It appears that fear of “bill shock” is out of proportion to the actual likelihood of exceeding your data allowance

Research from us here at billmonitor.com today, revealed that only 8% of UK smartphone users have experienced data charges recently – 49% of UK smartphone users are using just 100 MB of mobile data each month, and yet 88% pay for an allowance of 500 MB or more.

So what’s causing so many UK smartphone users to be on the wrong data tariff?

billmonitor.com believes the main factor is confusion and a lack of information. Smartphone users who don’t know how much data they’re using can’t make an informed decision on which data allowance is right for them, so the tendency for smartphone users in the Dabbler (those dipping a toe in the waters of mobile data) and Daily (those using mobile data on a daily basis – but with moderate usage levels) groups is to overcompensate in order to be on the safe side. It appears that fear of “bill shock” is out of proportion to the real likelihood of going out-of-bundle regards data use.

This is understandable as it’s notoriously difficult for people to estimate their real data usage, as different mobile internet behaviours have very different data usage requirements. Moreover, data consumption varies between phones – the same activity on an iPhone could create a different amount of data consumption compared to an Android or a BlackBerry phone.

When it comes to choosing which mobile contract to go for, out of the thousands on offer, users aren’t short of choice – but they are short of guidance. billmonitor.com analyses a user’s mobile bills and usage patterns to recommend exactly the right contract that matches the way they use their phone and fits their specific needs.

Looking at the mobile market, the encouraging news is that UK mobile phone providers are now offering a more varied range of data allowances, making it easier to find a good fit for your specific usage patterns. If you’re already a smartphone user you can use billmonitor.com to analyse your bills and see exactly which data tariff is right for you. If however you’re just about to get your first smartphone, then you’re likely going to be a Data Dabbler so opting for a modest allowance of up to 250 MB should be a good starting point.

Since individual data usage also increases over time, billmonitor.com recommends that smartphone users keep a close eye on that carefully-chosen data allowance, to make sure it continues to be right for their individual needs.

The research analysed 215,507 bills from UK customers who used the free bill analysis service at billmonitor.com. You can read our complete report on smartphone usage at http://www.billmonitor.com/billmonitor-smartphone-data-report.

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The billmonitor site is unusual in that we ask you to give us your online billing password so billmonitor can fetch your mobile bills for analysing. For this reason we did not add user logins to the site itself, on the grounds that having two logins and two passwords to remember could be confusing. This can be annoying, because it means the only way to get to your analysis results is to find the right message in your mailbox and click on the link. And it’s worse if you have more than one phone, so you have to figure out which mail links to the one you want. So there are plenty of people asking for logins on the billmonitor suggestions forum and asking us to help make it easier to keep track of multiple phones.

Today we are making it possible for you to log in to billmonitor using Sign in with Twitter. The first time you click the Sign In button you have to confirm that you don‘t mind billmonitor knowing who you are. After that the process is automatic—if you are already logged in on twitter.com, it is one button click.

Now when you start a bill analysis, billmonitor remembers it belongs to you. When you next log in, you will see your bill analysis immediately—no more rooting about in old mail folders.

If you already have a bill analysis then you will need to perform a brief, one-time ceremony to tell billmonitor that the user who started the analysis, and the user who just logged in, are the same person. You can start this by logging in, and then following a link to your analysis from your mail, or, alternatvely you can visit your bill analysis and then log in. Either way billmonitor will show you a page describing both identities and asking you whether they are the same person (and should be merged) or different people (in which case one of them should be logged out).

If you have more than one phone then you can repeat this little ritual for each of your analysis links. If you have multiple phones, billmonitor will give you list of all your analyses for you to look at when you log in.

What if you don’t have a Twitter account? For now we hope you won’t mind registering for one the first time you sign in: Twitter makes this pretty simple, so that it ends up being no more complicated than if we had login-and-password registration on billmonitor.

This is a new feature so we would love to hear from you about how well it works for you—and whether it would be useful to add other login systems apart from Twitter’s. Thanks!

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Here at billmonitor, we constantly keep watch on tariffs. Our recommendations are based not only on contract allowances, but also on all kinds of out-of-allowance charges you might not see.

T-Mobile introduced new tariffs on 1 February, including their famous “Full Monty” plans. How good are these plans? Will you see a significant drop in your phone bill? Let's analyse this in three parts: what is the offer; what are the hidden costs; and a few examples with typical users.

The Full Monty, and some other novelties...

What has changed?

T-Mobile previously sold contracts with a given allowance for voice and texts, plus a booster. This booster was selected from one of unlimited texts, unlimited data, unlimited landline and a few international bundles.

This offer was flexible, with low prices, but was this a true unlimited allowance? As usual, you have to be careful when a network says “unlimited”. For T-Mobile, “unlimited data” meant 500MB allowance for video and music, unlimited for the rest.

With the new contracts data is truly unlimited, and this is good news. The new offers from T-Mobile are more transparent, clearer and the number of different options are reduced. Flexibility is still here, but not for customers with low usage: the free boosters are only available for plans with at least 300 minutes – other customers will pay £5 a month for adding a booster.

So what does T-Mobile really offer now? The classic pay-monthly contract remain quite similar, but the flexible booster choice is now one of unlimited texts, unlimited landline calls and unlimited calls to T-Mobile. If you want more data, you'll have to pay £5 a month for 1.5GB allowance.

The big novelty is the Full Monty plan, with data and texts truly unlimited. You can get unlimited minutes for £41 or 2000 minutes for £36 a month, which would be probably enough for most customers.

The hidden costs

Good news! Transparency, unlimited allowances, for reasonable prices...

But is it that easy? Not really. You'll get big allowances, but what about the other charges? T-Mobile won't tell you this in their next TV ad, but there has been a considerable increase:

• Voice: 30p/min becomes 40p/min
• Text:  12p becomes 15p
• Calling your voicemail: 12p becomes 40p/min !
• International calls: +13% on average (depending on destination)

How good plans fit with typical usages: the billmonitor test

The following prices include everything: the monthly cost, the upfront cost and predicted out-of-allowances costs. They are the best results calculated by billmonitor.

The prices are displayed in green if T-Mobile's offer is the best deal available, black if it is close to the best deal, and red if not (comparing with Vodafone, O2, Orange, Three, Tesco).

The classic smartphone user: 200min / 500 texts / 200 MB

The texter: 20min / 1500 texts / 0 MB 

The all you can eat user: 500min/2000 texts/1024 MB 

The talkative user: 1200min / 200 texts / 50 MB

Conclusion

Not brilliant. Three and O2 remain far ahead, and only a few users which are using a lot of voice allowance are likely to save money with T-Mobile.

Would like to know how good are these deals for your actual usage? Try out bill analysis, and we'll tell you!

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What is the biggest hidden cost in mobile contracts? Answer: Roaming data.
You might think the Internet is worldwide, but your allowance isn't! Be careful, and choose the best offer for you.

Tesco and Three won't save you money

Usually the two cheapest networks, both Tesco and Three have very expensive roaming costs.

With Three, you'll pay £1.28/MB from Europe, £3/MB from some countries (including USA) and up to £6/MB from the rest of the world. Some examples to make you realize what this means:
- Watching a youtube video in Europe: £13
- Checking mails in the USA: 30p

Even worse with Tesco : you'll pay £4/MB from Europe, £8/MB from the rest of the world. Think twice before using Internet when you're on holidays:
- Watching a youtube video in Europe: £40 (!)
- Checking mails in the USA: 80p

Unfortunately, both don't offer any bundle that could help you lower these costs.

