How Australia is becoming the prepaid country

Angus Kidman 17 November 2017

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We're dumping phone contracts in favour of as-you-go deals.

As a professional dweeb, I'm often asked which mobile phone plan someone should buy. My first bit of advice is always the same: "don't sign up for a contract". Mobile plans change continuously, and signing up for a 24-month deal often means paying over the odds and getting less data than you can with a prepaid or month-to-month SIM.

Apparently, Australia is taking my advice. New data from Kantar Worldpanel ComTech shows that prepaid is the fastest growing segment of the market. In the quarter ending September 2017, it was up 4.5% on the same time last year. The big growth in prepaid has been in plans from Optus, Vodafone and amaysim. Here's how the different types of phone plans rank for popularity:

Tariff typeTotalPrepaidPostpaid
Standard SIM + phone contract32.0%-49.2%
Out of standard contract10.5%-16.1%
SIM only plan – month to month14.8%-22.8%
SIM only plan – 12/24 month7.7%-11.9%
SIM only – recharge as needed26.8%76.7%-
SIM only – monthly billing6.4%18.2%-
SIM + phone – monthly billing1.8%5.1%-

Yes, contract still makes up a big part of the market, which is understandable; scraping up a grand to buy a new flagship phone can be tough. But the growth is coming in prepaid, both in "top as you go" traditional prepaid plans and the more recent month-to-month deals, which have fixed inclusions and automatically renew but can be cancelled at any time.

Based on these figures, the people making the biggest mistake are the 16.2% who are out of contract but haven't changed deals. Again: there's bound to be a better plan than the one you signed up for two years ago, even if you don't want to switch providers.

The growth in prepaid also jives with other recent data showing that Samsung is growing much of its market share through the sale of cheaper Galaxy phones, rather than its flagship Galaxy S devices. Those phones make a solid match to a no-contract prepaid deal.

The lines between these types of deals are also becoming very blurry. Several providers (including Kogan and Vaya) run deals which offer month-to-month prepaid structures, but offer discounts if you've paid for 6 months or a year up front. While you might not technically be contracted, you won't be able to get a refund if you choose to go elsewhere. So the key question is not "what type of plan is this?", it's "how easy will it be to switch if a better deal comes along?"

Angus Kidman's Findings column looks at new developments and research that help you save money, make wise decisions and enjoy your life more. It appears regularly on finder.com.au.

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