Battle of the airwaves
They want your business and they'll dazzle with deals to get it
Saturday 22 August 1998
The magic 10 million figure for mobile phones in use in the UK, about 17 per cent of the total population, is expected to be breached any day now. Hans Snook, Orange's chief executive, expects mobile phone penetration to rise from today's figure to 50 per cent of the population by 2004.
But consumer complaints have kept pace with the meteoric rise in the mobile's usage. The most common criticisms concern high costs and the proliferation of offers which leaves the potential consumer desperately seeking simplification.
Moreover, many potential users resent the often confusing, and sometimes unfair, small print in the contracts they are asked to sign by mobile phone suppliers. The legal director of the Office of Fair Trading (OFT), Pat Edwards, announced in a report on unfair contracts in March 1997: "It's time to cut the jargon and use plain English."
Part of the problem is that potential shoppers find themselves at the centre of a tug-of-war between handset suppliers, mobile telephone providers who apply different charges and "service providers" who are free to tweak deals on offer from the providers. In fact, most providers are now moving to wrest back control of the services they offer and deal directly with customers.
The good news is that the mobile phone industry appears to be listening. It is now standard for a notice period of one month to end a contract, disconnection charges are rarely applied nowadays, and most contracts include a change-of-mind period of 14 days. John Bridgeman, director- general at the OFT, says: "Consumers can now be more confident of not being confused and penalised by small print."
But even though individual companies have made a concerted effort to create comprehensive deals, shopping around today is just as complicated as it ever was. Especially when the consumer attempts to compare like with like and when deals are changing all the time in the raging price- wars.
And prices are falling. A Cellnet spokeswoman says: "Prices are definitely coming down. Competition out there is getting harder and harder. Whether the fact that so many more people are taking up mobile phones is down to price is harder to say."
In June, Vodafone reduced its standard off-peak local and national calls to 5p per minute. Orange matched that figure as well as announcing its "Network Performance Promise", a John Lewis-style guarantee to match tariffs available on rival networks.
Competition between the four leading mobile phone companies - Cellnet, One 2 One, Orange and Vodafone - is intensifying as they move closer in the prices and services they offer; and it is often only the difficulty in comparing the packaging terms that puts a gloss of difference over these similarities.
One of the fastest-growing areas in mobile phones is that of pre-payment, which has captured 23 per cent of the market within two years or so. Customers buy a phone and pay in advance for calls, rather than by monthly bills. This can be an attractive alternative to the minimum-term contract, with its monthly bills and monthly rental charge.
Recently Cellnet launched a new digital pre-pay mobile phone package called Easylife. This comes with a Philips "Diga" handset costing pounds 119.99: you make one call to register, purchase the airtime and start talking straightaway. There is no contract to tie you down and no monthly bills.
Topping up your call credit is simple, by using credit or debit card or by Easylife vouchers which are available in a wide range of outlets. Cellnet and other providers offering a similar service claim pre-pay packages are particularly popular with students and those who prefer to avoid the encumbrance of monthly bills. They pay only for what they use. Calls cost 49p per minute for all UK numbers, however, which is an expensive way of calling your girlfriend to let her know you are just on your way.
Is the future contract-free? Cellnet launched a new fair-deal programme, First, last month. It is specifically designed to remove the worry of signing up to the wrong call plan by always giving you the lowest monthly charges irrespective of which digital call plan you have signed up to. A spokeswoman says: "We monitor the call pattern each month and if it shows that the person would have benefited by, say, pounds 12.73 from another call plan, we simply refund the money back to them."
First is free to join and the Cellnet customer can choose whether to sign a contract or not with the First in Freedom scheme. However, if you do decide to commit to Cellnet for between one- and five-year terms, you will receive call discounts of up to 15 per cent. The scheme also offers First for Families or First for Firms which offers 50 per cent discount on calls, similar to BT's Friends and Family scheme.
So fierce is the competition, such a scheme is likely to be replicated by all phone providers within the next few weeks.
"Customers have many different needs," says the Cellnet spokeswoman. "A business person will have different requirements in terms of when he or she is calling, and where, compared to a housewife. We aim to offer everyone the right deal for them."
Cellnet's initiative does beg the question of whether the plethora of different contracts available, which sometimes only serve to confuse people, really make sense. By moving people from one set of terms to another, phone providers are admitting that the market segmentation now carried out may not accurately reflect the diverse pattern of even one individual's usage.
If so, how long will it be before we return to the old-style practice of far fewer sets of charges for everyone? Weren't land lines once like that? Either way, with competition as strong as it is today, the customer really is king.
Cellnet: 0990 214000; One-2-One: 0500 500121; Orange: 0800 801080; Vodafone: 0800 101112.
More mobiles, page 2
Don't sign up before you've asked ...
Do you offer a 14-day return scheme?
Do you require a month's notice for termination of contract?
What is the cost of disconnection/breaking a contract?
Can I choose a contract that lasts for the standard 12 months?
What is the geographic coverage for a hand-held mobile?
Do you offer per-second billing?
Is your itemised billing free of charge?
What is your rollover allowance if I don't use up any free minutes within the allocated period?
Do you offer free phone numbers, such as voicemail deposit and retrieval?
What "roaming" facilities do you offer and what are your standard charges for international calls?
HOWEVER meticulous your research, you cannot guard against the unpredictable.
Nick Owens, who works for London's Haringey council, chose a mobile phone deal that offered free itemised billing. But right from the start he was charged for his bills.
He contacted the high street shop where he had bought his mobile, only to be told to contact the mobile company. "Neither was prepared to admit it was their responsibility."
Eventually, he was refunded for the first month's itemised bill, but continued to be charged from then on. "As you pay up-front, they don't have to offer the quality. They've got the upper hand; if you don't pay they can always cut you off. I threatened to take them to court but it seemed a waste of time."
However, his itemised bills did have one advantage as they allowed him to see which phone numbers he called and also the cost of calls. He noticed that 0181- and 0171- numbers which he called from London were being charged at peak rates. "I wrote to them but they just ignored my letters. In the end, I cancelled my direct debit and told them that any outstanding charges would cover what they owed me."
Next time round he went to a Vodafone own-shop. "So far I have had no problems, but I did spend a long time going into all the details."
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