9.2 Million Mobile Users Could Be Unwittingly Paying for Handsets They've Already Paid Off
13th May 2014
9.2 million Brits could be paying monthly for handsets they've already paid off in full by doing nothing when their contracts are up for renewal.
If these mobile users switched to new deals, they could save almost £1billion collectively, or £104.40 each, over 12 months.
Brits are spending £885million per year on out-of-tariff data charges - almost a quarter (23%) of Brits regularly exceed their data allowances, paying an extra £91.20 per year (£7.60 per month)
More than half (56%) of mobile owners use less than half their minutes allowance each month; 21% of mobile owners use less than a fifth. The average person uses just 39% of their minutes
The humble SMS has been overtaken by apps such as WhatsApp and BBM, with the average Brit sending just two a week
More than one in 10 (12%) save more than £180 per year (£15 per month) by moving to new deals, while the average saving is £8.70 per month.
More than 9 million mobile phone owners could be forking out money each month for handsets that have already been paid off in full, according to new research by uSwitch.com , the independent price comparison and switching service. Almost a third (31%) of mobile users say they are currently on pay-monthly contracts that are up for renewal, and haven't yet switched to new deals.
Almost three quarters (71%) of Brits on pay-monthly contracts opt for deals that come with 'free' mobile handsets - where the handset is not paid for upfront but absorbed into the customer's monthly bill. This means that when the contract ends, but they continue to pay their bills, they are effectively paying for a handset that has already been paid off. If these mobile users switched to SIM-only contracts or new pay-monthly deals, they could save a staggering £1billion collectively – or £104.40 each –over a 12-month period.
And there's more reason than ever to find a new deal as almost a quarter (23%) of UK mobile users are regularly exceeding their data allowances, paying £7.60 per month in out-of-tariff data charges. This means that, annually, Brits are wasting more than £885million simply by not being on a contract that best suits their data usage.
However, one in ten (12%) manage to save as much as £15 per month, or £180 per year. The average Brit uses just 39% of their monthly minutes, while 21% estimate that they use less than a fifth of their talktime in a typical month. A tariff with fewer minutes may be cheaper and the average saved by those who switch deals is £8.70 per month.
Two thirds (67%) of Brits have switched mobile deals at least once, and a savvy quarter (25%) have switched five times or more. The average Brit has switched mobile deals four times, with most motivated to do so because they want a new handset (56%).
Meanwhile, 21% switched deals because they weren't using their monthly allowance of minutes, while 13% said it was because they were going over their minutes allowance. And 10% switched deals because they weren't using their monthly allowance of data, while 12% said it was because they were going over their data allowances.
However, texts are barely a consideration for most Brits. The average mobile user sends just two SMS text messages per week, as apps like WhatsApp and BBM take precedence.
Interestingly, a third (33%) of Brits have stayed loyal to the same network since they first owned a mobile phone. Almost a fifth (18%) say it's too much hassle to switch networks, while one in ten (10%) say the process is too complicated. However, the majority (64%) are simply happy customers. Those who have made the move to other networks (66%) have done so an average of 2.8 times. Most were motivated by cheaper deals with rival networks (58%), while more than a third (36%) did so because they wanted different handsets. Almost three in ten (28%) wanted better mobile reception, while almost a fifth (18%) were looking for better customer service.
Ernest Doku, telecoms expert at uSwitch.com, says: “Of those who sign up to pay-monthly mobile contracts, 71% of us opt for deals that come with 'free' handsets, rather than forking out for a phone upfront. But as the saying goes, there's no such thing as a free lunch - and these phones are not free either. Instead, the cost is simply absorbed into your monthly bill. That means, once your contract has ended, you are effectively continuing to pay for a phone you've already paid off in full. A quick fix is to switch to a SIM-only deal as soon as possible or – if you want a shiny new smartphone – consider switching to a new pay-monthly deal. From the outset, it makes sense to do the maths and work out the total lifetime cost of ownership. Sometimes it pays to spend a small amount upfront and go for a deal offering a lower line rental, rather than opting for a free phone with a hefty amount to pay each month.
