UK operators defend tariffs as Which? reveals £300M consumer overspend

Vodafone UK, EE and Three UK defended their contract terms after consumer group Which? said UK mobile users are collectively paying £355 million (€493 million/$523 million) per year too much for their contracts.

A study of 2,055 consumers conducted for Which? by Populus revealed that 46 per cent are effectively paying an additional £92 per year each on their mobile bill because operators do not automatically stop charging for handsets included in the contract.

Which? said operators should provide clearer information on the split between handset and airtime costs in their tariffs, naming Vodafone UK, EE and Three UK as the only carriers in the market that currently don't offer such a breakdown. In contrast, O2 UK, Virgin Media, Tesco Mobile and Utility Warehouse all separate the airtime cost from the handset charges in their bills.

"Mobile operators need to play fair and ensure their customers are not paying over the odds," said Richard Lloyd, Which? executive director. "Consumers are being misled and as a result are collectively paying millions of pounds each year for a phone they have paid off," he added.

However, a Vodafone spokesperson refuted the Which? report, telling FierceWireless:Europe that the operator offers "competitive pricing on both 12 and 24 month contracts which often include a handset as part of the bundle," and that the operator communicates clearly when contracts are due to end "through customer services, their online account and the My Vodafone app."

When a consumer's contract ends, Vodafone enables them to "take a new handset or move their contract to a SIM Only plan," the spokesperson added.

Three UK issued a similar line. "At the end of their contract, customers can upgrade to a new handset with a new plan, switch to a SIM-only plan…or move to another operator," a spokesperson explained, adding that the operator already unlocks devices for free and is "looking at developing new contracts which will split out the cost of the handset and the airtime".

An EE spokesperson challenged the benefit of splitting airtime and handset costs in customer bills, telling FW:E that doing so "doesn't always represent the best deal for consumers," and that EE "customers have the flexibility to choose the tariff and upfront phone cost that's right for them, often with better value than tariffs that are separated."

EE also makes "all customers aware when they are eligible for upgrades and new tariffs on their monthly bills," the spokesperson added.

Despite EE's assertion regarding the value of split bills, the Which? research indicates that consumers increasingly view such a breakdown as a key deciding factor when switching operator.

For more:
- read this Which? release

Related Articles:
Mobile consumer prices and revenue: how do we get the balance right?
Analysts: EC MNO merger precedents bode well for Hutchison Whampoa's UK play
Austria's consumer prices rise following mobile market consolidation
Ofcom mandates 40% reduction in UK mobile termination rates by 2017
Ofcom must break up BT as part of review, rivals say