Free Mobile Phone Plans: Too Good To Be True?

Before setting off to South America two years ago, I cancelled my monthly phone contract in the UK and switched to Pay As You Go (known as prepay in some countries). When I returned to the UK last month, I had around £12 of credit on my account with Tesco Mobile.

That’s not a lot of credit, however it was not a big issue for me I am not a heavy phone user. I normally call people using Skype when I am at home and message friends via Facebook for issues that are not urgent. I rarely use internet on my phone either because I work at home. Despite this, I used up my phone credit within a week or so.

There are fantastic deals on mobile phone contracts at the moment at around £10 per month. These monthly contracts usually work out cheaper than Pay As You Go rates for most people; even light users like myself. Therefore, last week I started looking at what options are available to me.

The best Pay As You Go Option from a price point of view are Three. They only charge 3 pence a minute for calls, 2 pence for texts and 1 pence per MB for data. I have friends who have used Three in the past and they always complained about coverage and poor support. So I was reluctant to go with them.

Through HotUKDeals, I came across a new phone company called Ovivo Mobile. They piggyback on the Vodafone network so their coverage should be good.

Ovivo Mobile Freedom Plan

The plan that caught my eye was their freedom plan. The plan is 100% free. It offers 150 minutes for calls, 250 text messages and 500MB of data every month free of charge.

Once you have used your monthly allowance, the plan operates in a similar way to a Pay As You Go plan; and their prices are competitive. Calls to other networks are only 8 pence a minute (compared to 25 pence/min at T-Mobile, Orange and o2) and text messages are only 5 pence. The best part is that even when you use your monthly allowance, calls and texts to other people using Ovivio remain free.

Too Good to Be True?

When I first came across Ovivo, my first thought was that it was too good to be true. There are lots of comments on HotUKDeals from current users who are raving about the service. Apparently, their call centre support is fantastic too and is based within the UK.

The real question is how Ovivo makes money. If they are not making money, their business is not sustainable. From what I have read, they place advertisements into your phone’s internet browser. This probably earns them a little money. I imagine the rest comes from people topping up their phone after they have used their allowance. No doubt they are making good money from people upgrading to their premium monthly plans too. Their monthly deals are fairly priced, though they have a lot more competition in that area. For example, their £15 a month plan offers 500 mins, 1000 texts and 1000MB. At that same price, Virgin Mobile offers unlimited minutes, unlimited texts and unlimited data.

This week I will find out how good Ovivo really is as I have ordered a sim for me and my girlfriend. It costs £15 to order a sim card. £12.50 of that is added as credit and will be used once your monthly allowance has been burned up. I am hoping that it works well. Even if I do go over my allowance some months, I believe it will still be cheaper than signing up to a cheap monthly contract or using Pay As You Go. The best part is that Ovivo does not require you to create a monthly direct debit payment. This makes it a good choice for anyone who is worried about paying too much on their phone bill (e.g. parents who want to give a phone to their child). All you can lose is the money that you have topped up the account with.

Interestingly, Ovivo also offer a free sim with 750 MB of data every month. I am sure many tablet users will take advantage of this.

Is Free The Way of Things to Come?

Long term, I am not sure if free is a viable business option for mobile phone companies. Yet I am pleased to see a company take a chance with this and try to find a profitable way to do this.

What has become clear over the last few years is that mobile phone habits have changed. The thing that most people need is data. Therefore, that are what users are paying for in their monthly plans. The rise in popularity of smartphones, Facebook messaging and messaging applications such as WhatsApp means that mobile phone companies are offering thousands of text messages to customers on contracts. The reason is simply: people do not use them as much. We are all sending messages to each other through applications and services that require access to the internet.

It seems unlikely that large phone networks can sustain themselves without charging some customers. I believe that offering some customers the option of using their service for free could be sustainable. If you don’t believe me: Check out the top grossing applications on the Apple store. In the UK store, eight out of the top ten grossing apps are free. Only the eighth and ninth app are paid apps. The free apps are making their money by offering in-app purchases.

This is why I strongly believe that free mobile phone plans, in some shape or form, can exist. Whether Ovivo’s method of integrating advertising into the browser is the right way to do it, remains to be seen.

Thanks for reading,
Kevin