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Are mobile subscriber being ripped off?

A report by Which, the independent consumer champion stated:

‘Mobile customers are being "ripped off" by operators who continue to charge them the full price of their contracts even when they have paid off the cost of their phone’

It goes onto to say in some cases this could be as much as individual subscribers overpaying by more than £400 a year.

According to Which, the worst-affected subscribers were:

Three, where about four in 10 subscribers whose contracts ended in the last six months claimed they saw no price drop.

EE, where two in five subscribers whose contracts ended in the last six months claimed they saw no price drop

Vodafone, where three in ten subscribers whose contracts ended in the last six months claimed they saw no price drop

O2, Tesco Mobile and Virgin Mobile have all fared better and informed their subscribers that when their contracts end their bills would reduce to the best available airtime deal.

Comment: Now we can of course question the validity of the survey in regards how many subscribers were asked but with such information being shared, operators need to be ever-alert to the perceived reputation they maybe building.  The business model of attracting new customers whilst relying on the complacency of the existing customers to remain, is likely to change as new subscription models become more prevalent.

We all recognise that telecom service provides operate in an extremely competitive environment, including subsidised handsets, extensive data bundles, third party complementary subscriptions, etc., with the purpose to entice new customers, but the opportunity to lose customers through churn is extremely high, while costs to retain customers is low, costs to attract that new customers is also very high, a possible no win situation..?

Which? in their report gave examples from different UK telecom operators:

  • An iPhone 11 from Operator A was £68.21 a month during contract, it was £62 after the contract had ended - but an equivalent sim-only deal was available for £30 a month
  • A Samsung S20 5G from Operator B was £69.25 a month in contract, dropping to £61 after contract, with a sim-only deal for £35 a month
  • An iPhone 11 from Operator C was £51.92 a month during contract (including a discount for the first six months), and £57 after contract, with an equivalent deal available for £22 a month for sim-only

Comment: Now, again we can look at how these have been compared and assume if the subscriber mentioned in the examples above had a handset they still wanted to keep and utilise, they would naturally look at a sim-only contract anyway.  But the important aspect here is that subscribers will read and digest such information however accurate.

The telecoms industry is not unique of course when it comes to the complacency of customers at the end of contracts, this is the same in insurance, utilities industries etc., but with influence from consumer bodies like Which? and news coverage from the likes of the BBC as well regulatory comment and pressure from the regulatory body Ofcom, customers are becoming more and more aware of the possible opportunities of changing the tariffs they reside on.

It should not be all bad news for telecom operators with the full utilization of reference data, data analytics, customer segmentation and other complementary aspects, telecom operators can maximise the subscribers coming to the end of their contracts with bespoke/targeted tariff plans that benefit both the subscriber and the telecom operator.

Comment: Symmetry Solutions have been doing a number of activities around this particular area and as well aligning to the regulatory requirements and pressures, operators saw the opportunity to further enhance their customer relations and undertake targeted marketing initiatives to educate and migrate some of their subscribers off older legacy tariffs onto more competitive and more appropriate tariffs. Tariff rationalisation and migration was just one facet of this multi-dimensional approach that allows operators to retain their low churn rates which for some has hit as low this year of just 1%.

One CEO of of a leading UK operator has stated subscribers want ‘brilliant mobile connectivity with value for money and control’, this has meant the introduction of flexible custom plans and transparent billing. The implementation of such initiatives requires complete understanding of your data, and visibility across the business, but with the correct reference data, data governance and data and revenue assurance activities, such deliverables are achievable.