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Gold plated bills

Rory Cellan-Jones | 08:52 UK time, Monday, 11 April 2011

Any idea whether you're getting a good deal from your mobile phone contract? No, me neither - but according to a group of Oxford mathematicians behind a start-up firm called Billmonitor, we are collectively wasting nearly £5bn a year by being on the wrong deal.

Samsung Galaxy and iPhone 3G handsets

 

Having put nearly 30,000 bills through their sophisticated number cruncher, they've found that most people massively overestimate how much they will use their phones - and so end up on a more expensive contract than they need.

I used their system to look at my bills - and found that I was using roughly one third of the 600 minutes a month I'm allowed, and just under my 500Mb data allowance. But I turned out to be among the minority of mobile users who would not benefit by moving.

But even the millions who are on a gold-plated tariff may not be able to do much about it in the short-term, though you may be able to get a cheaper deal from the same operator halfway through your contract. And if we really were able to save £5bn a year, the operators would have to respond to losing such a huge chunk of their revenue by adjusting prices.

What I found more interesting in Billmonitor's report was what it showed about the changing pattern of mobile phone use - and the impact that the mass adoption of smartphones is having on our habits.

So here's what an average mobile phone subscriber in the UK looks like. Every month, they will talk for 240 minutes, send 300 texts, and use 133Mb of data. The voice calls, somewhat surprisingly, are still slightly on the rise, but texting is up nearly 50% on a year ago and data use has more than doubled. As the graph shows, the average user is piling on more data every month as they surf the web on the move.

Graph showing average monthly data use by UK mobile phone users

Average monthly data usage by UK mobile phone users

A few more insights into our mobile lives:

  • UK subscribers send 2.7 texts for every call
  • The average call lasts two minutes 35 seconds, and users spend around eight minutes a day calling
  • Calls peak at around 5pm each evening
  • The average user sends eight texts a day. Texting peaks later, at around 9pm
  • Women's calls are on average five seconds shorter than men's but they make 11 more calls a month. They are also heavier texters, sending 21% more a month than men, but men use 50% more data each month than women.

But it is the explosion in data use that is really striking.

A few years ago, the arrival of smartphone contracts bundled with unlimited data made millions of phone users far more relaxed about going online. Now, though, the mobile operators are trying to put the brakes on. First they introduced caps on those unlimited deals, now they're beginning to separate out data as an optional add-on to a contract.

We are spending an average of 16 minutes a day using our phones to call or text. But there are no figures for how long we are tapping away at apps, updating our social network statuses, or checking out football scores on the web, though I wouldn't mind betting that for many people that is now the main use for their phones. But the years when that was a free bonus bundled in with a smartphone contract are drawing to a close.

UPDATE: As has been pointed out, I got the abbreviation for megabytes wrong. It should be 133MB, not 133Mb.

Comments

  • Comment number 1.

    I'm paying way too much for what I use and I can't change my tariff, which I'm locking in to until Jan 2012 on a 24 month contract.

    Lesson learned - don't be fooled by the "this phone is free on this tariff" - choose the tariff and then work out the cost including the phone for the duration of the contract; it'll work out cheaper if you pay for the phone up front.

    Or go pay as you go.

  • Comment number 2.

    I am one of those that doesn't really need a flashy smartphone. Although the 'calling people up' feature is useful, my prime reason that I have one is that it's a nice gadget to have. Superficial and ephemeral, yes, but for approx 30 quid a month I can have a top 10 smartphone and depending on where I get it from, another piece of gadgetry free.

    The days of the mobile phone as a calling device are not numbered, as communication is the central USP to it. However, we have become seduced by the nice shiny, look what I've got attitude to getting smartphones.

    In truth, I could spend half what I spend and get a phonecall/texting allowance that is more appropriate to my needs. But, there are few contracts out there nowadays in the 15-20 quid bracket that allow even a modest handset upgrade. I suppose that staying with your current provider would make sense in that they could reduce your bills, but the industry is geared up to selling more technological devices, for more money and pocketing the difference by overselling the calls/text packages.

    We have only ourselves to blame. But I quite like my 18/24 month upgrade cycle. I'm not loyal to a particular brand or phone company. I just want the best deal that will allow me to keep up with the technological development of all these new gadgets and gizmos.

  • Comment number 3.

    If you don't know the difference between Mb (Mega bits) and MB (Mega Bytes), I'm not surprised you're paying too much Rory. The latter of course is 8 times as big as the former.

