There can be very few mobile phone users who haven't experienced some kind of ‘bill shock' at some time - when their mobile bill came in much higher than expected. Billmonitor, the only tariff comparison site endorsed by Ofcom, has looked at how much we overpay in its latest study, which you can access in full here.
The headline stats are as follows:
- The UK spends £3.47 billion per year on charges outside of allowance
- We're ‘wasting' £4.899 billion a year on mobile bills
- 76 percent of users are on the ‘wrong' mobile phone contract.
- On average we ‘waste' £194.71 each per year
By Billmonitor's rationale, waste occurs when we either incur extra charges over and above our contracted tariff, or we fail to use the full allowance offered by said tariff. The breakdown of the £4.899 figure that most media have gone with is: £2.62 billion from not using all your minutes, etc; £1.53 billion from using more minutes than covered on the tariff, and £0.74 billion from not ‘optimising' other free benefits.
The data for all these conclusions was derived from looking at 28,417 anonymised phone bills, and while we don't doubt many people are paying much more than they absolutely have to, we have to question the premises behind some of the findings.
Firstly there's the £2 bn difference between the total spent on extra phone charges (£3.47 bn) and the wasted amount (£1.53 bn). Does that mean £2 bn of those extra charges are not waste? If so why?
Also, the £2.62 bn figure attributed to taking out more expensive contracts than we need doesn't allow for the subsidisation of handsets, which is implicit in the contract. When we take out a £35 per month contract it's not necessarily because we need all the minutes that come with it, it's because we want the handset for ‘free'. In fact, you could argue the extra minutes are partly offered to reinforce the perception of value in these ‘free' deals.
All this doesn't mean this isn't an important study. £35 per month for two years is £840 for a handset that you can probably buy SIM-free for £500. If you think you'll spend less than £340 on mobile minutes, etc, over that time then maybe you are wasting money. But the £5 billion figure you'll be seeing all over the media (it's being discussed on Radio 4 as we write), doesn't seem to make any acknowledgement of the subsidisation model. It does make for a great headline though.