Average user overpaying by a £195 a year because they are on contracts that offer more minutes and texts than they use
UK mobile phone users are wasting a total of nearly £5bn a year because they are on the wrong contracts, according to a report.The overspend figure equates to almost half their spending every year on their mobile phone, or an average of £195, compared with an average spend of £439 annually.
Just over three quarters (76%) of people on monthly deals are paying too much, having signed up to tariffs after wrongly estimating how many minutes and text messages they use.
The study by Billmonitor, an Ofcom approved bill-analysis service, analysed millions of transactions from thousands of bills. It discovered that in total, Britain's 33m mobile subscribers are wasting nearly £5bn a year because of the problem.
But it points to the scale of the challenge for subscribers hoping to get the right contract, noting that there are more than 8.5m potential mobile tariffs available. Its calculation takes into account not only tariff and handset costs but also the costs for all usage – going line by line through the customer's bill to give a 'real bill' cost.
In general it says that overspending falls into three categories:
• 52% of those on the wrong contract are on a tariff that's too large for them, using on average just one quarter of their monthly calling allowance (with a total waste across the UK of £2.62bn);
• 29% of those on the wrong contract are on too small a tariff, wasting money on "out of allowance" calls,
texts, data usage as well as other costs that could be reduced with a larger tariff (total waste: £1.53bn); and
• 19% have the right level of inclusive minutes, but waste money by not optimising free benefits, data
& text allowances as well as other costs, or taking advantage of lower costs from 24 month contracts (total waste: £0.74bn).
Only 24% of people are "not wasting anything", according to Billmonitor, set up by mathematicians in Oxford, which compiled the figures after analysing nearly 28,500 anonymous mobile phone bills. The study found that the average person spent £439 a year on their mobile phone.
Customers spent £719m a year calling premium numbers and sending premium-rate texts from their mobiles, while £502mn was spent calling and texting while abroad and £1.36bn was spent on roaming charges.
Just over three quarters (76%) of people on monthly deals are paying too much, having signed up to tariffs after wrongly estimating how many minutes and text messages they use.
The study by Billmonitor, an Ofcom approved bill-analysis service, analysed millions of transactions from thousands of bills. It discovered that in total, Britain's 33m mobile subscribers are wasting nearly £5bn a year because of the problem.
But it points to the scale of the challenge for subscribers hoping to get the right contract, noting that there are more than 8.5m potential mobile tariffs available. Its calculation takes into account not only tariff and handset costs but also the costs for all usage – going line by line through the customer's bill to give a 'real bill' cost.
In general it says that overspending falls into three categories:
• 52% of those on the wrong contract are on a tariff that's too large for them, using on average just one quarter of their monthly calling allowance (with a total waste across the UK of £2.62bn);
• 29% of those on the wrong contract are on too small a tariff, wasting money on "out of allowance" calls,
texts, data usage as well as other costs that could be reduced with a larger tariff (total waste: £1.53bn); and
• 19% have the right level of inclusive minutes, but waste money by not optimising free benefits, data
& text allowances as well as other costs, or taking advantage of lower costs from 24 month contracts (total waste: £0.74bn).
Fact
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Only 24% of people are "not wasting anything", according to Billmonitor, set up by mathematicians in Oxford, which compiled the figures after analysing nearly 28,500 anonymous mobile phone bills. The study found that the average person spent £439 a year on their mobile phone.
Customers spent £719m a year calling premium numbers and sending premium-rate texts from their mobiles, while £502mn was spent calling and texting while abroad and £1.36bn was spent on roaming charges.
Users also doubled their use of data in a year, surfing the web on their smartphones, and sending an average of 300 texts a month.
The results in this report are based on statistical analysis of 28,417 anonymised bills from customers with mobile contracts on O2, Orange, Vodafone and T-Mobile covering usage over the last 18 months. The analysis was carried out by the Billmonitor team together with Billmonitor's science advisers, Professor Chris Holmes and Dr Nicolai Meinshausen (both from Oxford University).
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