Limits to avoid a huge disappointment

After complaints from the customers, most of the networks now have limits for roaming data usage. You'll be informed by text that your your limit has been reached. After realizing how much money you've already lost, you'll have to choose between two solutions : call your network to raise your limit, or wait until you come back home!

And the winner is : Vodafone

If you are a regular roaming data consumer, you'll have to choose the best bundle providers can offer.

T-Mobile Euro Internet booster is a fairly good deal, that can be added at any time :
- 3 MB for £1 - to use in a day.
- 20 MB for £5 - to use in a week
- 50 MB for £10 - to use in a month

See more on T-Mobile website

But the best offer for big users is definitely Vodafone Data Traveller. For only £10 a month, you'll have a daily allowance of 25MB! (Europe only)
Even better, if your plan has at least 1200 minutes of voice allowance, this bundle will be free.

See more on Vodafone website

How to know what's the best for me?

Don't hesitate! Use our bill analysis service and we'll find the one that best matches your usage.

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One of my jobs is keeping an eye on billmonitor as it scans and analyses our users’ bills. I have a dashboard with graphs showing green for successful cases, blue for people with account problems, and various shades of red for problems that need fixing at our end. The bands of colour are stacked like a layer cake. If all is going well I can glance at the screen and see mostly green with a thin layer of blue icing on top. Today I came in to discover Orange’s chart was mostly blue. Strange!

The first thing to do is see what billmonitor thinks is wrong with these accounts. In this case it reported ONLY_PDFS, which is a code we use for a problem specific to Orange accounts: by default your online bills are summaries in PDF format, not the itemised bills we need (which they call ‘e-bills’). If you are one of our Orange customers, you will be familiar with this problem—and may have had to jump through a few hoops to get e-bills activated.

We don’t normally see an account switch from having e-bills to having only PDFs, let alone for 60% of accounts all at once, so to check we can look at what billmonitor sees when it visits the account. Here’s an example of what billmonitor found:

This confirms that the December and November are without e-bills. What’s more, the headline now says ‘hello customer’ rather than ‘hello Sam’ or ‘hello Max’ or whatever. In other words, it looks as though the Orange billing site has forgotten all its user customisation.

This is a problem for us because we can‘t fix it—billmonitor can’t make changes to your account settings (nor would you want it to). All billmonitor can do is send its usual email message asking this user to call customer services and enable e-bills. Not much fun for them, but there it is.

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Wouldn't it be great to get reminded (on your own terms), just how long you have left until you get nice, juicy contract upgrade or even have the privilege of switching?

Well - we've gone and made it happen.

Know exactly how long's left on your contract and when you can switch

We're really excited about this feature and we hope you are too. Now you'll be able to make the right decision, on the right contract for you at exactly the right time.

One of the most cited complaints with why users don't take up the recommendations is they're simply not able to switch or, as our users put it, they're "stuck in contract". It's annoying isn't it, getting all these money-saving recommendations from us when there's no way you can do anything about it?

This way we'll hope we'll get the right message to you at the right time. Even if you decide not to take our recommendation, hopefully you'll still get this helpful knowledge in your inbox every month, giving you a countdown to your renewal date.

When can I switch anyway?

Although you can often upgrade with your own network in advance of your contract end date, you can only typically switch networks freely once you're in your final month. Even then, if you switch before your contract expires (say in the final month), you may end up paying double for several days, so do be careful to wait until you're fully out of contract. In some rare cases, your new network may cover the costs for you leaving early but don't count on it.

Of course, you can switch at any time for a set penalty fee but most people rarely enjoy the prospect. Typically this is at least the number of months you have left multiplied by your monthly tariff - but may be more - always check. It may occasionally make financial sense to switch early - say, if your prospective savings on the new contract exceed your exit fee but it's a difficult balance!

There are plenty of people walking around paying hugely inflated monthly tariff costs when they're already out of contract. To those people we'd say "What are you waiting for?!". There's tons of contracts out there that are likely to save you money. If you still love your phone, consider a SIM-only contract - which will let you keep your handset.

How do I switch when the time comes and how do I keep my number when I do?

When you think of switching, you may think you'll have to give up your old phone number and get a new one. This may well be what you want to do (change can be a good thing!) but it doesn't have to be this way, of course. Switching networks while keeping your number can now be a pretty painfree process.

Here's what you'll need to do in 7 clear steps:

1. Wait until your contract has expired or is at least in final month - otherwise you'll have to pay extra to cover the costs of the remainder of your contract.

2. Do some research and check if you're on the right contract. If it's definitely time to move on to greener (cheaper) pastures, go to step 3.

3. Call your current network, tell them it's been emotional but it's time to call it a day. ASK FOR YOUR PAC CODE. This is a 9-digit code required to port your number from one network to another. They MUST give you this within 2 hours maximum if your request it.

4. They will probably throw a great deal at you to keep you. Listen to them, compare to the options you saw in step 2 and make a decision. If you decide to take their offer - then congratulations, you've probably just saved a lot of money. If you've had enough or the deal isn't good enough then proceed to step 5.

5. Don't cancel your current account yet but make sure you get the PAC code before you end the conversation.

6. With your PAC code in hand, you now have 30 days to use it or lose it (literally, after 30 days, you'll need a new one). Choose to buy your new contract online or in-store and then call the new network to ask for your current number to be transferred via the PAC code.

7. Having bought your new contract and asked to transfer your number, you can expect your account to be transferred from your old to new network within 7 working days.

Seems a lot to remember - will you let me know how it's done when the time comes?

Yup - we're working to make sure this advice gets to you at the exact right time, just when you need it. Look out for more great stuff in the near future!

Got questions about switching or upgrading, when you can do it or how to find out how long you've got left on contract - or just want to uibble with anything we just said? Let us know, we'd love to hear your thoughts below.

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Why only now? What took you so long?

I know, I know. It did take too long. "Add Tesco Mobile" has been our most requested user feature related to adding networks for almost a year now - although, to be fair, a reliable and accurate feed has only been available for a few months. We apologise it took so long, however, and hope we're still in time for when you choose your next contract.

What about other MVNOs and smaller networks? Where's giffgaff?!

Quite right! We've still got work to do and we know it. Please do keep letting us know what we've missed - we really value your feedback. You can let us know in the comments below or, better still, use our uservoice forum. Make sure your idea hasn't already been suggested (in which case, just add your vote) and then let us know your thoughts.

As soon as the others get added, you'll be the first to know about it. Rest assured, we have no prejudice or ill-will against the networks we've not yet included. We're only a small team and adding new networks can sometimes be a harder job than expected - especially as billmonitor needs a lot more information & detail (often not available from feeds) to confidently make its recommendations than other price comparison engines.

We hope you understand and bear with us. Don't forget to share you views on what should be next below!

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Today Vodafone announced a new initiative called "Data Test Drive"; effectively a "try before you buy" data plan for your mobile. If you're a new or upgrading customer with Vodafone, you'll now get unlimited data during the first three months. After that time, Vodafone will give you an assessment of how much data you've really used and suggest a more suitable data allowance for you, but only if what you need turns out to be more than you originally bought (if you use less, you probably won't be allowed to move down).

First impressions: "Wow! What a great deal."

This is quite a startlingly new way of handling customer price plans. Previously, it had always seemed that mobile operators were always willing to profit from customers' ignorance regarding their real usage, whereas here we have a major operator effectively admitting they know we'll probably get it wrong first time - but: never fear! You can change your mind later!

This seems like an ideal win-win for customers and Vodafone. Customers get 3 months unlimited mobile data and an insight into their real usage. They also get the satisfaction of feeling that they have a data plan that suits them.

