Heading back to 2004, if you took out a phone contract, you could only guarantee it would be for a 12 month time period. You would most probably have been given a free phone by your local mobile phone dealer and also have been given a bundle of inclusive minutes along with a pre determined text allowance. When you got in to the 11th month of the agreement, the network provider would have got into contact with you and offered you another free phone trying to get you to subscribe for another 12 month agreement.
As 2006 approached, many retailers and mobile phone network companies started to substitute the 12 month contract with the longer 18 month period agreement, which meant that the consumer would have to keep their phone for approximately 6 months longer compared to previous years. There are two big winners from the longer 18 month term mobile phone contract, and you could be sure that the customer is not one of them.
As you can imagine, the biggest winner in the longer term contract length would be the mobile phone network provider, as in theory, they have now lowered their costs regarding providing customers with free phones by around one third. Another silent winner was also the mobile phone insurance providers, as much more buyers decided to take out mobile phone insurance to protect their phones, since they understood that there was a longer period where it might get lost or stolen, without any chance of another free mobile phone until the end of the 18 month contract.
Within a year of the new longer mobile phone agreements, the network companies changed the guidelines yet again by increasing agreement terms by another 6 months to a long 24 month period. Again the mobile phone network providers decreased their costs since they only provide you with a free mobile phone every two years, their savings must run in to the millions every year. With the networks saving cash, the customer is left to take the gamble of protecting their mobile phone with mobile phone insurance, or opting to take the risk of it lasting two full years and not go missing, thieved or harmed over the 24 month period.
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