“When picking a new deal, also choose a tariff that best reflects your actual monthly usage. Your current bill shows you how many minutes, texts and data you use in a typical month. Finally, if you have a smartphone, do pay close attention to your data usage, as out-of-bundle charges are likely to be costly.”
Survey conducted online via the uSwitch.com Consumer Opinion Panel in March 2014 among 1,639 mobile customers on pay-monthly contracts.
1. Respondents were asked: “Have you ever switched your mobile deal (ie the allowance of minutes, texts and data), but stayed with your network, so that you were paying more or less every month?” – 31.2% said 'no'. According to ONS there are 44.9million UK adults, 94% of whom own/use a mobile phone according to Ofcom = 42,206,000. 31% of 42m is 13,083,860. According to uSwitch deals data 71% opt for contracts with 'free' phones (where the handset is not paid for upfront). 71% of 13,083,860 = 9,289,540.
2. 9,289,540 x £104.40 = £969,828,038
3. 23% of 42,206,000 = 9,707,380 x £91.20 = £885,313,056
4. Respondents were asked: “If you usually exceed your data allowance, how much extra do you normally pay per month?” 10.6% said less than £5, 7.9% said £5-£10, 2.3% said £10-£15, 0.5% said £20-£25, 0.2% said £25-£30, 0.5% said £30+, 77.1% said nothing, I don't exceed my limit. The mean = £7.60 per month
5. Respondents were asked: “What portion of your allowance of minutes do you typically use in one month?” – 20.6% said less than 20%, 12.9% said 20-30%, 12.2% said 30-40%, 10.5% said 40-50%, 9.4% said 50-60%, 8.1% said 60-70%, 7.3% said 70-80%, 5.8% said 80-90%, 3.3% said 90-100%, 1.3% said more than 100%, 8.6% said I have unlimited minutes. The mean = 39.3%
6. Respondents were asked: “When you last changed your mobile deal, how much did you save per month?” – 31.3% said up to £5, 31.6% said £5-£10, 14.8% said £10-£15, 6% said £15-£20, 3.7% said £20-£25, 1.6% said £25-£30, 0.5% said £30-£35, 0.2% said more than £40, 10.4% said I now pay more. The mean = £8.70.
7. Respondents were asked: “Since you first owned a mobile phone, how many times have you changed your mobile deal?” – 14.9% said 1, 20.8% said 2, 21.2% said 3, 13% said 4, 10.4% said 5, 6.1% said 6, 2.7% said 7, 3.8% said 8, 0.5% said 9, 1.6% said 10, 4.9% said more than 10. The mean = 3.8
8. Respondents were asked: “Thinking about the last time you switched mobile deal, what were the reasons?” – 55.9% said I wanted a new handset, 14.2% said I wasn't using all my texts, 20.5%s said I wasn't using all my minutes, 10.1% said I wasn't using all my data, 5.5% said I was going over my texts, 12.7% said I was going over my minutes, 11.6% said I was going over my data, 20% said other.
9. Respondents were asked: “How many SMS text messages do you send per week (do not include messages sent via apps like WhatsApp and BBM)” – 46.2% said fewer than 25, 26.6% said 25-50, 11.6% said 50-75, 8.5% said 75-100, 7.1% said 100+. The mean = 2.0
10. Respondents were asked: “Have you ever switched mobile networks?” – 66.8% said yes, 33.2% said no. Those who said yes were then asked “Since you first owned a mobile phone, how many times have you switched mobile networks?”. The mean = 2.8 times.
11. Respondents were asked: “Which of the following reasons best explain why you haven't switched networks? (please tick all that apply) – 64.3% said they were happy with their network, 18.1% said too much hassle, 9.8% said it's too complicated, 7.8% said they can't be bothered
12. Respondents were asked: “Thinking about the last time you switched mobile network, what were the reasons?” – 57.6% said they were chasing cheaper deals, 17.6% wanted better customer service, 28.4% said they wanted better mobile reception, 35.9% wanted a new handset
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