Mobile bills: it's time to reverse the charges
Don't rely on the regulators to cut your phone bills down to size, says David Prosser
Saturday 31 March 2007
t's a tough time to be a mobile phone company executive. The six big networks are under attack from regulators at home and in Europe, facing new rules that will cost them hundreds of millions of pounds a year.
Last month, the European Commission announced it would set tough caps on the prices mobile networks can charge when customers use their phones outside of their home country. Back in the UK, Ofcom said on Wednesday that it would set similar caps on connection charges between different networks.
The Ofcom crackdown requires the mobile phone companies to cut their prices when they accept calls from rival networks, or from landline providers. So, for example, if you call a Vodafone phone from your BT landline or your Orange mobile phone, you should now pay lower prices.
However, while consumer groups have welcomed Ofcom's ruling, they warn the new rules will produce small savings for each mobile phone user. "I expect the impact on customers will be minimal," says Rob Barnes, head of mobile phones at price comparison service Moneysupermarket. "Savings will perhaps be 0.5p to 2p a minute and it is also likely the networks will attempt to recoup lost revenue in other ways."
One possibility is that the networks will cut back on the very generous subsidised deals for mobile phone handsets. Increased charges for calls and texts are also possible.
It's also likely that the big beneficiary of Ofcom's ruling will be people using landlines to call mobile phones. If you're calling a different mobile phone network from your mobile, the two companies will both be losing out because of Ofcom's ruling, so they're likely to adjust their prices accordingly.
In other words, mobile phone users can't depend on regulators to ensure they get the best possible deals. "Customers calling mobile to mobile are still being charged unnecessarily high prices," warns Karen Darby, chief executive of price comparison service Simply Switch.
On the other hand, take action personally in order to cut your mobile phone costs and you're likely to save hundreds of pounds more than Ofcom or the European Commission will ever deliver.
The key to paying as little as possible for your mobile phone is to work out exactly how you use it: the number of phone calls you make; the text messages you send; who you call - landlines or mobiles; and whether you use it during peak hours, essentially between seven in the morning and seven at night during the week.
Armed with that information - look at your last six months of bills to get the most accurate picture - you can decide whether a contract deal or pay-as-you-go service makes most sense. (See story below.) Either way, to save the most money you need to find the tariff that best suits your user profile.
It's a difficult balance. Opt for a tariff that assumes you're a heavier phone user than you really are and you'll overpay, particularly on contract deals where there's a large monthly fee levied in return for lower call charges. But underestimate how much you use your phone and you'll be caught out by higher call charges.
Anthony Ball, a director of OneCompare, the independent phone price comparison service, says the latter mistake is more common. Research conducted by his company suggests six in 10 mobile phone users on contract deals admit they exceed their monthly calls and text message allowances. As a result, they pay an average of £120 a year in excess charges.
"Many consumers are willingly throwing their money down the drain," says Ball. "Strangely, it has become a given that our mobile phone bill will exceed our monthly price plan - consumers should look at their bill regularly to help them to understand what type of tariff will suit them best when it comes to reviewing their contract."
Martin Lewis, founder of consumer advice website Moneysavingexpert.com, says there are so many tariffs on offer to mobile phone users that it's not worth trying to do the comparisons yourself. He advises using the automated services on Moneysupermarket.com and OneCompare.com; the latter includes more parameters and therefore should give a more accurate tariff recommendation.
However, finding the best tariff is only the first half of the equation, Lewis adds. "The price you actually pay depends on the retailer and the discounting available in some shops can make a huge difference to the cost of the tariff," he explains.
OneCompare has some information about retailers' deals on its website, but it's worth doing your own research too. In general, Lewis advises avoiding the big chains, such as Carphone Warehouse and The Link, in favour of small online retailers such as e2save.com, dialaphone.co.uk and mobileshop.com.
To seal the deal, go back to your current network. Check first that you don't have to pay any charges to switch to a new deal with it or a rival. If you're planning on leaving the network it's worth asking them to match the price you've been offered elsewhere. Networks are often desperate to retain customers and very happy to haggle.
Staying with your current network is also convenient, because there is then no hassle with transferring your phone number to a rival provider. But never let this stop you from switching to a cheaper deal elsewhere.
Calls home from abroad
* The EC is in the process of cracking down on the big mobile phone companies, because they charge so much for calls from one country to another.
* The networks will have to cut "roaming charges" - the calls you pay to use another company's network while abroad - but for now using your existing mobile overseas remains very expensive.
* Pay-as-you-go phone users can be hard hit. For example, 3 customers have to pay £1 a minute to make calls while they're elsewhere in Europe. Contract customerscan pay through the nose too. Vodafone charges up to £1.49 a minute for calls back home.
* Check if your network offers any special overseas tariffs. O2s Chosen Country bundle and Vodafone's Passport service can produce big savings.
* Consider buying a global SIM card. Once inserted in your phone, these cards put you on to a different phone network, where you'll pay much lower charges, though you will also have a different phone number so remember to leave a message on your normal SIM card. More details are on www.onecompare.com.
Pay as you go or contract?
* Most people have a choice about how they pay for their mobile phone.
* As long as you have a decent credit rating, one option is to go for a contract deal. You use the phone as often as you like for calls, texts and data connections and then receive a monthly bill for line rental and charges.
* The alternative is a pay-as-you-go deal. You pay in advance for using the phone, topping up the handset by buying vouchers or electronic credits.
* Martin Lewis of Moneysavingexpert.com says: "As a rough rule of thumb, use less than 150 minutes of calls and 100 texts a month and pay-as-you-go will work out cheaper."
* This is because while calls and texts are more expensive on pay-as-you-go deals, there's no monthly line rental to pay. Use the phone sparingly and the more expensive call charges won't cancel out this saving.
* There are other issues to consider, however. The big advantage of a contract is that you don't have to worry about making sure your phone has enough credit. The phone is always available for use and you never have to find an outlet to buy top-ups.
* In addition, the cost of handsets are usually much more heavily subsidised on contract deals. If you want anything other than a very basic phone, you'll have to pay substantially more for it if you opt for a pay-as-you-go deal. That said, you may be able to save money by buying a new SIM card and putting this into your current phone.
* On the other hand, sign up to a contract deal and you will usually be locked in for at least a year. If a cheaper contract comes up elsewhere or you want to change phones, you may have to pay penalty charges to get out of your existing arrangement.
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