UK Report Shines Bright Light On Mobile Phone Costs

Cellphone In London

Oxford mathematicians have developed a tool that allows British consumers to analyze their mobile phone bills and figure out the most affordable subscription plan.

Their analysis suggests that shifting to the right plan (one more atune to actual usage) would save British consumers £4.899 billion annually. That’s $8 billion. (If the comparison were one-to-one, that would be equivalent to a $40 billion in savings in the U.S. market.)

That money, of course, is going into the pockets of telecos and then on to …. who? Stockholders? Senior executives? Infrastructure improvements? Advertising?

Telecos count on us (consumers) to pick plans that overshoot our needs; it’s one reason there are huge penalties for exceeding the monthly plan. And it’s why, at least in the U.S., if you want to change your plan, you are (as a general rule) stuck with an additional 24 month contract with that teleco.

Questions:

• What is the cost of UK cell phone “talk” plans? Is there evidence of monopolistic competition, ie, does each teleco have the same “minutes scale” and how similar are the pricing plans? [I tried to test this for my market, Western Washington, but Verizon Wireless website is broken at the moment.]
• What is the regulatory scheme for wireless telecos? In other words, how easy (or difficult) is it for the companies to change their plans (minutes, cost per plan)?
• What are the ramifications of changing plans? In other words, what is the average contract term in the UK and how does changing a plan affect that contract?
• If everyone shifted to a plan that more closely reflected their actual use, what would the net loss of revenue mean for the teleco sector?

This video should be on your must-watch list even if you live somewhere other than the UK:

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