 8GB iPhone 3G | 24 | £43.92 | £88.11 | £264.24 | |
| 16GB iPhone 3G | 18 | £43.92 | £88.11 | £264.24 | |
| 16GB iPhone 3G | 24 | £43.92 | £88.11 | £264.24 | |
Is there any way to get it cheaper?
Yep, there’s one more way – Affinity deals. O2 provides mobile phone service to several large corporate firms, and has offered a “friends and family” deal to their employees. So, if you know someone who works for Lloyds TSB, McDonalds, Network Rail (and one other I can’t remember, sorry) then you can get 30% off monthly tariffs. That’s not just for iPhones, it’s 30% off any O2 tariff, and it’s valid for upgrades as well as new contracts.
The new iPhone
All of this is likely to change when the new iPhone is released in June or July. I expect tariffs will change then, especially if the iPhone becomes available on other networks in the UK. I’ll update this guide when we know more.