Vodafone, on the other hand, is basically incentivising maximal data usage in the hope that early exploration will pay off in terms of getting people excited about mobile internet and other data-driven features (apps, streaming etc.), while also hoping that translates into longer-term higher usage/higher spend. At the same time, they are probably banking on the fact they will come across as the "good guys", in that they (genuinely) appear not to want to gouge you for excessive usage.

This all seems very reasonable and generous - but is there a catch?

Well, a few little ones. Vodafone doesn't spell out the obvious strategy to infer from this pricing, which is to start with the lowest data plan possible and only move up if absolutely necessary.

This is, by the way, the best strategy with all usage allowances: smaller is better if you have no idea what you will be using ( - if you've been using mobiles for a while on post-pay, you can do a bill analysis to find out how you're really using your phone and the minimum safety allowance to go for).

It seems an obvious strategy but no-one does it as often as you'd think, because the urge to go for a larger than necessary allowance is too high for most people. We fear those extra charges and forget that moving up is always possible; moving down is not.

The small print doesn't clarify but it seems safe to assume that, if after 3 months you turn out to have used less than your requested data allowance (let's say you chose 500MB to be "safe", but ended up using around 200MB, where a 250MB allowance would have been sufficient), you will probably not be allowed to move down.

To be truly transparent, I'd have liked to have seen this consequence spelled out (or ruled out) by Vodafone - at least in the small print.

There's also the matter of Vodafone trying to "inflate" usage in the first 3-months, which may give an unrealistic picture of your likely usage for the entire duration of your contract and lead you to choose a higher than necessary allowance (though you can return to your original data plan level at any time - but curiously not 1MB lower!). In fact, our data shows it does actually make sense to get a (slightly) higher data allowance than you need, since as customers find new uses for their phones, mobile internet usage trends up over time. This is in contrast to minutes and text usage, which has less obvious trending patterns and where the last 3 months, for any given individual are a better indicator of future usage.

A subtler point to bear in mind is that Vodafone is also framing the entire problem so that customers who have not yet chosen a smartphone probably think that "not having enough data", will be a significant issue for them. This is disingenuous. The opposite is likely true: most customers have more data than they know what to do with and are systemativally paying more than they need to.

What's the verdict then?

So, in a nutshell: this is a good offer from Vodafone but don't get lulled into bingeing on mobile data allowance (either before or after you take the contract), or you'll wake up with an (expensive) hangover, you won't shake off for another 15-21 months!

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It is for this reason networks developed their own proprietary "network coverage checkers", to enable customers to assess the reliability of the reception they'll get at a specific postcode (here are the maps for O2, Vodafone, Orange and T-mobile). According to Ofcom, only 30% of us actually know these Google Maps/Silverlight mash-ups exist at all but, more surprisingly, most of us that do (80%-90%) find them very useful.

We agree - they are useful. But they're also misleading.

Again, Ofcom checked the truth of the network's verdicts on their own coverage and found they were "broadly accurate". Although this should put our minds at ease, there are plenty of gripes still outstanding - even if the broad idea of the tools is a good one.

1. There is no nationwide, comprehensive, independent coverage verification of the networks' coverage. Yes, Ofcom checked in one county - but what's true in one place will not necessarily be accurate in another. As the networks do not make their network coverage information available as a feed, it's difficult to systematically compare their results against independent results. The BBC's "3G Survey" crowd-sourced app and OpenSignalMaps's app go some way to improving the independent verification but in reality these project needs hundreds of thousands of users to provide a reality-based coverage map to test against the networks' computer-simulated maps. Or else an independent body needs to be set up to monitor this - something that is unlikely to be justifed due to the "generally" accurate nature of the current results.

2. The maps are based on computer extrapolation ('Propagation models') not customer experiences. Again, Ofcom has deemed that the computer models used to simulate actual reception quality are "reasonably accurate" but is this enough? It's the customers in outlier locations or with unpredictable factors affecting their reception that draw the short straw with this system. If this outlier customer happens to be you, the fact that it's "reasonably accurate" for most people, is likely to be small comfort indeed. If the networks were serious about providing reception-quality maps from the customer perspective, they could easily provide some kind of customer viewpoint-based questionnaire or even an app and begin integrating real customer feedback with technical data and their computer models to increase their accuracy.

3. The network maps are very tricky to compare against one another. As Ofcom rightly points out, some have voice/2G reception only, some include 3G coverage as well. But in addition, each coverage checker uses its own rating system of either 2,3 or 5 levels - how would a customer or third party interpret the comparison of "moderate" reception vs. "good outdoors" - are they the same? Without standardisation to a certain degree, you'd have a hard time saying these are truly intercomparable. What's needed is a standard, agreed output that can be easily compared by any individual or company.

4. Postcode areas may be too large to allow an accurate verdict for your specific location. Postcode areas vary hugely in geographic scale from very precise to a very wide area. Some coverage checkers take this into account, others don't. Speaking from personal experience, my parents' house in Kent is supposed to have "good indoors and outdoors" reception in principle but in reality I may as well leave my phone turned off for all the reception I get - either indoors or out! Again, these hidden "not-spots" will not be picked up without customer feedback - see point 2.

5. Giving a verdict for indoors reception - or even outdoors in some cases - is meaningless as it depends on the specific building materials, structural build, proximity to outside etc.  The networks themselves flag this up as a limitation but it's a pretty big one if you live in the "wrong" kind of building as far as your mobile network's signal strength is concerned. Giving a "one-size-fits-all" verdict may work for most but not for all...This is, to be fair, a very difficult factor to control or account for - but it makes it difficult to be accurate in any verdict and provide the customer with a 100% accurate verdict.

6. Reception varies according to multiple factors such as population density, which in itself is affected by time of day, seasonality etc., making a "one-off" verdict highly misleading. It's no secret that you can have great reception one moment, only to have it fall off a cliff the next, without you having moved an inch. Mobile signal strength is affected by how many people are accessing the same signal from a given cell tower at a given time and more people, all on the same network on their mobile, means worse quality for all. This is also an important factor as to why some networks restrict certain kinds of 3G mobile traffic at certain times (or all the time) - to enable all customers to have sufficiently high quality reception and not let one guy ruin the reception for everyone else. Networks should consider how they manage customer expectations for reception quality variation throughout the day at peak vs. low traffic levels.

7. A reception map is only half the story - surely it should tell me where I need to walk to to get better reception any moment? It's all well and good providing postcode based advice as to my home and office locations when I'm first choosing my netowrk provider but what about when I'm a subscriber already - I'm on the move and want to know why I don't have reception? Could there not be a pre-installed app on my mobile that tells me where the nearest place with better reception might be?

Why does billmonitor care?

Well - aside from the fact you've probably guessed that we've each personally experienced reception problems in the past and want to be rid of them for good - we're also keen to provide an overview of mobile network reception quality within our own results. This is something we've wanted to provide for a long time but have felt the networks' maps were a) probably inaccurate and b) difficult to extract usable, intercomparable data from.

What Ofcom's recent report shows though is that there may be increasing pressure on networks to provide an more usable, comparable feed for third parties, like ourselves, to analyse. This will only improve the accuracy and usefulness of our own results, as our own verdicts will also flawed if we're telling you the "right contract for you" is with a network that you know, from your own experience, has poor reception in places you visit often.

So - this is something we're looking at. Watch this space and, if you feel like giving us some advice how we should implement this within our service, how to improve the accuracy of these services (allow users to give their own feedback on reception quality via billmonitor?) or how to get the networks to provide better maps themselves (or at least make more people aware they exist), I'd love to hear it. We're open and ready to listen.

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The wider picture: some real surprises

For me, the report presents a simultaneously awe-inspiring and humbling depiction of the present day mobile market - and the communications market in general.