  • Comment number 4.

    Remember that your data usage is only those times you're not connected to a wireless network and are using the telco network for data. I think as free wifi becomes more prevalent then tariffed data usage will become less and less, not more.

  • Comment number 5.

    Once bitten.......

    I'm just coming to the end of a 24 month contract "lock-in" on a smartphone. Never again.

    It wouldn't be so bad if the network treated you with some respect once they have you "hooked" by providing timely updates and support, but they don't. You are stuck with a phone that doesn't perform as you had hoped and a network that can't be bothered to do anything about it.

    So, instead of "upgrading" at the earliest opportunity, I'm going to wait until my lock-in has completely expired and go PAYG. The money I save on not forking out £35 a month will more than pay for the new phone, calls and data.

  • Comment number 6.

    I was stuck on a contract with T-Mobile a couple of years back and the cost of calls was 50p per minute day or night, but I rang them up and said that I couldn't afford the phone anymore and they put me onto a PAYG at no extra cost, my call rates dropped by 35p per minute and I got a new phone with it as well, the trick is to tell them that your struggling to pay the contract each month and they will if your lucky change you over.

  • Comment number 7.

    As a businessman I currently carry a phone and a blackberry.

    I looked to change this to carrying a smart phone only. It rapidly became clear to me that either the phone companies believe we, the customers, are stupid or the phone companies are stupid.

    To help the phone companies here is a list of things that a smart phone has to be able to do for a single monthly charge for business people.

    1. Read and send emails - syncing with a server (usually MS server and outlook)

    2. You may not have noticed but emails often have attachments. PDF files can be big. I am not paying extra simply to read the attachments

    3. File viewers to allow all major file attachments to be displayed

    4. Business people often go abroad. Roaming charges make this excessive.

    5. Business people do not want to fiddle with settings, should not matter whether on 3G or Wifi - the phone should just work.

    In the end I gave up and bought a cheap netbook, now all I need is a free Wifi spot...

  • Comment number 8.

    CONFUSION MARKETING

    This is the evil business method that many utilities use to bamboozle customers - IT MUST BE STOPPED.

    Suggestion: No service (contract) should be able to be enforced if the customer did not understand it - the onus being on the seller not the customer and there should also be a statutory penalty of a full refund with loss of interest and some nominal compensation perhaps 5% of the contract price.

    Tell your MP to promote a private member's bill!

  • Comment number 9.

    I think some of the time the costs are explained up front, however the fact that 'local rate' or 'freephone' numbers are not included in your minutes is a huge con. They 'should be' according to Ofcom, but as they don't have to be the operators get away it.

  • Comment number 10.

    I'm sure these headlines will get Billmonitor some handy headlines and publicity but as others have hinted at they don't show half the story.

    I only use 60 of my 600 minutes per month and I pay £45 per month. According to Billmonitor I'm mad.

    But £15 of my Tariff is insurance and to get my handset on PAYG or even decent second hand would cost me £450. Plus I get unlimited texts and 5gb of data.

    So really I'm paying £90 per year for 7,200 minutes talk time, 60gb of data, insurance and unlimited texts. Not so mad.

  • Comment number 11.

    Also, O2, Vodafone and Orange allow you to downgrade your contract after 9 months - the point at which they calculated you have paid for your handset:

    http://cow.neondragon.net/index.php/downgrading-or-upgrading-your-mobile-contract-during-your-contract-period

  • Comment number 12.

    Is it any wonder that in with the current state of housing i.e. more people renting and thus moving about to work, it is easier to have access to the internet via a phone rather than deal with the costs of connecting a landline? I think once BT's monopoly on line installation and connection, and the increase in free wifi/4G, data usage will improve as smartphone make better usage of the available networks. I for one like mobile broadband, but it can do with improvements so that students etc can take advantage of it.

  • Comment number 13.

    I am a very light user of my mobile phone, I use it mostly used for access to the web and apps.
    I chose to pay for more minutes and texts than I need in order to get the mobile I wanted (with no up-front costs).
    Also it's usually better to over-estimate your mobile use as the bundled minutes and texts are included at a much cheaper rate than if you run over your limit and and charged much more as a result.
    I can't stand 24-months contracts, I wouldn't sign up for one the technology moves too fast. I wish more companies offered smartphones on 12 month contracts.
    I also wish mobile companies were more honest about when you can upgrade, you should be able to swap to any new phone at any time but obviously there'd be an associated upgrade premium to pay.

