Playing it safe can be expensive

Billmonitor's new report about UK mobile subscribers says people prefer to play it safe because there's “a deep aversion amongst a majority of customers towards unexpected call costs” BLOGGER: JEFF BARAK

A few months ago, a friend of mine finally gave in to temptation by purchasing her first (and much-debated) smartphone, and in doing so, entered the unknown world of data tariffs. Would 0.5Gb be enough? 1Gb? In the end, she decided on 2Gb, “just to be on the safe side” but she concedes that the widespread availability of Wifi networks means she probably doesn’t even reach half of that. However, she has yet to switch tariffs. And that’s not unusual – over half of all British postpaid mobile subscribers are on a tariff that’s too large for them, according to a report just issued by billmonitor, the UK’s only Ofcom-accredited mobile comparison calculator. The report claims that these 13 million subscribers are wasting an astounding £200 (around $325) a year on average on unused minutes.

According to billmonitor, 74% of UK mobile subscribers never exceed their minutes allowance and the majority of these customers use just one quarter of their monthly minutes. Billmonitor analysts argue that this shows there is “a deep aversion amongst a majority of customers towards unexpected call costs.”And now, with the exponential growth of smartphones, subscribers also have to take into account their data usage when choosing a package.

As billmonitor points out: “Who knows the difference between reading an e-mail (10kb), visiting a website (1.5-2MB) or watching YouTube (roughly 3.8MB for every 5 mins) on a mobile? If it’s hard enough for customers to estimate their real calling usage, how much more difficult [is it for them] to estimate data?” Billmonitor predicts that if customers increasingly have to estimate their tariffs according to data usage as well as minutes, the number of customers making the mistake of going for an oversized safety margin will be exaggerated even further.”

While some service providers might be happy selling unnecessarily large and expensive packages to their subscribers, the ones who truly care about their customer experience should begin considering offering value-based pricing, where the price is determined based on the perceived value as seen by the actual customer. For instance, instead of offering a 5GB package, and leaving the consumer to figure out just exactly how many films that will allow them to download, the service provider could suggest a five-movie package deal, with all the relevant data quotas and speed included.

As we saw with consumer backlashes against bill shock and excessive roaming charges, which brought about the intervention of the regulator, it’s in the service provider’s long-term interest to provide a pricing model that suits their consumers, not one that leaves them unhappy.

P.S. Another finding of the billmonitor report is that women’s calls are on average 5 seconds shorter than men’s – but they make 11 more calls a month (an extra half an hour longer each month). More significantly, women send 21% more texts than men – an average of 49 more texts a month. You can read into that whatever you wish!

One Comment

  1. Vaibhav Lad
    Posted October 10, 2011 at 9:16 am | Permalink

    This is a brilliant survey. In India, we (postpaid customers) do not bother to verify whether we have chosen a tariff more than what we actually required. My mobile service provider does not monitor it either – they could proactively suggest a better plan for me but I guess they are more worried about their income than my experience.

    I wish we could have an app to which we can feed our tariff plan – then it can provide us vital statics like actual usage and maybe go beyond that by suggesting a better plan available in the market which would suit my needs.

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