One moment we’re given to marvel at the fact that the communications landscape has changed so vastly as to be unrecognisable from what it was only a decade ago. Addicted to smartphones? We had only just barely started using mobiles in 2000!

The next, we are reminded that the industry revenue for communications in 2010 was the same as it was in 2000 – essentially proving the old adage: plus ca change, plus la meme chose. All this new technology but no more money being made now compared to 10 years ago.

It’s equally humbling, as well as surprising, to realise that fixed line calling minutes still outnumber mobile minutes despite the fact that a) fixed lines have been declining each year throughout the past decade, b) 93% of the UK has a mobile and c) 1 in 5 of us freely admits to being “addicted” to our mobiles – a number that reaches 37% for smartphone owners and over 60% for teens (that's right - the majority of teens are addicted).

It's especially remarkable if, like me, you're in one of the 15% of UK households who now don't own a landline any more and have gone "mobile only". Why would you need one, honestly?

The rise and rise of contracts and the decline of pay-as-you-go

As billmonitor's bill analysis service is currently only available for contract customers, it’s fascinating to see Britons increasingly flocking to grab a contract and turn their backs on "topping up" via pay-as-you-go. Almost half the market is now post-pay, whereas it was 41% only a year ago. That's astonishing growth.

This trend is only likely to accelerate as pre-pay handset subsidies get removed and call costs skyrocket for PAYG customers – which in itself was a response by the networks to Ofcom’s own regulation to lower mobile termination rates.

It will come as a surprise to no-one that the networks will be happy about this migration as post-pay customers are worth more than 3 times as much as PAYG customers, are more than twice as likely to own an expensive smartphone (smartphone users make more calls, send more texts and generally use their phone far more frequently) and are much more likely to be lifetime customers. But subscribers themselves are also clearly benefiting from this migration with lower tariff costs, better customer service (ratings for satisfaction in mobile are at an all-time high and outrank all other communication services) and improved handsets.

Of course, as customers move to contracts, it becomes enormously important to choose well and use services like billmonitor to help make that choice. On average, customers on post-pay contracts spend almost £200 more than they need to for how they use their mobile. Due to the extended contract lengths that are now standard and the lower tariff flexibility during the minimum contract term, choosing the right contract first time could save customers on average £400 over the course of a 24-month contract - which would otherwise be like tossing money down the drain. 

Our involvement in the report

Full disclosure: Ofcom approached bilmonitor asking for a number of data points to support and inform their argument that they could not source from anywhere else and we were happy to oblige. You will find our stats cited throughout the report at various points. billmonitor is a mobile price comparison site based on analysis of customers' actual bills, which gives us unprecedented detail and accuracy in supplying this kind of data and we had already done extensive analysis to go into our National billmonitor mobile report earlier this year.

Although Ofcom have caveated the data we provided as potentially skewed, we ourselves have critically evaluated our own data with other publicly available information and alternative sources and have found it highly representative of the overall market.

What do you make of the report? Do you find anything interesting there? Are you addicted to your smartphone? Do you remember what having a mobile was like back in 2000? I want to hear your thoughts! Let me know.

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"Ladies and gentlemen, a mobile should be mobile."

Never truer words spoken by Neelie Kroes in her Wednesday announcement about the shake-up of EU roaming rules. Why should it be that we all switch our mobiles off or use them much, much less when we go abroad?

They still work. It doesn't usually cost the operators much more to supply the service than at home. The whole situation is, as Kroes suggests a "raw deal" for customers and one where "operators enjoy outrageous margins, particularly on data downloads".

Why has this "outrageous" situation persisted so long?

The best reason I've seen far this so far was given by Paul Lambert, Senior Analyst at Informa Telecoms & Media:

"European operators have been reluctant to stimulate the market for consumer roaming in the EU largely to protect the rates they charge their corporate customers, which, unlike the consumer, are much less price sensitive as they have a much greater need to stay connected when they travel abroad."

It certainly makes sense - but I think there are other factors at play.

After all, we know 39% of UK subscribers use their phones for roaming at some point or another during the year and they can't all be business customers. Why are they not choosing alternatives that are available? VoIP services like Skype, Jajah or Rebtel, local SIMs, Global SIMs, calling cards, apps that reduce your data usage - there are many possible ways to cut costs today, why are they not being used.

One reason: convenience. Or more precisely: Inconvenience.

They require the customer to have identified the problem, researched alternatives, chosen something, set it up and then actually used it. Their use is often conditional or circumscribed in ways that are frankly a hassle to most people (eg. got to use Wifi, can't keep your phone number or contacts, must unlock your phone, separate billing etc.). So they're not used as often as they could be - even though they'd save a lot of people a lot of money.

So what's the solution? Two contracts: one for home, one for abroad

This is why the idea of an independent roaming contract market where the problem is assumed as a given and the customer is almost forced to choose for their own good is such a game-changer. As laid out by the EU proposals, by 2014, all customers will have to be offered alternative roaming solutions from other providers at the point at which they purchase their new "local" tariff and mobile contract - the default will still be their local network operator (who is unfortunately likely to persist in charging the maximum possible, which, by 2014, will still be considerably less than today) but it gives room for a whole host of other players to enter the roaming market as MVNOs (mobile virtual network operators).

You will basically have two mobile contracts from 2014; one for home and one for abroad. You'll automatically switch from one to the other when travelling  and you won't need to switch SIMs, mobile numbers or handsets.

billmonitor will help you to choose the right roaming contract as soon as the freedom exists - we're already the only site giving roaming bundle recommendations

Of course, at billmonitor, we're already gearing up for what this means in terms of not only providing you the right local contract but also the right roaming contract. It's also worth bearing in mind that billmonitor is currently the ONLY mobile price comparison site that a) analyses your roaming & international calls and b) actually provides you with the relevant details of the network bundle you'd need to buy to match your needs. No-one else is providing you details on these bundles when recommending new contracts.

In fact, it's a measure of how difficult this process is that this is based on our own manual research right now and you can't often buy these bundles without calling your network. Even ones you get for free often have to be activated by customers rather than being switched on by default.

Given all this, we're incredibly excited by the implications of this change and you can be sure that as soon as these market structures develop, we'll be the first to offer you the best service for your situation.

But it's not here yet - so watch out!

None of this should encourage immediate celebration. The full impact of this legislation won't be carried through until 2014 - unless the networks decide to speed it up further.  Until then, the usual roaming rules apply:

• Switch off data roaming unless absolutely necessary
• Use your phone as little as possible abroad
• Text don't call where possible - texts are free to receive (and it's free for others to text you too) and cost less to send than a call
• If you really need a mobile more regularly, investigate the alternatives (mentioned above - look out for future blog posts too)
• Make sure you have all the righ roaming bundles, bolt-ons or add-ons available from your network. They're not always helpful but they could be just the right thing. Call your network to ask for options.

Seen the right way, this is a huge opportunity for the first network to make the changes

From our perspective, we'd like to see the networks really rise to the occasion and introduce these changes as fast as possible. The market for roaming is potentially much bigger than it is today and high prices have curtailed the number of people using the services and the amount they use them.

It stands to reason there's a lot of money to be made by being first with lower prices and encouraging people to opt for your roaming rates not a competitor's (ie. basically steal customers for the holiday season - as well as regular roamers). Frankly, all the networks will have to cut their prices anyway, so why not look to grow the market aggressively in response?

The problem is of course that everyone will want to take other networks' customers but no-one will want to open their own customer base to being snatched. I'd still like to think that some innovative, aggressive, below-price-cap price cuts to roaming rates combined with opening up to roaming competitors and a well-publicised awareness campaign that names and shames other networks who aren't quite so forthcoming, would ultimately work in favour of whoever tries it first. We can but dream...

