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Vodafone ditches lock-in contracts in massive plan overhaul

Vodafone now lets you choose your plan and split the cost of a new phone over 12, 24 or 36 months, interest free. No more signing on the dotted line.

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Vodafone

There is literally nothing worse that losing or smashing your phone two months into a 24-month contract and having to pony up every month for a phone you no longer have. Literally. Nothing. Worse.

But Vodafone wants to kill the contract with a massive overhaul of postpaid plans. From today, the telco will no longer offer lock-in contracts, instead offering its Red Plans with the option of buying your phone outright or paying it off, interest free, in monthly instalments.

It's good timing with two of the biggest phone brands about to launch flagship devices -- the Samsung Galaxy Note 8 is due to be unveiled this month, while Apple's as-yet-unnamed iPhone 8 could be revealed as soon as next month.

According to Vodafone, the new setup is the first major overhaul to postpaid pricing since the '90s.

Until now, postpaid has essentially involved paying, say, $90 a month for a mobile plan that includes a "free" phone. Phone repayments are built into your total plan cost, though you may not have a clear idea of how much of that monthly bill is actually going to data and calls, and how much is paying off your phone.

But with Vodafone's new setup, the telco is essentially giving you a SIM-only plan, and then selling you a phone on top of that. You can buy the phone outright for the full RRP, or split the cost interest free over 12, 24 or 36 months. A $1,200 phone over 12 months? You'll pay your monthly plan cost plus $100 a month for the phone. And because you haven't signed a contract, you can bail whenever you want and just pay off what's remaining on the phone.

Vodafone is simplifying its plans too, offering six price points between $30 and $100 -- you can check out all the plans in detail here.

Speaking about the plan overhaul, the director of Vodafone's consumer business Ben McIntosh said it was a massive departure from the way every Aussie telco has done postpaid before now, offering "free phones" with complicated lock-in contracts, or leasing options.

"There's no such thing as a free phone. That 'free phone,' you pay for," he said. "[Leasing] is the equivalent of paying off someone else's mortgage and never getting to own the house.

"The aim here is for all costs to be crystal clear, prices to be fair and payment options to suit a range of budgets and lifestyles. When you consider that well over 80 percent of Aussie mobile users own a smartphone, and the average person holds onto their handset for three years, it's about time carriers became a lot more flexible."

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