  • Comment number 14.

    Ok it's good that ofcom release such information, our family often switch tariff as soon as our contracts allow. I will say it’s worth pointing out that regardless of official 'Ofcom accreditation' when I was looking for new deals for the 3 family contracts I’ve had to renew recently I found cheaper deals via other comparison sites like comparephonedeals.com so I think bill monitor may compare different deals?

    In my case the price difference for the deals shown were significant. So to be completely impartial I would advise others to make sure they also compare via other existing solutions to be more certain of truly finding the best deal.

    Chrissy

  • Comment number 15.

    @10 MyVoiceinYrHead

    You should look into whether your phone can be insured elsewhere. £15 PCM to insure your phone is ridiculous.

    I have 2 phones insured with my bank as part of the "features" of my account. The whole account costs £15 PCM and that includes a £1k overdraft, AA cover, travel insurance, etc, as well as insuring TWO phones!!!

  • Comment number 16.

    I decided I was paying too much on my contract, so jacked it in and moved to a community-based operator. So far, I have gone from £34 per month to around £1.50!!!!

  • Comment number 17.

    That website is pretty crap really.

    It doesn't take into account fair usage policies on data (like T-mobiles), it doesn't take into account things like the "magic number" thing that Orange have, it doesn't take into account data tethering and it got my bill totally wrong! (it said I averaged 30MB of data in the last few months, when I know that is wrong because I've gone over my data allowance by a small amount each month!).

  • Comment number 18.

    @ MyVoiceinYrHead
    You're paying £180/year to insure your phone. I pay £120/year to insure the entire contents of my HOUSE, including things like my phone and laptop if they are stolen when I have them away with me. You're being fleeced, mate.

  • Comment number 19.

    I have a mobile contract that costs me £8 a month. 60mins talk, 30 texts, and unlimited internet. The unlimited internet allows me to email people rather than text them and I only use the mobile to talk when my house phone is unavailable. People need to negotiate with thier providers for better deals.

  • Comment number 20.

    Whilst I have no doubt that if you were to simply look at the combined cost of the calls, texts and data charges then you would indeed conclude that the average person is overpaying on their bill. However, I do wonder whether the company behind this research has taken into account the cost of actually buying the handset and the cost of being on either a pay as you go tariff or a sim only tariff. Personally speaking my current bill is £30 a month on a 24 month contract. For that I got a 160GB PS3 and a free phone. I also receive 600 free minutes a month, unlimited texts (3000 a month) and 500MB of data usage a month. Even with my very modest monthly usage I would still be looking at around about £10 a month for the calls, texts and data charges. If you add this to the cost of buying both the phone and the PS3 then it would cost me a total of £710 to pay for all of these things separately, with an initial cost of £470 to buy the phone and the PS3. The total cost of my entire 24 month contract will only come to £720, a mere £10 extra over 2 years, or 41.66 pence per month more than it would have cost to pay for everything separately. Also having the contract has saved me the large initial start-up cost of buying both the phone and the PS3.

  • Comment number 21.

    The timing is great since the last update I did on my site showed how a certain mobile operator has robbed it's customers of the freedom to downgrade their package as much as they like.

    http://o2hell.com/contracts.htm
    http://o2hell.com/tethering.htm

  • Comment number 22.

    Yup Chrissy’s right BillMonitor can’t be showing the full picture, I’ve just tested for myself. This is a big point, people wanting to save money should know this!

    My requirements HTC Desire, 200 mins, 500 texts, internet data. comparemobiledeals.com gives result of £17.52 per month.

    http://www.comparemobiledeals.com/mobile-phones/HTC/Desire?&tab=Pay-Monthly&page=1&texts=500&minutes=200&Cashback=None&internet=yes

    But billmonitor.com show £20.83 per month.

    http://www.billmonitor.com/calculator/deals?unique_id=41696beec332513be62e3b2308ddde516e8fdaf7

    So there you go, try it for yourselves. I don’t care about ofcom approval, I want the cheapest deal.

  • Comment number 23.

    Yawn, yes of course people are spending way too much on their mobiles and not changing to better suited tariffs and a nice little survey and calculator proves that (and plugs Ofcoms service). I’m glad Chrissy_mum had the sense to post the above advice, I was going to post the same word of warning and I think the BBC should consider it as it’s supposed to be ‘impartial’.