And what will be the knock-on effect? Will we see higher tariffs, out-of-allowance costs, or international calling costs?

With the networks likely to lose a previously guaranteed revenue stream (unless they innovate aggressively and proactively as suggested above), what will be the likely knock-on effects for UK mobile phone users? Well - no network will raise prices before they have to and in fact they don't like raising them anyway (higher prices mean fewer customers).

However, even if they choose the aggressive market growth route (which we recommend), they will likely need to combine this with a more defensive price raising strategy. They have a number of options:

1. Raise prices for customers who exceed their allowance on local calls, texts or data - this is traditionally the obvious outlet as it can be billed as the "customer's fault" and the numbers who exceed their tariff are reasonably predictable

2. Raise tariff prices - networks avoid this like the plague unless they see significant movement from other competitors. I would expect this to be a move of last resort.

3. Raise prices for international calls - this seems the most likely outlet. After the last roaming price caps, international call charges from mobiles increased - to the extent that it's now less than half the cost to call a Spanish or French number from Spain or France than it is to do so from the UK! There is a strong correlation with people who use international services and roaming services, so they'd be passing the costs on to the same section of the population.

In my view, this would be a mistake though - international calls have so many alternatives and the prices are already so high, that a further substantial price increase might mean customers NEVER again use their mobiles to call abroad.

4. Raise prices for roaming outside EU - the EU can only legislate within its member states. This means that operators are free to increase roaming charges elsewhere like the US or Asia. Ideally, the roaming operator/contract you choose should cover ANY trip abroad but it's as yet unclear if networks will allow this or not. Unfortunately, this is very likely to happen as an immediate consequence and for those who travel further afield than Europe this could be the worst direct impact of the EU's legislation.

On balance, the worst case scenario might be a combination of all four approaches. Expect the market to look very different by next summer! And by 2014 it will be unrecognisable.

What are your thoughts on the EU roaming rules? Will it work out well for customer or not? Are these measures long overdue or are they too disruptive? I want to know your thoughts - please share your comments below.

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Wow - what a surprise!

We had previously heard Neelie Kroes admit her frustration that competition in the mobile roaming market had not led to the satisfactory outcomes in terms of lower consumer prices but last week's announced wholesale price caps were hardly going to make a difference. So these changes are a very welcome step. The only shame is that customers wont' enjoy these changes until next year (unlike the roaming call charge price cuts which were effective last week).

In fact, I'd literally call this a game changer.

Instead of either slightly tweaking their roaming strategies or raising local tariffs or per minute prices for customers to make up the shortfall (roaming data is currently responsbile for around £443 million in annual revenue for the networks), networks should be looking to massively expand their market penetration amongst customers using mobile data abroad.

As prices reach roughly £6 per hour of normal (non-streaming) mobile internet usage, smartphones will become viable and much more convenient alternatives to using internet cafés or free Wifi areas (the current best alternatives). I would expect that, with a price drop of this magnitude, customers will believe the cost to be worth acceptable and networks should see both the number and the amount of data usage go up exponentially. Even though their ARPU is limited to £45 per month, I'd wager that very few are hitting that cap today and even if usage increases would likely be far from reaching it.

The real benefit for networks would be that customers who'd never considered smartphone data use abroad begin doing so, leading to incrementail revenue they may otherwise not have had. In addition, by 2014, when smartphone penetration will be much further along, there will also be many more potential customers able to avail themselves of the service. I would expect the current 24% of susbcribers using roaming data to be much closer to the 39% who already use their phone for roaming calls.

Finally, Kroes directly indicated that there would be further shake-ups to the roaming market - possibly introducing more viable competitiveness into a market where customers are currently too locked in. We eagerly await the full announcement due this Wednesday.

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The 10% cut in outbound roaming call prices will certainly help but as the 39% of us who make roaming calls well know, it will be a drop in the ocean relative to already very high costs. Especially as there is a distinct lack of help for mobile subscribers who might benefit from the large array of roaming bundles, bolt-ons and add-ons but simply forget or are not informed about their options.

It's particularly disappointing to see no per minute retail price cap on roaming data costs.

Although customers have probably benefited from a £40 (€50) monthly price cap on roaming data, the current effective per minute cost for the average customer using roaming data is £2 per MB - that translates to £2 for just 5 minutes of web browsing or £24 per hour of mobile browsing.

As Kroes will know very well, cuts in wholesale price caps unfortunately do not always translate into lower costs to the customer. Roaming data remains an area of excessive profits for the networks. This is at the expense of around one quarter of mobile subscribers who use their phone to access the internet abroad.

In the last year, UK mobile subcribers made and received 2,17 billion minutes of roaming calls and used 219 Terabytes of roaming data. This is a significant chunk of network traffic and amounts to total customer spend of £1,23 billion per year.

Given the large minority of users wanting to use their phone abroad and the volume of usage and spend, it's hardly surprising, though it remains frustrating, that networks are reluctant to lower their prices.

I would hope that the currently rather vague "comprehensive new proposals for long-term solutions to address the underlying problem of lack of competition in roaming markets" that Kroes intends to publish shortly will go further in trying to remedy the manifest customer pain experienced by many.

I would certainly not recommend for anyone to see this as a "license to talk" more freely abroad. Roaming remains an unnecessarily expensive mobile spend category and we share the EU's vision (or, should I say, dream) that roaming costs will approach national calling costs by 2015.

All this being said, next week I'll be uncovering the "Truth about mobile roaming" - which will debunk some of the myths around mobile roaming (the third in our ongoing series of mobile mythbusting).

This will then be followed by a deeper article looking at some of the ways customers can reduce their roaming bills and some of the ways we hope roaming bills will decrease in years to come.

What do you think about the price caps? I want to hear what you think - do let me know. Are you excited, disappointed, apathetic, jaded by these announcements?

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1. The best value contracts have commitment periods that are too long - as described recently, the best value contracts are almost always 24-month contracts but even 18-month contracts are too long for many. There's an intrinsic distrust for any company that wants to tie you down for so long. I actually think these long-term contract periods are breeding significant resentment amongst many customers who feel, certainly towards the end of their contract, that they would prefer to upgrade, get a better deal, get better reception etc.
2. Little tariff flexibility within the contract period - tied to the previous point; longer contract commitment periods might be bearable if we were at least allowed to make mistakes or have some flexbility with our tariffs. However, over the last few years, operators have moved to close the door on people who want to move down a tariff level (ie. get fewer minutes/texts/ data after finding out they don't need them after all). No operator will now allow you to move down within your first year and as we know this is the main source of customers paying more than they should, this means there are a lot of frustrated people. While it makes sense that operators want to keep up their profit margins and to some extent customer have comitted to a certain spend, curbing customers' freedom to amend their mistakes is not a way to earn their trust in the long term.
3. Too many people feel their network is trying to punish them at every opportunity (eg. excessive roaming costs) - It doesn't help that the media is full of scandalous stories of "bill shock" but we don't need to have been handed a £1,000 bill to feel like we've been ripped off. All it takes is a trip abroad for most of us to be stung for more than our usual monthly bill. Why do the networks persist in overcharging for roaming when they know it destroys goodwill in their customers? We're all prepared to pay a little more when we go abroad and use our phone but we also have our limits - too often those limits are breached by the networks who value their profit above their customers' trust and loyalty.
4. Mobiles are complicated - lots can go wrong - Hardly entirely the fault of the networks themselves but mobile phones - and the networks they run on - are exceptionally complex pieces of equipment and lots can go wrong. A lot of the time it does. Perhaps we shouldn't blame them but we do. Each time something goes wrong, our trust in our network goes down. You can't help thinking: "If they can't even help them with this, what else are they competent at?"
5. Mobile tariffs are even more complicated - it's too easy to get confused and make a mistake - At last count there were almost 8 million combinations or tariffs, plus bundles, plus handsets analysed by billmonitor. That's an awful lot. It also makes customers' cognitive dissonance have to work incredibly hard for them to feel like they got a good deal - most people when faced with such choice, feel that inevitably they will make the wrong one and will resent the company that didn't make it easier to choose. There's no easy answer here: people's mobile behaviour is complex and a one-size-fits-all approach wouldn't work. Then again, it helps no-one for customers to feel like they can't trust their network.
6. Customers rely on their mobiles every day for one thing they care for and need above all else: communication - It just so happens that the one reason mobiles have been so successful is also why we care so much when things don't go our way. Communication is crucial to humans and mobile telephony (along with the internet) has been the single biggest technological evolution in communication of the last two decades. When something has become such a cornerstone of our modern-day lives, it's no wonder we expect a lot of the companies that give us the technology. In light of this, perhaps it would revolutionise the mobile industry to demand of its technology the same level of technical reliability as cars or airplanes. Examples of technology we are forced to trust with our lives. Then again - this runs counter to the current development and marketing cycle that reveres innovation above reliability or longevity. Perhaps it's time a trade-off is made?
7. a) Impersonal marketing, b) mis-selling, c) false advertising and d) selling stuff we don't need - This is a bit of a catch-all point but I think they all relate to Sales & Marketing techniques and strategies we've unfortunately come to explicitly associate with telecoms companies.

