Telco Rip-Off: Are You Getting Screwed?

Are you a loyal customer? Do you re-contract and get the next flashy phone available without comparing deals first? Chances are you’re getting ripped off. Read on to find out what you can do about it.

My Story

If you’re anything like me, and many others, you find a phone provider and stay with them. When your phone contract is near expiry, you simply re-contract and get the next new phone. The biggest decision made is whether to get an iPhone or a Samsung.

A contract is mentioned, costs are glossed over. It all begins to sound like blah, blah, blah whilst you get excited about the new phone that will soon be in your hands. Familiar story?

It’s my story and I’m still trapped in it due to a lack of knowledge and awareness when I last re-contracted. Thankfully, Mr Hack was able to make immediate money saving changes. But for me, I have to wait a further five agonising months until my contract ends.

I did try to get out of my contract but the upfront fee cancellation was more than waiting the contract out. So I wait … Every bill that has arrived since I’ve gained awareness at how much I allowed to get myself ripped off by a telco irks me.

For the record, I am currently on a post-paid (contract) plan with a major telco provider. All comparisons I make are with Aldi Mobile. There are many telcos out there and I encourage you to make your own comparisons to get the best deal suited to your circumstances.

Phone Cost

When I re-contracted, I allowed myself to get screwed. My phone contract came with a beautiful new Samsung S8 and I couldn’t wait to play with it!

Photo of a Samsung S8
Samsung S8

I didn’t realise until later that I got ripped off on the price of the phone.

All I heard was blah, blah, blah when really what I should have been paying attention to was the phone will cost $49 per month for the next 24 months. $49 x 24 = $1176

Yes, that’s right, I agreed to pay $1176 for a Samsung S8.

Comparably, both Harvey Norman and Officeworks sell a Samsung S8 for $788. JB Hi-Fi sells them for $799

Yep, I paid over $300 more than I should have.

But what if I didn’t have a spare $800 to buy a new phone? Then clearly, I’m living beyond my means and being charged for the privilege of doing so.

If you can’t afford the newest smartphone, buy a cheaper phone. The latest smart phone is a luxury, not a necessity. Oh, hindsight is a wonderful thing.

Compare Telcos

I’m currently locked into a $65 per month plan (plus per month phone repayments). For my money I get unlimited texts and phone calls, 150 minutes of international calls to selected countries and 3.5 GB of data. There’s also a paper invoice fee of $2.20.

Never, ever, agree to have paper bills posted to you. Every single paper bill comes at a price to both the environment and your wallet.

Small regular expenses soon add up to a large amount. Email bills are free and can be placed in a computer file if you desire, or you can view previous bills online.

Let’s compare my plan with another telco provider. For a similar deal, they has a pre-paid deal of $25 per month with no lock in contract.

This provider uses the Telstra towers so there’s no need to worry about service availability. You can also keep your current phone number. When Mr Hack transferred over he found the process simple and easy to do.

It’s a good idea to set up a direct debit arrangement so that each month your next lot of pre-paid is automatically sorted. Remember this is not a contract plan and you can cancel at any time.

Our $25 new deal comes with unlimited texts and phone calls, unlimited international calls and texts to 15 countries, and 9 GB of data which is rolled-over if you don’t use it all. Terms and conditions apply, as always check the fine print.

That’s right, for $40 less per month you get 5.5 more GB of data, unlimited international calls and texts to 15 countries, and the same unlimited texts and phone calls.

Meme with a Star Trek character exclaiming 'Well, that was surprising'.
Compare prices first so you don’t get caught out

Lifestyle Creep

Lifestyle creep is not about some weirdo who dresses strangely. It’s the self-defeating personal finance phenomenon of spending extra money on inconsequential things that soon become considered necessities.

For example, I currently pay $65 per month to a major telco. When my contract expires and I change to the new provider at $25 per month, I’ll save $40 per month (plus the cost of the phone repayments). Over one year $40 per month adds up to $480. Over the life of a 24 month contract it’s a savings of $960.

I have a choice here:

I could allow lifestyle creep to absorb that money.

Or I could use it to pay extra on a high interest debt such as a credit card.

Or I could use it to help save up for a house deposit, or pay off a mortgage.

Or I could invest it.

Or I could save it up to purchase my next phone. This, ironically, takes two years of saving $40 per month for the latest smartphone, and is the same amount of time a smartphone generally lasts.

There are so many financially beneficial uses for that extra money, rather than allowing lifestyle creep to take it over.

Planned Obsolescence

Unfortunately, smartphones are built for obsolescence, they are designed to fail. The average working life of a smartphone is two years. After that the battery starts to hold less charge, the operating system updates decline and the phone loses compatibility.

This only benefits the manufacturer with increased sales as the consumer is forced to buy another phone. It also has a significant environmental impact.

Photo showing the time line and evolution of the Apple iPhone which is designed for obsolescence.
Planned Obsolescence

Planned obsolescence affects our finances and the planet. It is estimated that there are 31 million mobile devices active in Australia, with a further 23 million old or broken mobile devices sitting in drawers and cupboards. That’s a lot of money spent on phones and a lot of resources sitting idly unused in households.

You just can’t throw a mobile phone in your landfill bin after it’s reached obsolescence as they are not biodegradable and contain substances which are harmful to the environment.

Your smartphone actually contains precious resources such as gold, silver, copper, aluminium, lead, cadmium and coltan. Some people collect old mobile phones to harvest the gold out of them to sell. There are plenty of YouTube clips on how to do this if you’re interested.

Did you know 99% of the resources in a phone can be recovered and reused.

How To Recycle Your Old Phone

Old mobile phones, even if they are broken, can be dropped off at many major telco businesses such as Telstra, Optus, Vodafone and Samsung stores.

They can be posted to Mobile Muster by a free reply paid satchel at Australia Post. Some local transfer stations also accept e-waste.

By recycling your old mobile phone, you’ll be doing a fantastic deed for future generations and for the environment.

And, please, learn from my mistakes and don’t get ripped off by a telco on the price of your phone or a lock-in contract.

Like to know more about saving money? Check out these articles:

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Do you have a telco rip off story to tell? Please scroll down to the comments box below so that others can avoid the same mistakes.

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