    I too found an excellent deal recently that wasn’t listed on bill monitor but indeed via another comparison site and my partner a great deal simply by haggling. An ofcom approved site is great but in my experience this particular site hasn’t been that useful to me, I think there are better. Use common sense and collective resources to try and save you money just don’t get fooled into thinking you’ll ‘always’ get the best deal with bill monitor, I didn’t. I too have tested against other price comparison resources like the above mentioned and I too found better deals listed based on my requirements compared to bill monitor. It appears one resource can’t compare every single deal, probably because deals change so frequently.

    Just because it’s ofcom approved doesn’t make it the gospel for saving the maximum amount. There are various measures to save money inc deal comparison sites and haggling, just remember to read the terms and conditions. We know mobile contracts are overpriced so please do your homework instead of putting all your faith into one resource. Your wallet will thank you.

  • Comment number 24.

    Get a sim only contract - better offers that PAYG. You can choose to end your current tariff if you feel you are not getting value at the end of each month. (save up to buy the phone of your choice. popular expensive phones may not be the best for your usage, in this way you save money)

  • Comment number 25.

    Its about time the gov put pressure on the networks as mobile use is exceedingly over priced. As for billmoniter I've the same experience, good idea but flawed practice. Im a big mobile internet user and by htc hero has died. Im now after an htc desire hd smartphone and need 500 voice minutes and 500 texts with mobile web data.

    Billmonitor.com says the 'right contract for me' is £28.23 per month. http://www.billmonitor.com/calculator/deals?unique_id=81f6794d1350b051391e55be9fca6392fdb61935

    Comparemobiledeals.com says 'effective cost' is £23.00 per month. http://www.comparemobiledeals.com/mobile-phones/HTC/Desire-HD?&tab=Pay-Monthly&page=1&term=24&texts=500&minutes=500&Cashback=None&internet=yes

    That's a hell of a difference over the 2 years and I know what tariff I'm going for. I got stone walled by my network redemption team, wouldnt match the deal and tried convincing me thats not the phone I want!

    Very frustrating knowing that new customers get offered the best deals. Whatever happened to customer loyalty!

  • Comment number 26.

    People should be aware that all of these websites - BillMonitor, Omio, Recombu, etc are operating as affiliates. That means for every sale made through these sites, the site owner makes between 20 & 60 pounds a sale.

    The BillMonitor "research" was just a nice way of getting some PR to make extra sales.

    My advice is to use a selection of these sites to find the best deal, and then head over to QuidCo. They'll give you the 20 to 60 pounds that these comparison websites normally make, and that helps to reduce the overall cost of your contract.

  • Comment number 27.

    People should consider buying the phone out right and signing up for a contract/pay as go as separate pieces – it gives much more flexibility – if you don’t like the phone you can return or sell it on without it being tied to a contract. I do suspect people think this to be the expensive option but just do the maths yourself on the phone you’re looking at over a 24 month contract, you might well be surprised on the overall price. Plus as a bonus you get “vanilla” phone with none of the carrier branding on it or in it.

  • Comment number 28.

    I realised when I got to the end of my last contract that I could make a substantial saving on my contract. I'm pleased that having looked at the Billmonitor website, I am actually paying less than the cheapest contract it could find for my phone.

    So, remember people, when you look to upgrade, find the cheapest price you can for what you need, then go in to the store, see if they can beat the price you have, then phone them up, see if they can beat that price.

    You can easily save £10/month and often the price of the handset by digging around and then haggling over the phone. Over the course of my contract, that's a saving of £400 off the quoted price!

  • Comment number 29.

    Part of the problem is the type of handset that you get. When I was after an upgrade from my provider they constantly bombarded me with recommendations for the iPhone 4. In the end they caved in to my demands that they work out how much I'd be paying over 24 months at £40 per month. Plus they wanted £200 up front for the handset. If I asked for the phone that I actually wanted, they would either say they had a limited stock and were waiting for some coming in or the last excuse they used was "You can't have that one, it's only for business tariffs".
    Needless to say, I decided with my feet and telephoned the retentions dept when I got home, who kindly informed me that the handset I wanted was available on any tariff.
    Within 2 days I had my upgrade and I'm paying far less than what I would if I'd gone with the retail persons "recommendations".

  • Comment number 30.

