How-to: figure out the best value iPhone 4 contracts in the UK (updated)

By Vlad Savov

posted June 18th 2010 6:49AM

How-To

Choices, choices. Do you get the 16GB or 32GB iPhone 4? The black one now or the white one a little later? We can't tell you which variant of Apple's next phone will hold its value best over the coming months, but we can try to clear up a bit of the fogginess surrounding price plans on offer from UK networks. Orange and O2 are the first to drop handset pricing and full contract details, but they haven't made it easy for the discerning buyer, with each carrier offering more than a dozen options. Vodafone, T-Mobile, Three, and even Tesco Mobile are set to follow suit in the coming days and weeks, but we thought we'd get the ball rolling with the pair we have now.

Update: And just as we publish this, Voda has gone official with its tariffs. We've now broken them down into a more digestible format as well. Just for you.

Update 2: Tesco Mobile has also outed its pricing and it's by far the best of the bunch. Check out the full chart inside the post.

Update 3: Three's iPhone 4 pricing has now also been made known.

On first sight, it'll kinda look like we've replaced the carriers' tables with our own more colorful ones, but hopefully these shed a slightly more informative light on the real cost of iPhone fan club membership. There are three rows you really want to concern yourself with. Firstly, the total cost of ownership number tells you how much you'd have to drop over the full length of the contract in the best possible scenario (i.e. you never incur charges beyond your allowances). Then there's the monthly cost of service, which isolates exactly how much you'd be paying purely for the services rendered to you under each contract by excluding handset costs. Think of it as the equivalent of a SIM-only contract where you've already bought the iPhone yourself. We like that stat as a useful barometer of worth, but we've also pulled together a quick value index of our own, which we based on free talktime provision. Its results represent what you'd be paying (in pence) per minute of free calls, but since Orange and O2's contracts differ in other ways, we prefer to call it an index rather than present it as a precise measurement. As with all indexes, the actual numerical values shouldn't be considered as important as the illustrative scale they provide. That's your third row of uber-importance.

We've ignored texts since carriers seem to be giving them away as freely as leaflets nowadays, and we've omitted data from the calculations for the sake of keeping things simple. Let's just use O2's excuse here: 97 percent of all users aren't going to go over 500MB a month (boy, do we hate that excuse, but that's a story for another time). What you need to know is that most of O2's deals are capped at that number, with only the top two stretching to 750MB, whereas Orange has a 750MB "fair usage policy" across the board. That's quite a pitiful offering from both, if we're honest. We've also thrown out the £60+ options for the sake of streamlining these tables, and also because if you're considering them, you probably don't need us to hold your hand through making that choice.

Orange
Contract term (months)	24	24	24	24	18	18	18
Monthly cost	£30	£35	£40	£45	£35	£40	£45
Handset cost
16GB	£169	£119	£89	£29	£229	£169	£129
32GB	£269	£219	£189	£139	£319	£269	£219
Total cost of ownership*
16GB	£889	£959	£1,049	£1,109	£859	£889	£939
32GB	£989	£1,059	£1,149	£1,219	£949	£989	£1,029
Monthly cost of service only**
16GB	£16.25	£19.17	£22.92	£25.42	£20.00	£21.67	£24.44
32GB	£16.25	£19.17	£22.92	£25.83	£19.44	£21.67	£23.89
Minutes	150	600	900	1200	600	900	1200
Talktime value index (lower is better)***
16GB	10.83	3.19	2.55	2.12	3.33	2.41	2.04
32GB	10.83	3.19	2.55	2.15	3.24	2.41	1.99

