Thousands of Kiwis paying too much on cell phone bill: watchdog

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The finding has triggered the commission to send a letter to Spark, Vodafone and 2degrees telling them they should improve consumer choice by providing easier to understand comparisons between plans. Photo: Getty Images
The Commerce Commission says thousands of Kiwis are paying too much for their mobile phone bill.

The market watchdog says it commissioned analysis of 80,000 phone bills that found:

• a quarter of post-paid (contract) consumers could save an estimated average of $11.60 a month by moving to a cheaper plan that would still cover their usage.

• 7 per cent of all residential consumers spent a relatively high amount on mobile services, given their usage, and that these consumers could potentially save an average of $48.65 a month.

The ComCom's big-picture finding was that although Spark, Vodafone, 2degrees and Spark-owned Skinny offer cheaper service than operators in most OECD countries, punters aren't always seeking out the best plans.

The survey found 64 per cent of consumers did not change plans during the 12-month review period (September 2018 to August 2019).

The finding has triggered the commission to send a letter to Spark, Vodafone and 2degrees telling them they should improve consumer choice by providing easier to understand comparisons between plans, which it says will help prevent over-spending.

"It isn't surprising that 64 per cent of consumers did not change plans during the review period as it's often incredibly difficult to compare plans and services between providers," Craig Young, head of consumer lobby group the Technology Users Association of NZ told the Herald.

His group encouraged phone companies to follow the ComCom's recommendations.

Non-profit budget advice service FinCap said, "It is alarming to see that a quarter of mobile phone users are paying on average $11.60 monthly more than they need to for their mobile phone usage.

"Some people may be able to absorb this extra cost in their household spending, but for others this overspending may mean they fall behind in their payments.

"The consequences of falling behind on mobile bills could include bills being sent to debt collection or that customers experience drops in credit ratings. These measures can be very harmful to vulnerable consumers."

Telcos fight their corner

A spokeswoman for Vodafone said, "Essentially this report confirms that mobile telecommunications is one of the most competitive sectors in our economy, and that most New Zealanders shop around for the best mobile deals."

She added, that if you reverse the figures given in the ComCom research, you could deduce that 36 per cent of consumers who bought base plans switched during the 12 month period – more than one-third, which is significantly higher than the electricity sector where average churn is understood to be around 20 per cent, and banking is even lower at around 14 per cent.

"If anything, these comparisons show the level of churn is already too high, creating unnecessary costs for the industry," she said.

"While the report states around 7 per cent of residential consumers spend a relatively high amount on mobile services, given their usage" – the inference is that 93 per cent of consumers are playing a fair amount.

"Customers choose plans for a variety of reasons, and it's not as straightforward as looking just at data allowances vs usage and price. Some people want free social data or calls to Australia – or certainty they won't run out of high-speed mobile data."

She said Vodafone regularly contacts its customers to inform them of the best plans available to them.

"For example, we run quarterly campaigns to inform customers on older post-pay plans about our new deals. We also proactively contact customers nearing the end of a promotion, informing them that the offer is coming to an end and options of plans that might be right for them. All customers can check recent [past two months] usage on the My Vodafone app."

She underlined that in September 2019, the Commerce Commission released a report into New Zealand's mobile market concluding there is a strong level of competition, with Kiwis paying less than the OECD average for mobile services.

Key problem with survey

A spokeswoman for Spark said while it was working to simplify its systems, the telco already offered customers a lot of data about their monthly usage.

She also raised an objection to the survey's methodology: it looked for people who switched plans, but not who switched telcos - a process that by necessity involves switching plans.

"The commission's expert Aaron Schiff also notes that his analysis excludes customers who switched mobile service providers during his sample period: September 2018 to August 2019. As a result of these study limitations, and the changes we have made to our mobile plans since that sample period, the savings quoted by the commission should be treated with appropriate caution."

2degrees emphasised a similar point, noting that "New Zealand one of the easiest countries in the world to switch providers."

A spokesman for the Commerce Commission replied, "We consider the study to be representative of market dynamics generally.

"Both our mobile market study and our mobile bill review show that most consumers don't switch very often, either to another provider or to another plan with the same provider, with the average consumer in our mobile bill review staying with their provider for more than four years.

"Giving customers easy access to meaningful usage and spend information will help consumers choose the best plan for them whether that's with their current provider or a new provider."

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