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Would you consider buying your next phone outright?

Forking out several hundred dollars for a new mobile phone isn't an experience a lot of Australians are likely to have had until this point, but is the tide turning in favour of outright phone purchases?

A rainbow of money and phones

(Credit: CBSi)

Forking out several hundred dollars for a new mobile phone isn't an experience a lot of Australians are likely to have had until this point. Google's recent direct-to-customer play in the US with its Nexus One handset bucks the trend of the carrier-subsidised mobile phone, which could open doors for other manufacturers to do the same, if they suspected there was interest in such a thing.

Outright handset purchases are popular in parts of the world where carrier subsidies are scarce or at least not as generous as what we experience in Australia. In the US, for example, customers pay an upfront charge before locking into a multi-year contract. An iPhone 3GS 32GB attracts a US$300 outlay and a two-year contract commitment on the AT&T network, while the same phone through Optus spreads a similar cost over the 24 months of the contract period, which is an obvious win for the consumer.

There are advantages to buying your phone outright, however; chiefly the option to avoid locking into a long, costly contract, and the flexibility to adjust your monthly spend if your circumstances or usage patterns change. All of the carriers offer SIM-only contracts with a 12-month term or less, with some, like 3 Mobile, even ditching the contract altogether, letting you come and go as you please.

Not only that, but the carriers do even more to encourage an outright purchase by offering higher value plans to customers who bring their own phone to a SIM-only arrangement. Virgin Mobile offers a bonus 20 per cent calls and messaging credit to customers who "BYO", and Optus and Vodafone have both created speciality SIM-only iPhone plans presumably to snare customers who buy their iPhones directly through Apple.

We're also noticing a lower average price for new high-end smartphones. The HTC HD2's AU$829 outright price tag is a little over half of the AU$1499 RRP HTC attached to its Touch Pro2 handset six months earlier. Not to mention the increased popularity of online mobile phone stores, like eXpansys and Mobicity, helping to drive the prices down even further with discounts on the RRP for unlocked handsets from all the major vendors, including models which aren't otherwise available in Australia.

So the question is: could you be persuaded to ditch the two-year mobile buying cycle and splash out on an unsubsidised handset? Is the flexibility of being without a contract worth more than a 40 or 50 per cent handset subsidy?