Yesterday OFCOM released their “Mobile Sector Assessment“(PDF). Billmonitor is in a unique position to comment at a consumer level view of the market, through the analysis of hundreds of anonymised actual user bills.

Despite a significant increase in the choice of tariffs and services available, BillMonitor’s research shows that 88% of UK contract mobile users could save on average 42.6% (£211 annually) on their mobile bill by choosing the right tariff. This suggests that the 26 million UK mobile contract users could make £4.4 billion in savings each year.

OFCOM’s Mobile Sector Assessment (MSA) states that ‘competition in the mobile sector has, on the whole, been a success for UK consumers.’ BillMonitor agrees this is true in terms of available choice, however from the numbers above it’s clear that consumers are struggling to make the right choice. Consumer Focus, the independent campaign organisation, in their recent assessment found that the mobile sector had the lowest rating in terms of consumer confidence.

It’s not hard to see why this is the case; BillMonitor is tracking 228,532 tariffs and add-ons which represents significant and meaningful choice. However, as mobile consumers, our usage patterns are changing continuously as new services become available. The MSA highlights the increasing amount of calls made as well as the rise in usage of new services, especially data and text; BillMonitor sees evidence this makes it hard for consumers to keep up with suitable tariffs. Compounding this, BillMonitor has found that 70% of consumers are not confident in estimating their usage with 36% saying they have ‘no idea’.

BillMonitor has found substantiating evidence. As seen in actual user bills, 82% of users have a plan that is too big for them, and while some extra inclusive usage is desirable, usually the consumer is paying for many minutes and texts they never use. At the same time consumers are failing to take advantage of bundles available to them for the new data or other services they are starting to use (BillMonitor is currently tracking 163 bundles).

Do consumers really need to switch provider?
Although the MSA highlights the importance of switching provider in driving healthy competition, finding the right tariff does not necessarily mean switching. Indeed as the MSA highlights 74% of mobile users are not interested in switching provider currently and 60% have never switched.

Summary Statistics
88% of BillMonitor users save money by switching to the tariff most suitable for them – an average saving of £17.56. a month – that’s £211 a year! In percentage terms, the average mobile contract user seen by BillMonitor saves 42.6% on deals that include a free phone.

• There is no need to change provider – 91% still save £17.64 on average by changing to their most suitable tariff with their current provider (including SIM-only tariffs)
• If they are willing to keep their existing handset then 92% can save £19.47 on average per month using a SIM-only tariff most without changing provider. The MSA highlights the growing popularity of this type of contract, particularly due to the lack of any lock-in period.
• If everyone used BillMonitor to find their ideal tariff, the UK average monthly bill would drop from £39.27 to £21.28.

Conclusion
BillMonitor agrees that there is sufficient and growing choice in the mobile market, however we believe the significant inefficiency evidenced by consumer choices requires attention. BillMonitor is aiming to provide the information the consumer needs to navigate the huge choice available and we would welcome specific initiatives by OFCOM on this front.

OFCOM (the independent regulator for mobile in the UK) is trying to make sense of it all in its upcoming ‘Mobile Sector Assessment’. Their aim is to see what can be done to make mobile better for all of us – consumer confidence in mobile is lower than all other services considered in a report conducted for the government last June. In preparation OFCOM released a consultation report with a series of questions that have been investigated over the last year. In the consultation they highlighted some key issues:

Tariff confusion:
According to OFCOM only 15% of consumers find it ‘very easy’ to choose a contract. This isn’t surprising to BillMonitor: maintaining our comprehensive tariff and bundle information is serious work – tariff information is unstandardised, with bundle information scattered across many network’s webpages, and with much of the details only in small print terms and conditions. We think that having a choice between over 100,000 tariffs is a good thing – it means there is a tariff out there that is great for you – but an unclear choice is no choice.

These factors can lead to consumers being on a more expensive contract than is right for them. We see the effects of these problems in our results, as almost every one who uses our bill assessment could be on a significantly better tariff. In fact, we’ve been busy number-crunching to find out exactly how much people should be saving – the results will be in our interim mobile price index report, some of which makes for some eye-watering reading.

Billing and cost clarity:
Both the OFCOM consultation and a recent report by Consumer Focus talk of the hidden costs in billing. Often operators charge for itemised paper bills, even though without itemised billing it is impossible to see where your money is being spent. Different networks bill the same types of calls in inconsistent ways such as (depending on the network) rounding up calls, deferring charges and excluding voicemail from your inclusive allowances. BillMonitor takes these kind of things into account when working out the best tariff – but we often have to phone up the networks to find out exactly how much a certain type of call will cost. Compounding this is the fact the each network presents their bill differently and with varying levels of detail.

Ease of switching:
The current economic situation is making many mobile users think about switching. A recent survey by Booz & Company found that 43% are considering changing to a cheaper contract. Switching mobile network while keeping your number should be easy – you just get a PAC code from your old network and give it to your new one. It’s never quite that simple though; one of the BillMonitor team recently spent 45 minutes being bounced around a call centre, finally being put on silent hold for 10 minutes before he finally managed to get a PAC! Even though most BillMonitor users still save when they switch to a better tariff with their current network, consumers should be allowed to move to a good deal on a different network without this hassle.

Problems like these are exactly the reason why we created BillMonitor and we’re looking forward to see what OFCOM has to say.

Vodafone, O2, Orange, T-Mobile and Three have all passed the cut on to customers, although they’ve chosen to keep their advertised prices on tariffs and calls the same.  When the VAT is applied to your actual bill, it’ll be 15% and your calls will be cheaper than the published rates.  Handsets, however, have had their advertised prices cut, with the exception of Three, who’ve chosen to just apply the cut when they charge you.

In addition, anyone on Pay As You Go will receive between 18p and 25p extra per £10 of top-up.

This begs the question, should price comparison sites report the actual prices with the new VAT rate considered or should they stick to the advertised rates?  At present, BillMonitor continues to reflect the advertised rates on the network websites, but perhaps we’ll change this depending on what our users want to see.