O2
Contract term (months)	24	24	24	24	24	18	18	18	18	18
Monthly cost	£25	£30	£35	£40	£45	£30	£35	£40	£45	£50
Handset cost
16GB	£279	£179	£119	£89	£29	£209	£179	£119	£89	£29
32GB	£323	£279	£209	£179	£129	£299	£279	£209	£179	£129
Total cost of ownership*
16GB	£879	£899	£959	£1,049	£1,109	£749	£809	£839	£899	£929
32GB	£923	£999	£1,049	£1,139	£1,209	£839	£909	£929	£989	£1,029
Monthly cost of service only**
16GB	£15.83	£16.67	£19.17	£22.92	£25.42	£13.89	£17.22	£18.89	£22.22	£23.89
32GB	£13.50	£16.67	£18.75	£22.50	£25.42	£13.33	£17.22	£18.22	£21.66	£23.89
Minutes	100	300	600	900	1200	100	300	600	900	1200
Talktime value index (lower is better)***
16GB	15.83	5.56	3.19	2.55	2.12	13.89	5.74	3.15	2.47	1.99
32GB	13.50	5.56	3.12	2.50	2.12	13.33	5.74	3.06	2.41	1.99

* Monthly cost times number of months, plus handset cost.
** TCO minus price of iPhone (£499 for 16GB; £599 for 32GB), divided by number of months.
*** MCSO divided by number of bundled free minutes.

So, what does the breakdown tell us? The first thing that strikes you is that there's an awful lot of price overlap on the two-year deals offered by O2 and Orange; this is evidenced both by nearly identical total cost of ownership on price plans between £35 and £45 and by very similar scores in our talktime index. Price differentiation is a bit more pronounced on the shorter-term agreements, where O2 has the beating of Orange when it comes to total cost, and also offers the cheapest possible iPhone 4 plus service deal with its 18-month contracts costing £30 per. We should, however, reiterate the disparity in 3G data allowance from the two networks, while noting that Orange will also let you buy an add-on 3GB tethering bundle for £5 extra -- something that O2 is unwilling to match.

Another O2 curiosity is that the company prices its iPhone 4s cheaper on its lowest 18-month tariffs than it does on its cheapest 24-month ones. That might be a mistake soon to be corrected, but it makes for an interesting subsidy and helps deliver that sub-£800 TCO number for the cheapest 16GB iPhone 4. Of course, it feels rather absurd to consider such lofty numbers as good value, but on the basis of the two networks who've announced pricing so far, we're inclined to go O2's way and just try to control our bandwidth gluttony. Orange really isn't doing enough to encourage defection from the longtime exclusive iPhone carrier in the UK, which is saddening but hardly unpredictable.

Update: Vodafone has now also gone live with its gambit to lure customers in and we've got the full list for you below.

Vodafone
Contract term (months)	24	24	24	24	24	18	18	18	18	18
Monthly cost	£25	£30	£35	£40	£45	£30	£35	£40	£45	£50
Handset cost
16GB	£219	£169	£119	£89	£29	£219	£169	£119	£89	£29
32GB	£309	£269	£219	£189	£139	£309	£269	£219	£189	£139
Total cost of ownership*
16GB	£819	£889	£959	£1,049	£1,109	£759	£799	£839	£899	£929
32GB	£909	£989	£1,059	£1,149	£1,219	£849	£899	£939	£999	£1,039
Monthly cost of service only**
16GB	£13.33	£16.25	£19.17	£22.92	£25.42	£14.44	£16.67	£18.89	£22.22	£23.89
32GB	£12.92	£16.25	£19.17	£22.92	£25.83	£13.89	£16.67	£18.89	£22.22	£24.44
Minutes	75	300	600	900	1200	75	300	600	900	1200
Talktime value index (lower is better)***
16GB	17.78	5.42	3.19	2.55	2.12	19.26	5.56	3.15	2.47	1.99
32GB	17.22	5.42	3.19	2.55	2.15	18.52	5.56	3.15	2.47	2.04

* Monthly cost times number of months, plus handset cost.
** TCO minus price of iPhone (£499 for 16GB; £599 for 32GB), divided by number of months.
*** MCSO divided by number of bundled free minutes.

