Buying a phone in combination with a contract – the mislabeled “free phone” – just became a whole lot more complicated in my home country of The Netherlands. Today, our minister of finance, Jeroen Dijsselbloem (if you follow international news – yes, that one) today announced that he is not going to create an exemption in Dutch finance laws specifically for mobile carriers offering “free” phones on contract.
Last year, The Hoge Raad der Nederlanden (our supreme court) ruled that if carriers offer a loan of â‚¬250 or higher, they need to abide by the same rules as any other company, institution, or entity providing such loans – meaning, they will have to perform an income check, check if people have prior debts, and in general, if their financial situation is sound enough for them to be able to take on a loan for a smartphone. They will also need to be a lot more transparent and upfront about the fact they are offering a loan, including warnings, the terms, and so on.
This, of course, affects carriers a great deal; a lot of expensive, high-end phones, like iPhones or the latest Galaxy phones, are sold in combination with contracts, their true price hidden in monthly payments. Making it harder for consumers to take on these loans hurts their business model. As such, carriers had asked our minister of finance to create an exemption specifically for them – but he refused.
Carriers are, of course, not happy. T-Mobile, Vodafone, and KPN – our three major carriers – have already voiced their displeasure. They’re complaining they will have to do considerable investments to change their sales model, and that it will become a lot harder for customers to buy high-end phones. To be fair to the carriers, all this does mean consumers will have to reveal a considerable amount of private information to carriers if they want to take out a loan to buy a phone.
That being said, there are alternatives: carriers could simply charge the price of the phone upfront. This, of course, is not something they want – they’d much rather be a little bit shady and fuzzy about the true price of smartphones. Samsung, Apple, and other smartphone makers surely won’t be happy with this either, as they rely on these somewhat shady deals to peddle their wares. Half of Dutch consumers are already on SIM-only contracts, and this will only push more consumers to cheaper phones.
As a Dutchman, I find this great news. My financial means are such that I don’t have to worry about this sort of thing, but there are enough people out there for whom this is not the case, and there are certainly quite a few people lured into these seemingly “cheap” phones, only to suffer for it down the line. While I’m sure people living in Libertarian la-la-land will scream bloody murder, the fact of the matter is that if left to their own devices, these companies will abuse people left and right.