a) When you sell "communication" as your service, it's easy to become overly global in your advertising, to think of broad target markets or impersonal, inoffensive advertising that will appeal to everyone. It's my opinion that increasingly this form of advertising appeals to no-one and only acts to alienate viewers adn listeners.

b) Mis-selling is still rife in the industry. Though less than it used to be, customer have long memory and previous experience tarnishes current opinion.

c) The industry has always had a fascination for overstatement and never more so than for mobile data. The proliferation of  "unlimited" data plans came abruptly and ignominiously to an end last year. It may be true that few of us would ever truly need an "unlimited" mobile data plan but there's nothing that breaks trust quite like promising something then scaling back that promise and having to qualify it with a litany of terms and conditions.

d) Finally, we've all become familiar with being upsold things we don't need by eager mobile phone salespeople. The one thing I'd point the finger at would be mobile phone insurance. Most of us have our phones covered under contents insurance or elsewhere, insurance excesses are often so large as to make the insurance redundant and terms and conditions mean it's often impossible to claim - yet still many customers are persuaded to pay this useless, persistent monthly cost.

What do you think? I'm sure I could think of a ton more - but why do you think trust is so low? Do you trust/distrust your own network and if so why? Are you working in the mobile industry and have some insider info why these scores may be so low? Please share - I'd love to know your thoughts.

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In the relatively short time I've been at billmonitor (since Jan this year), I've been blown away with the skill, "agility" and creativity of our small but dedicated 4-man engineering team. The sleepy Oxford suburb of Summertown houses a surpisingly potent software powerhouse that is using advanced mathematics to help people make better decisions.

I particularly relish the oxymoron of using exceptionally complex software and mathematical algorithms to make what looks to customers like a very simple statement: "you're on the wrong/right contract". It's our job to render the complex in the simplest possible terms - in a world which already has so many choices, what better service can you offer than something that makes one of those choices a lot easier AND saves people on average £200 a year?

If you know of someone who could make a real contribution to our development team then please point them to the open position at http://www.billmonitor.com/join-the-team.html - we're hiring!

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Following on directly from my earlier post about who's switching to which network, here's the second part, where Ken eloquently explains why he believes we all don't switch mobile networks more often and more importantly, shares some great tips on what to think about when you're thinking of switching.

Data from Ofcom, Consumer Focus and others consistently show that it's only a minority of mobile customers that switch with more than 50% having never moved networks. Do you think this is a good thing, first of all? Secondly, why do you think this is? Is it consumer apathy or consumer satisfaction? Or might it be due to loyalty & retention deals offered by networks...?

The reluctance of customers to switch network certainly isn’t a good thing: it means the UK mobile market isn’t as competitive as it can be and many people are going to be paying a lot more than they need to. I think the reluctance to change is primarily due to the complexity of the market and the donor-led method of obtaining a PAC Code.

1.     Complexity and choice paralysis

Firstly, a mobile phone service is hardly a homogenous product – in terms of complexity choosing a new phone service is probably more akin to choosing a new home or car than to choosing a new home insurance package or electricity provider.

Our analysis shows that Three’s “The One Plan” has been instrumental to Three’s recent success in the “Ken’s Tech Tips Index”. So far this year, virtually all of Three’s print and public advertising has focussed around “The One Plan” tariff. The interesting thing about “The One Plan” is that by offering so much airtime, that very few people ever come close to using it all up, consumers are freed from the confusion of having to work out the amount of minutes/texts/data they use and the worries about what charges could be incurred if they made the wrong decisions. Furthermore, Three appear to have based most of their marketing and promotion around a couple of key handsets such as the Apple iPhone 4, the HTC Desire HD and the HTC Wildfire. Obviously these handsets are all very different and target different audiences so there isn’t really any great difficulty in comparing them. Perhaps by offering less choice to the consumer upfront they’ve actually reduced the “information overload” and “choice paralysis” which is often associated with buying a new phone and consequently managed to boost sales.

The general trend in the rest of the industry seems to be moving towards more choice rather than less: a larger range of tariffs at different prices, the introduction of tiered data tariffs on O2, etc. Whilst some choice is undoubtedly a good thing, perhaps a bit of simplification would really benefit the industry.

2.     Transferring your phone number & retention deals

The second reason why I think switching isn’t more prevalent is the donor-led system of obtaining a PAC Code. At the moment, you’ve got to talk to the friendly chaps at the “customer retention team” of your mobile network before you can obtain a PAC Code to transfer your number to another network. This gives them an opportunity to offer you an alternative deal just as you’re in the buying mood.

From personal experience, I’ve been offered retention deals such as a HTC HD2 as an alternative to a HTC Desire or a Samsung Galaxy Ace instead of a Samsung Galaxy S 2. Unless you’re really clued up on all of the phones in the market, you’re quite likely to accept at face value the claim that the phones are actually very similar. In the end, the consumer ends up with a retention deal featuring a phone which is different to the one he originally wanted and a phone which he didn’t research properly.

In my opinion, moving to a “recipient-led” number porting system would be beneficial: without the fallback of being able to offer a “retention deal”, it’d mean the only way to retain customers is to offer all of their best deals upfront where consumers have ample opportunity to research and compare.

Giffgaff recently kicked up a fuss regarding locked handsets being an issue preventing many customers from being able to quickly and easily switch networks while retaining their handset. I think their point had particular relevance to customers who might want to use multiple SIMs, either for international, roaming or simply maximising their benefit across networks simultaneously. Do you think they had a larger point? Do you see handsets being locked to a network being a major factor preventing free switching between networks?

If you find a network and tariff which is suitable for you, why shouldn’t you be able to a cheaper and subsidised phone phone? With the latest smartphones costing several hundred pounds, it could be argued that a subsidy on the phone cost is incredibly beneficial by bringing down the cost of the handset to a more affordable level.

The fact that the major mobile operators provide locked handsets doesn’t stop anyone from being able to buy their handset SIM-free or unlocked if they so wish –there is a fairly large and competitive marketplace for these phones online and at major electronics retailers.