    So there are 3 issues here:

    1) The lure of free / heavily subsidised handsets, and therefore the need for 24 month contracts to recoup the cost.
    2) The quality of 'advice' given, by someone who is being paid on commission.
    3) Phone usage changes / inability to understand current usage.

    1 & 3 almost go hand in hand. If you take out a contract for 24 months, which is quite difficult not to on some networks (let alone a 36 month contract!), you had better hope that your phone usage had not change too much. A lot can happen in 2 years, maybe start traveling abroad more, get a company phone, start to use more/less of services, need to call more / less frequently.

    If you had a rolling 30 day contract, then you could adapt your circumstances to the price plan and features that give most value for money. However, what you don't get is the shiny new phone to flash to your friends and work mates.

    There is a solution, but it does require a little initial hardship. Save up and by what you want, SIM free. Get tired of the phone, sell it / trade in and get a newer model. Swap networks, no problem, it's SIM free. unlocked SIM free models command a premium, plus don't have the extra layer of customisation that can be troublesome, or slow down/stop updates to the phone.

    Lastly, the paid advice you get in mobile shops is really no substitute for doing a bit of homework first. Look at your monthly bills and see who do you call, what do you use. Then go looking for a network with coverage where you use the phone and see what tariffs they offer. A great tariff is pretty pointless if you don't get coverage. Lastly see what phones are available or buy separately.

    Unfortunately, the decision process is usually the other way around.

  • Comment number 31.

    One crucial thing that both this blog and the article have omitted: people sign in at contracts to get phones free at that level most of the time, not because of the minutes, texts and data they get with it...

  • Comment number 32.

    Just wanted to respond to some of these comments on behalf of billmonitor.

    @CraigT Agree overestimation is best - but 13M people already do this and they go way too far. Indeed, it's harder to correct downwards than upwards once in contract, so ultimately it will be cheaper to start with your lowest reasonable "overestimate" - rather than your highest. Re: 24-months, a valid point on technology and lock-in but there's no denying they are much better value. 12-month/18-month contracts you essentially pay a "tax" to be able to get the latest handsets as early as possible.

    @Chrissy_mum Very sorry to hear you couldn't find the best contract on billmonitor. It's worth being aware our method of comparison is slightly different from other sites. We ask for your "average" current actual usage, whereas other sites ask for your "maximum" allowance preference - we then forecast a reasonable safety margin and base our recommendations on that. We understand this method is still not sufficiently explained on the site so we're looking to improve this - thanks for the feedback! In addition, see comments below for how we're looking to improve.

    @WelshBluebird1 Sorry to hear you didn't have an ideal experience. We do include fair usage where operators have noted it explicitly, magic numbers are indeed hard to recommend as we do not read individual phone numbers on users' bills for privacy reasons and data tethering is something we'd look to include in future as more people request this feature. As for estimating your data usage incorrectly, this is simply due to T-mobile not including this on their own online bills - so there's no way we can know. Again, we'd love to have real data on this and apologies we got it wrong in your case.

    @zaferduc You make several great points. We can only include what users tell us and what's in their bill - to that extent the PS3 and handset you got would not be included. However, we are looking at comparing customers' current contract to a new contract that meets their usage requirements and preferences - to that extent, wastage is the difference between what customers are paying now and what they would be paying on a new contract. In your case, you may be told you can "save" when you feel you got a good deal last time - unfortunately, we may get it wrong in your case.

    @jatanker I hope my response to chrissy_mum elucidated some of the points re: usage differential but in your particular case, the other site is also recommending you a "refurbished" HTC Desire, which may not be clear from the results page but can be seen when you click through. We are currently debating how to best included "refurbished phones" in our results without disappointing customers (not many people would actively choose it and it's about how to make it prominent the phone is not new).

    @spicyone Some great advice! And thanks for the feedback. We're always looking to include the best deals from reliable retailers, so we'll certainly look to include some of the ones users have recommended here. Naturally, we aim to get you the right contract across all those available but I apologise if you didn't find this to be the case. As you recommend, we err on the side of safety and this may be why others are providing lower costs - on the other hand, we'll look to optimise our own contract feeds from additional retailers.

    @vince_d_75 We're very sorry you didn't find the best possible deal on billmonitor. Please refer to my comments above in regards to other userswhy this might be the case. Rest assured, we'll look to improve this situation as soon as possible.

    @mrtivo601f Some great advice - especially about reversing the usual decision process!

 

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