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While the offer of a 'free' smartphone on a mobile contract is extremely appealing, it may come as a surprise to know that such phones are not free at all.
Many people are thrilled about the idea of getting a new phone as part of a deal on a two-year contract.
But the cost of that phone is actually factored into the overall contract price, the head of a major telecommunications association told TV ONE's Breakfast today.
"It is in effect a hire purchase," said Paul Brislen, Chief Executive of the Telecommunications Users Association of New Zealand.
Brislen does not think many people realise this fact.
"They think 'great, I've paid zero dollars, I've got it for free'."
And while the user does acquire ownership of the phone, they then pay it off over a two-year period, Brislen explained.
"There's money built in all the way through that two-year contract on top of the data, the minutes, the voice calling, the text messages and everything else you're getting."
Telcos are careful not to say these smartphones are free with the contract, Brislen said.
Instead, they tell customers there's zero dollars to pay up front.