Several provisos however:

• The networks should be forced to unlock phones at a reasonable price and in a reasonable timeframe. The cost to unlock the phone should be no more than the network-provided subsidy. The cost of buying a locked phone and unlocking it should cost no more than the SIM-free price. If it was, the unlocking fee acts as a anticompetitive barrier for customers who want to leave.

• There is no good reason for Pay Monthly phones to be locked. As customers are already tied in for a 24-month contract, the network already has the guaranteed future cash flow which makes the subsidy viable. Some networks such as O2 will already unlock all of their Pay Monthly phones for free and this is something I’d like all networks to do.

What should customers consider when they choose to switch networks and what shouldn't be a factor? Is switching always a good idea - even when there's a better deal to be had?

Secondly, if you haven’t jumped onto the smartphone revolution yet, that’s a great reason to upgrade your phone and to change your mobile network. Having features such as Facebook, Google Maps, GPS Navigation and an app store on your phone can really revolutionise your life. Whilst choosing a new smartphone, it’s worth spending a little time with sites such as billmonitor to find the right network and the right tariff for you.

Finally, price is always a good reason to switch too. If you’ve come to the end of your contract, you can often save hundreds of pounds each year by switching to a SIM-only tariff. This is an airtime-only contract where you’re no longer paying towards the cost of the subsidised handset. You don’t even need to switch network or phone number: one quick phone call to customer services could cut your bill by £180/year on average without reducing your airtime allowances.

Once again, Ken and I would love to hear your thoughts on this. Are you network promiscuous? Got a different theory about why more people don't switch? Disagree with Ken's views on locked phones? We want to know!

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We have the great good fortune this week of being joined by the exceptionally talented, knowledgeable mobile expert Ken Lo, from Ken's Tech Tips. Ken is kindly returning the favour after I foisted myself on his readers just a few weeks ago in another guest post, talking about the future of mobile data.

I'll let Ken himself explain what his blog aims to do in just a moment but suffice it to say I'd wholeheartedly recommend you head over to his blog if you want to stay clued up on the mobile market from a customer point of view. As we're dealing with some tricky issues here about where mobile customers are switching to, why they're doing it in the first place and what customers should be wary of when choosing to switch themselves, I decided there was enough material to easily merit more than one blog post, so you can look forward to the second part shortly.

Hi Ken, first of all I'd love for you to summarise your findings about how many people are switching between networks, or rather how many people are joining and leaving each network - what you call "Ken's Tech Tips Index". Which network comes out top, which is bottom and what trends are you seeing?

Thanks! Firstly, just to give a little bit of background on the research: I’m a mobile technology writer & blogger and I’ve been running a website called “Ken’s Tech Tips” which aims to demystify the world of mobile by explaining common jargon, highlighting deals and reviewing phones and tariffs.

One of the popular articles on the site concerns “PAC Codes” and how to transfer your mobile phone number when you switch network. When people use our “PAC Code Finder”, we ask them which network they’re leaving and which network they’re joining. By collating this data and analysing these results, we’ve observed some really interesting trends about how people are switching network.

In order to account for both the number of customers a network is gaining as well as the number of customers they are losing, we use the “Ken’s Tech Tips Index” to analyse how well each mobile network is doing. This is defined as the number of people joining a network for every 100 people who leave that network. A score above 100 means the network is gaining more customers than it's losing. Obviously this is good news for them and the higher the score the better.

The results for October 2010 to April 2011 are shown below

“Ken’s Tech Tips Index” calculated on a monthly basis from October 2010 to April 2011. Higher score is better. The numerical figures for April 2011 are given.

 The key trends that we’ve noticed are that Three and Tesco Mobile consistently top the tables as being the best performing networks whilst Virgin Mobile and O2 consistently perform the worst.

What do you think lies behind these trends or what contributes to those networks with particularly high or low indices and, on a broader level, do you see this trend changing in the near future?

•  Three recently became the best performing network in our study. Three’s score began rising in December 2010, at the same time as they launched all-you-can-eat data on The One Plan. All-you-can-eat data seems to have been incredibly popular: Three have tapped into the consumer worry about download limits and provided a competitively-priced tariff with the reassurance of no download limits or charges. Although the vast majority of consumers come nowhere close to their fair usage limits, it appears as if consumers are sufficiently confused about data tariffs they’re willing to pay a bit more for the reassurance of not having a download limit.

• Tesco Mobile’s score peaked in January and has been in decline ever since. Tesco were previously offering two popular SIM-only deals before the 25^th January (500 minutes, unlimited texts and 500MB internet for £10/month). These were hugely popular and the removal of these tariffs is likely to have led to the drop in Tesco’s score.

• T-Mobile: The introduction of a 500MB fair usage policy by T-Mobile in February appears to have had little impact upon their score.

•  O2 consistently score very poorly in our study. This can perhaps be partially attributed to O2’s loss of exclusivity on the iPhone at the end of 2009. O2 iPhone customers who are now due for an upgrade will have the choice of an iPhone on any of the major networks. We saw a significant drop in O2’s score in April. This corresponds to when O2 increased their tariff prices by around £2/month on their Pay Monthly tariffs at the start of April

•  O2 seem to have been following a multi-brand strategy by targeting high-end customers with the O2 brand and using their two budget brands (Tesco Mobile and Giffgaff) to target the lower-end of the market. Tesco Mobile is a 50:50 joint venture between O2 and Tesco whereas Giffgaff is a fully-owned subsidiary of O2. Although O2, Tesco and Giffgaff customers use the same O2 network and infrastructure, call prices are often much lower on Tesco and Giffgaff. When we lump O2, Tesco and Giffgaff together into one category (“O2 & MVNOs” in the graph below), O2’s performance is roughly in line with the other networks (until the O2 April price rises come into effect). 

On the whole, it seems like consumers are responsive to the products and tariffs being offered by each network. It’ll be interesting to see what effects the re-introduction of 12-month tariffs and subsequent tariff updates will have on our data in the coming months.

Has Ofcom's recent legislation regarding networks being obliged to provide PAC codes within 24 hours made a material difference to the ease of switching and even, perhaps, the desire to do so? Have you seen an increase in customers wanting to switch?

Although Ofcom recently changed the rules to reduce number portability from 2 days to 1, we haven’t observed any increase in the number of people wanting to switch network.

I don’t think the 2-day window ever put anyone off switching: under the old system you’d still be able to continue using your phone in the 2 days before the number transfer goes ahead. Hence the change from 2 days to 1 doesn’t really make a huge difference for the end user.

I think the main barrier to consumers switching network is still the worries about how difficult it might be to switch and how much work might be involved. Most of us don’t switch network very often so it’s not a system we have much experience of: there’s always going to be the worry about how long it might take and what might go. Reassuring people that changing network is easy and painless is likely to make much more of a difference to people’s willingness to switch.

Whilst the Ofcom changes are most definitely a step in the right direction, number porting time certainly isn’t the main factor that holds people back from changing network.

Part 2 coming soon... why do people not switch more often? Does locking handsets make sense? And what to be aware of when switching yourself!

Ken and I would both love to hear your thoughts on any of the subjects covered. Are you a frequent switcher or a long-time network loyalist? Are we missing a key market trend or being too dismissive of the impact of Ofcom's decision? Let us know!

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After the last post about the myth of 24-month contracts being bad for customers, here's a piece of research from a US high-tech consumer electronics review site Retrevo, suggesting that the majority of customers feel their mobile is out-of-date before their contract comes up for renewal. According to the research 62% of their customers feel their mobile will be out-of-date by the time their 2 year contract is up.

