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Show me the money!

It's the wrong tariff, Gromit! And it's gone wrong!!

Posted By TelecomTV One , 11 April 2011 | 2 Comments | (0)
Tags: Research money Regulation mobile competition Technology tariffs

A new report from Billmonitor, a billing analysis company approved by the UK telecoms regulator, Ofcom, shows that Brits are overspending by a massive 44 per cent on their mobile phone bills - mainly because they sign-up for the wrong tariff packages. Martyn Warwick reports.

Britain is infamous around the world for its rip-off prices and the passivity and resignation of its population in the face of such institutionalised and pervasive price-gouging. When other peoples would take to the barricades we just shrug our shoulders and mutter into our beer. And no doubt froth will be blown across a few bars today as mobile subscribers learn that, on average and as individuals, they are wasting some £195 per annum by staying on calling plans that are utterly unsuitable to their real needs. Meanwhile, the mobile operators sit back and get fatter.

The data on which the Billmonitor report is based was collated and analysed by two respected academics at Oxford University, Professor Chris Holmes and Dr Nicolai Meinshausen, and amply demonstrates that, cumulatively, the British are overpaying the mobile operators a massive £5 billion a year more than they ought or need to - all because they are on the wrong tariffs and contracts.

The figures show that the average annual mobile bill for a UK subscriber is £439 when it should really be £244! And it's not just a few mugs or idiots that are overpaying, it's 76 per cent of all subscribers on monthly post-pay contracts!

The report says this is happening because they are utterly wrong in estimating their voice, texting and data usage patterns. Needless to say, the mobile operators themselves, ever more keen to lock customers into long-contracts (18 month or two years is now the norm for many calling plans - especially if you want a halfway decent smartphone as part of the "deal") that are hedged around with punitive financial penalties for any that have the temerity to want to break out of technology/financial jail, don't point out or protest when users mis-estimate their needs, nor do they persuade them to take a cheaper calling package. After all, upselling is what it's all about.

In the UK, deciding which contract to take-out isn't just a maze, it's a jungle littered with traps for the unwary who put far too much faith in their own judgements and are far too easily swayed by the blandishments of staff in the many mobile phone shops that
are such a feature of our High Streets. These people work on commission paid according to the number and types of handsets they shift and the types of calling plans punters can be persuaded to sign-up to. The more expensive the tariff, the more money they "earn".

To give you some idea of the fiendish complexity involved in making a choice of tariff and contract, it should be borne in mind that the British customer has to negotiate his or her way through a matrix of 8.5 MILLION potential calling plans.

Absolute madness.

The Billmonitor report says that overspend typically falls into one of three categories with 52 per cent of those that are on the incorrect tariff using just 25 per cent of their calling/other services allowance. (this equates to overpayments of £2.62 billion a year). Meanwhile, 29 per cent are on a tariff that does not provide  them with enough minutes or megabits for their lifestyles and so they use up their time very quickly each month and then have to pay so-called "out of allowance" charges which are, needless to to say, comparatively very expensive indeed. The remaining 19 per cent are on the right minutes regime but waste money by not taking advantage of "free" voice, data and text allowances.

Billmonitor analysed 28,500 anonymised mobile phone bills pertaining to subscribers of the UK's Big Four mobile operators in the compilation of the research and also found that UK mobile users also spend £719 million a year on calling premium numbers and sending premium-rate texts. Some £502 million is spent calling and texting while overseas and £1.36 billion goes on roaming charges.

The report says that consumers who are prepared to retain their existing mobile phones and who then switch to "SIM only" deal will benefit to the tune of £250 a year each. In an era of recession and austerity, that's a saving not to be sniffed at.

Professor Holmes commented, “We found that people consistently over-estimate how many minutes they need by a factor of about four."

Incidentally, this very morning the UK regulator has introduced new rules mandating that Brits will henceforth be able to port their mobile phone numbers from one network to another in just 24 hours - and operators will be penalised if this deadline is exceeded.

To vote with their feet, users need a PAC (porting authorisation code) from the network they are leaving. In the past the network operators obfuscated and delayed issuing PACs and, in an age of instant electronic communication, insisted on sending them by post rather than as a text message - anything to keep the punter enmeshed in their coils for as long as possible.

However, the PAC must now be sent - by phone or text message - within 2 hours of application.

Ten years ago it took a subscriber and average of 25 days to switch providers. The whole experience was a Kafkaesque nightmare as  the mobile operators remained determined to make things as complex and as difficult as possible for users to change providers. Indeed, Vodafne in particular was the most vocal in opposing proposed changes and even managed to delay much needed reform by appealing regulatory decisions to the Competition Appeals Tribunal.

Not any more though. The new regime came into force this morning. So, if in doubt, use it. You know it makes sense.


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2 comments (Add Yours) - click here to sign in

(1) 11 April 2011 17:01:50 by Robert Maitland

Are we on the wrong tariff? or are the tariffs designed to make you over buy?

I get 10GB for £15 of mobile data for my iPad but I never go over 2GB of usage, but a 1GB plan is £7.50?!?! half the value and I would run out of data.

(2) 11 April 2011 18:02:47 by Tim Masson

Of course the networks want you to overbuy - they get your dosh and don't have to deliver a bean! Not so very long a go 'Pay as you go' was 'Pay for what you use' so you could buy a SIM with £25 credit that was maybe 10p minute and £15/GB, and you topped up when you had used it all. What happened to that? I bought 3's 3GB for £20 SIM on an iPad and 3 months later I have used 1.2GB and a top-up will be £10/GB. So now I will wait until I need it. I'd cheerfully pay £15/GB for UK data and maybe much more while roaming - if my credit did not automatically expire after 30 days.
I'm sure I'm not alone!