That lovely new smartphone could be costing you more than you think

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SPAIN (El Pais) The incentive of a new, latest-model smartphone for less than its market price is a popular reason for 'porting' , or moving, one's cellphone number to another operator. Yet doing so ends up being quite expensive for customers, says DoctorSIM, a consulting firm that specializes in telephone rates. Some 60 percent of portability transfers between the main operators Movistar, Orange and Vodafone are due to offers involving subsidized cellphones. Clients pay less than the full retail price for a state-of-the-art phone in exchange for signing a contract of one year or more. In the end, these customers will end up paying their new operator 261 euros more than they should during the first year, according to DoctorSIM.>>>

Movistar (Telefónica) leads the way with 63 percent of new clients attracted by subsidized smartphones, followed by Vodafone (58 percent) and Orange (55 percent). Meanwhile, virtual cellphone operators that opted for more competitive rates without offering subsidized phones only managed to draw 306,344 clients away from other operators, or seven percent of the total.

In 2010, nearly 2.4 million people transferred their numbers to another company to obtain a subsidized phone. The strategy followed by the three main players links the cellphone to contract clauses "that guarantee revenues that are higher than the price of the subsidized phone," says the DoctorSIM report. For instance, clients porting their number to Movistar to get a new cellphone will end up paying an excess 296 euros; those going over to Vodafone will pay an additional 273 euros and in the case of Orange, the figure is 216 euros.
This extra cost is partly due to contract conditions, which force clients to sign on for a minimum of between 12 and 24 months. The DoctorSIM report considers that phone rates become obsolete within six months due to competition. "This rigidity forces clients to pay up to 20 percent more than they would with a plan better tailored to their consumption patterns," reads the study.

Operators claim that rate changes do not happen that fast. "If we consider a client with an average monthly bill of 30 to 40 euros who is looking for a good phone, the model based on a market-rate phone and free choice of rates would be wearisome, as it would force the client to be always on the lookout for new rates and would also mean a greater expense every time they wanted to change phones," says an Orange representative.

The phone-and-plan package is "much more favorable for the client than other (options) where you pay 400 euros for a no-contract phone without a guarantee from the operator and a much cheaper monthly rate," says a spokesperson for Movistar.

"The clients really value subsidized phones," adds someone from Vodafone.

Porting one's number to another company for the sake of a smartphone comes with plans of 15 to 25 euros a month during the minimum term, although over 50 percent of clients never use the full quota of megas, says DoctorSIM. Clients wishing to rescind their contract get penalized with large fees."The fact is that 90 percent stay with the contract," says the Movistar representative.

Before signing anything, DoctorSIM, which has over 250,000 clients, says to select plans that adapt to one's real consumption, choosing a phone with features that will actually be used, finding out how much that same phone would cost on its own, and comparing the price difference between the subsidized-phone-and-minimum-term scheme and the market-price-and-no-term option.

Héctor Meana, director general of DoctorSIM, admits that virtual cellphone operators are shaking up the status quo. "But there is still a lot of resignation out there. People think that operators are a disease that they have to suffer."