I think this speaks volumes about the way in which technology marketing is able to build appetite for the latest handset, even when there may be only incremental improvements in features or technology. An exception to this was the recent smartphone explosion kicked off by the iPhone - where mobile internet browsing and usage has become orders of magnitude easier.

Then again, I'd call this a user interface revolution (led by Apple's design), rather than a technological one (led by engineering).

In any case, I'm glad Retrevo followed up with another question asking, how many would actually pay more upfront to get the latest handset - given this fear of obsolescence. The answer showed an overwhelmingly sensible economic decision by the majority.

Does this reflect your attitude - do you need the latest handset regardless of the price? Or are you reluctant to shell out while still envious of the latest technology? Or maybe you're in the minority who basically believe not that much changes in 2 years and you're quite willing to wait? I'd love to know your thoughts!

*It's worth pointing out that this survey is heavily skewed towards gadget-lovers and this is a relatively small sample-size.

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24-month contracts are a terrible choice for customers - the argument runs.

It leaves them locked into a network for longer than they want and at the mercy of potentially poor reception & poor customer service for 2 years. People have mortgages that last for less time!

A lot of people cannot predict what will happen to their lives and mobile phone usage in 3 months - let alone 24. What if the contracts no longer suits them?

Worst of all, very few 24-month contracts allow a handset upgrade mid-contract, meaning that, already by the end of the first year, most customers' handsets are woefully out-of-date and, in some cases, in pretty poor shape as regards battery life and general wear & tear.

Here's uSwitch's advice on the matter:

"Try to avoid signing a 24 month contract, even if it means that your chosen contract phone will be free - it will be another two years before you qualify for an upgrade or can switch provider."

Ok - I'll be honest. This is a "demi-myth". There's no way anyone could argue wholeheartedly in favour of 24-month contracts and a lot of the above criticisms are true - to an extent (see below).

There's just one inconvenient fact: when it comes to cost, they're often the only rational choice. Comparing 18 to 24 month contracts at the same tariff allowance levels shows there is usually at least £5/month difference (sometimes up to £10) - meaning that by opting for an 18-month contract, you're choosing to pay at least £90 more over the length of the contract.

In addition, 24-month contracts simultaneously minimise the upfront costs to customers who choose more expensive handsets. Although in general it's almost always economically rational to pay as much as possible upfront, 24-month contracts do limit this one-off payment.

billmonitor can easily be accused of playing the "rational economic" argument here and ignoring other salient factors but I'll try to explain the reasoning. Let's take each criticism in turn, beginning with the most salient.

Problem 1: Can't predict what will happen in 24 months

Validity:  Naturally no-one can. billmonitor forecasts how you will likely use your phone, within safe margins of error - but of course life changes. However, getting a larger contract actually makes it easier to handle larger life changes and leave a safety margin. By choosing a longer contract term, you can pay less for the same amount (or often more) minutes, texts and data, leaving plenty of "savings" to cope with future usage changes.

What you can do: Contrary to received wisdom: The longer your contract term - the more financial flexibility you can build in for the the unpredictable events in life, which might change how you use your phone.

Problem 2: Can't upgrade to latest handset when you like - and handsets don't last 2 years

Validity: Is it worth paying an additional £90 (or indeed up to £180) over the course of your contract in order to be able to get a new handset half a year earlier? Only the individual can answer - billmonitor doesn't think so. How likely is the handset to die before the contract term is up? Well - this depends on many factors, mainly due to individual usage and how well you take care of your phone. In general, it should be possible, nay likely, that it will last the full term - barring major damage or loss (which are not relevant to this argument). 

What you can do: Critically assess whether getting access to the latest handset 6 months sooner is worth paying £90-£180 more. Should be a simple cost-benefit analysis for anyone.

Problem 3: Can't escape if network reception is poor

Validity: In many ways, a very valid concern. There is little recourse to change anything due to poor reception once in contract (unless the device is at fault). If you live in a dead reception area, you may be stuck for 24 months. Equally, if you move home during those 2 years, there's no guarantee at all reception will be as good as where you used to live.

What you can do: Check reception quality via friends in your area and make sure you at least glance over the operator's network coverage maps (even though they may be overly generous, they will quickly give you a rule of thumb). The best advice on how to avoid the "no reception" trap I've seen, is via Ken Lo here. You can always use the 7-day "cooling off" period, if you bought online or remotely - so test your phone and test it early!

Problem 4: Can't escape if customer service is poor

Validity: Can be very valid - especially as there is little chance to test customer service early on during a contract. However, I don't believe this is a valid reason not to sign up for 24 months - there is a lot of online info to help re: best network for customer service either via customer reviews or other public data  (see last week's post on networks with most/fewest complaints). In the end, it's only 6 more months until you can change and I doubt customer service is the major influencing choice for many.

What you can do: . Good service is often rewarded and bad service punished on the web - use it as a valuable resource. Otherwise, I'm afraid, short of registering complaints with the network and consumer responsibility groups like Ofcom or Consumer Direct - there's little that can be donw except grin abd bear it!

Some important notes

• billmonitor is not "pro" 24-month contracts - indeed our advice is generally to keep your current phone and go SIM-only, giving you much more freedom to move, if necessary and access to the largest possible savings. Customers should specify whichever cotnract length they're comfortable with, while being aware of the real costs and savings available.
• Should 24 months be best value? The ideal is that every customer has maximum flexibility at all times, of course. However, in reality, handsets are expensive these days and customers are reluctant to pay too much upfront (although it's almost always the most financially sound advice). 24 months is a compromise between lower monthly and upfront costs and a longer guaranteed income for operators. Both sides technically win - though in practice, customer resentment runs especially high. The answer may lie in avoiding our addiction to the always getting new phones - especially where they add little value...
• 12-month contracts are incomparable, in terms of value to 24-month ones - so are not part of this discussion. Choosing 12-months is a conscious choice of convenience over cost - everyone is free to make their own choice.

Do you agree?

It's not the mainstream line to be in favour of 24-month contracts - in many ways a very unpopular product. Do you agree that they are better value and therefore grudgingly the best choice. Or do you choose 12-, 18-month contracts (or even PAYG)  out of protest or for one of the reasons given above? I'd love to hear your thoughts! Comment below....

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Ofcom recently released data on the number of customer complaints it had received about each of the major mobile operators. Customer complaints run the gamut of "mis-selling, billing errors, lack of service  and customer service problems" and some of the examples Ofcom gives of what "mis-selling" actually means, are truly awful (though they appear to be often due to retailers, rather than the networks themselves).

Here is how each provider performed in terms of numbers of complaints per 1000 customers between October 2010 and February 2011:

Three UK comes out worst with 0.15 complaints per 1000 customers. This number is marginally higher than the runner-up worst which was T-mobile but more than 3 times higher than the best provider, which was O2. However, it's worth pointing out that overall mobile operators have by far the lowest complaints of any of the three major telecoms categories - Three UK has fewer complaints than even the best fixed line broadband or phone suppliers.

So what does this mean for customers?

This is just one more criteria to consider when choosing your network - but it should not be the only one, as Ofcom themselves highlight:

"In addition to information about telecoms complaints, consumers may wish to consider a range of information when thinking about a communications service, such as price and network quality of service.  For example, Ofcom accredits price comparison websites and also publishes information about broadband speeds."

Currently, billmonitor does not include these or other qualitative criteria in its results - but we're working on how this might be included in a reliable an impartial manner for the future.

Over to you...

What's the most important criteria when you choose a mobile network? Will you be less likely to choose/stay with Three UK after seeing this data? Or is personal experience or the experience of friends and family a better indicator? Finally - have you ever made or wanted to make a complaint to Ofcom about a specific provider - and if so, why?

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