We want fairer mobile phone deals for all

I would like to see an end to the up-front cost of mobile phones being subsidised by inflated monthly charges because this:
– Encourages consumers to acquire handsets they cannot truly afford through an unhealthy “buy now pay later” consumer debt culture with a disguised loan from the mobile network.
– Distorts competition by disguising the true price of the handset and of the service, as opposed to a SIM-free handset and SIM-only service.
– Encourages wasteful acquisition of new handsets because consumers mistakenly believe they are receiving the handset for free or for very little.
– Necessitates long contract durations in order to spread the cost of the handset, which inhibits competition by preventing consumers from switching networks.
– Causes consumers to continue paying the inflated monthly charge even after they have paid off the subsidy of the handset, unless they remember to take action at the end of the minimum contract period.
Subsidised handsets are usually SIM-locked which:
– Inhibits competition by making it more difficult to switch networks.
– Prevents consumers from using local SIM cards abroad, allowing UK networks to impose unreasonably high roaming charges by excluding foreign competition.

For these reasons, Ofcom should encourage unsubsidised SIM-free handsets and competitive SIM-only contracts to become the norm, as is common in many other countries. At the very least, networks should be forced to unbundle the monthly handset subsidy repayment and the monthly charge for service (as O2 has started doing), itemising the two separately with independent contract durations and even an APR for the loan. The monthly handset subsidy repayment should not be allowed to continue after the cost of the handset has been paid off.

I would also like to see a ban on bundles. Bundles are of no benefit to consumers because their sole purpose is to allow the network to overcharge the customer in scenarios where the customer uses more or less than the exact allowance provided by the bundle:
– If the consumer uses less than the allowance, then some of the allowance is wasted, causing the network to receive revenue for a service was not used.
– If the consumer uses more than the allowance (or doesn’t buy a bundle), then the network imposes an unreasonably high and disproportionate out-of-bundle rate which is often many times the pro-rata rate of the bundle. This is such a problem that the Americans even have invented a word for it – “overage”.

The networks should instead charge a clear and transparent price per minute, per text and per megabyte instead of bundles. Three charges in this way on its prepaid tariff (3p/min, 2p/text, 1p/MB), and most networks also charge similarly on corporate tariffs offered to very large companies. Large corporates don’t tolerate the bundle rip-off and nor should consumers. To provide volume discounts to heavy users, networks could impose tiers whereby higher usage is charged at a lower price per unit. The only bundles that should be allowed should be those providing unlimited usage (e.g. of minutes, texts or data).

Imagine if we had to buy electricity and gas in bundles, whereby you had to guess exactly how much energy you would use in a given period. It would be intolerable because it would always result in overcharging. If we wouldn’t tolerate it in the energy sector, why has it become so acceptable in the mobile phone sector?

FYI if you’re interested, the European Commission proposals in the pipeline are;

Consumers will have the right to terminate any electronic communication contract once the first six months have elapsed. Consumers would not be required to pay any compensation other than the residual value of subsidised equipment/devices or promotional offers.

Consumers will have the right to set financial caps at the level of their choice, for free, to ensure their bills never go over this amount without their consent.

Consumers will have the right to port any phone number from a national telephone numbering plan within the same member state, for free, with activation happening within one working day of the switch.

Receiving calls while roaming will be free as of 1 July 2014.