Vodafone is the only iPhone carrier so far to man up and give its users a full 1GB of 3G data. It also joins Orange in offering tethering options, but its prices are far less thrifty: the same £5 that stretches to 3GB with Orange will only get you 500MB with Vodafone. What emerges from these data is that actual pricing between the networks will be as narrow and boilerplate as we had (unhappily) expected. What's going to make the difference for you in the end will probably be a matter of whether or not you'd like to tether your laptop to your iPhone, whether you can fit in under O2's silly 500MB data cap, and indeed whether 75 minutes of free talktime is something you can deal with.

Of course, we haven't even dipped our toes into the opportunities presented by buying the handset outright and then hunting around for the best SIM-only deal. Our isolation of service costs herein should make those comparisons easier for you to do yourself, but don't forget to keep checking back on this post -- we'll likely be adding to it as and when T-Mobile and Three stake their claims for well heeled iPhone users. Tesco Mobile, though? Probably not.

Update 2: You knew we were joking about Tesco, right? The local MVNA that surfs O2's airwaves has unleashed its own tariffs, and by golly, they ain't half bad. 1GB of data and unlimited texts come with all contract options, and the lowest TCO on offer is a comparatively thrifty £589. See the superstore's pricing in the full below.

Tesco Mobile
Contract term (months)	12	12	24
Monthly cost	£20	£35	£45
Handset cost
16GB	£349	£229	£19
32GB	£429	£299	£99
Total cost of ownership*
16GB	£589	£649	£1,099
32GB	£669	£719	£1,179
Monthly cost of service only**
16GB	£7.50	£12.50	£25.00
32GB	£5.83	£10.00	£24.17
Minutes	250	750	Unlimited
Talktime value index (lower is better)***
16GB	3.00	1.67	~
32GB	2.33	1.33	~

* Monthly cost times number of months, plus handset cost.
** TCO minus price of iPhone (£499 for 16GB; £599 for 32GB), divided by number of months.
*** MCSO divided by number of bundled free minutes.
~ Unlimited talk time breaks our index.

We seriously couldn't be happier at this turn of events. Tesco has wiped the floor with the major carriers and established itself as the absolute value leader in terms of UK iPhone 4 contracts. It has higher upfront costs for the handset, but the limited 12-month minimum commitment really pays off and the subsidies are extremely generous in comparison with what we've seen so far. We doubt T-Mobile will be matching this kind of aggression, but maybe Three has something similarly alluring in the bag?

Update 3: Here we go, strapping ourselves in for another table of discovery with Three's iPhone 4 options.

Three
Contract term (months)	24	24	24	24	24
Monthly cost	£30	£35	£35	£40	£45
Handset cost
16GB	£99	£99	£169	£59	Free
32GB	£189	£189	£259	£149	£89
Total cost of ownership*
16GB	£819	£939	£1,009	£1,019	£1,080
32GB	£909	£1,029	£1,099	£1,109	£1,169
Monthly cost of service only**
16GB	£13.33	£18.33	£21.25	£21.67	£24.81
32GB	£12.92	£17.92	£20.83	£21.25	£23.75
Minutes	500	900	2000	2000	2000
Talktime value index (lower is better)***
16GB	2.67	2.04	1.06	1.08	1.21
32GB	2.58	1.99	1.04	1.06	1.19

* Monthly cost times number of months, plus handset cost.
** TCO minus price of iPhone (£499 for 16GB; £599 for 32GB), divided by number of months.
*** MCSO divided by number of bundled free minutes.

Three is the first network to bite the bullet and offer you a completely free iPhone 4 (16GB), with its £45 a month tariff, though the company expects no smaller commitments from you with its range limited to only 24-month choices. Notable extras include a solid 1GB of data allowance per month and an effectively unlimited 5,000-minute talktime to other Three network users -- could be a boon if you and your best mates all ride on this particular bandwagon. While this is clearly not the most affordable set of options ever, the extremely generous minute bundles make a big difference in our talktime index -- which we're told is sworn to judicial impartiality and never overindulges with sugary snacks.

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