Smartphones are becoming increasingly expensive, with the latest models often reaching well into the thousands.
And despite the high cost, many users abandon their handset in the space of a couple of years once a newer model comes along.
As well as hitting people’s wallets, this throwaway approach is also bad for the planet – as phone batteries contain hazardous substances that can leak into the environment.
A solution to this problem is now being offered in the form of phone subscriptions, which allow consumers to lease handsets instead of buying, for less.
Raylo is a mobile phone subscription service that says it can save consumers on their bills
The latest to launch is Raylo, which has recently received funding from venture capital firm Octopus Ventures.
The company allows people to lease mobiles over a 12 or 24-month period, and says it wants to address the waste caused by the ‘buy-and-dispose’ cycle of people getting rid of their phones every two years.
It also claims that it can save consumers hundreds each year.
For example, a customer could lease an iPhone 12 for £22.99 a month via Raylo, with nothing to pay upfront.
If they then opted for Three’s 12GB Sim-only contract for £12 a month, they would be spending a total of £34.99 a month.
If they took out an Unlimited contract on the same phone with Three – meaning they would own the handset when the contract ended – it would cost them £82 a month.
This is Money takes a look how Raylo works and asks whether subscription models are really the future of phone ownership.
How does Raylo work?
Customers looking for a subscription phone can choose a new or refurbished model from the Raylo website, and take out a 12 or 24 month rental contract on the handset.
All of Raylo’s phones are sold without Sim cards, so the buyer will need to use their existing Sim or take out a new Sim-only contract directly with their network.
However, Raylo promises its model will still be cheaper than taking out a handset and airtime contract with a mobile phone network.
Options currently available include a refurbished iPhone XR for £13.99 a month and a brand new Samsung Galaxy S21 for £27.99 a month.
The brand new phones are sourced directly from Apple and Samsung’s authorised distributors in the UK.
In the long term, Raylo wants to source all of its refurbished phones from its customer base when they choose to upgrade to a newer model.
But at the moment, it is supplementing its supply from other sources such as mobile networks and manufacturer trade-in programmes.
All Raylo Refurbished phones go through a stringent 70-point check and benefit from a full warranty during the lease term.
At the end of the lease, customers can opt for a free upgrade, in which case the old device is collected, refurbished and leased to the next customer.
Once a device eventually does reach the end of its life, it’s sustainably recycled by Raylo’s partners.
The smartphones are used for 6 years, which Raylo says addresses the issues of underutilisation and waste.
Each phone also comes with a free eco-friendly case and screen protector.
Raylo says consumers can lease an iPhone 12 for £22.99 a month with nothing to pay upfront
What is Raylo’s aim?
Increasing numbers of people are accustomed to paying a subscription to access anything from a car to their favourite music. However, most still rely on a two-year ‘buy-and-dispose’ cycle when getting their smartphones.
Raylo said this ends up being both costly and terrible for the environment.
Old devices inevitably end up in drawers while they are still perfectly usable, with the average smartphone being used for only 40 per cent of its potential life.
According to Raylo there are an estimated 125million smartphones in ‘hibernation’ across the UK.
The firm believes each of its devices can be used by a total of three customers over 6 to 7 years – a lifespan almost 200 per cent longer than the UK average of 2.31 years.
It said if all European smartphone users made the transition to a rental model it would save 8.9million tonnes of CO2 per annum – the equivalent of taking 6.6million cars off the roads every single year.
Karl Gilbert, co-founder and CEO of Raylo, said: ‘Raylo is the technology powering a world where fewer consumer devices are manufactured and those that are get an extended life through our managed cycle of refurb, reuse and recycle.
‘We believe leasing delivers a fundamentally better experience and value for customers, and a materially more sustainable outcome for all of us.
‘We want to be known for leading the change in how people access consumer tech, and over the next 6 to 12 months we’ll be expanding both our product range and distribution channels.’