ComCom to telcos: provide consumers with meaningful comparison information
- 17 September, 2020 07:44
Tristan Gilbertson (Commerce Commission)
The Commerce Commission has told NZ’s mobile network operators they should provide more meaningful comparison information and guard against overspending by consumers.
In an open letter to Spark, Vodafone and 2degrees, the regulator outlined its review of nearly 80,000 consumer mobile bills, which followed on from its 2019 study into the state of competition in the mobile market.
The review, which also included bills from Spark's Skinny brand, found 64 per cent of consumers did not change plans during the 12-month review period.
The review found the average customer spent $33.85 per month, with the average postpaid customer spending more than twice as much as the average prepaid customer ($49.86 versus $21.65 per month).
It also found a quarter of post-paid consumers could save an estimated average of $11.60 a month by moving to a cheaper plan that would still cover their usage.
Further, 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.
“Our work suggests that some consumers are significantly overspending on their mobile plans due to transparency and inertia problems in the market,” Telecommunications Commissioner Tristan Gilbertson said.
“We want to see the industry catch up to other sectors, like electricity, where consumers and comparison websites are making good use of the ability to compare usage and pricing."
Vodafone NZ said the report confirmed that mobile telecommunications is one of the most competitive sectors in the economy and that most New Zealanders shop around for the best deals.
The telco's initial observations included 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 and significantly higher than the electricity sector where average churn is understood to be around 20%, and banking is even lower at around 14%.
"If anything, these comparisons show the level of churn is already too high, creating unnecessary costs for the industry," Vodafone 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 paying a fair amount."
Vodafone said there were a number of technical details its regulatory team would be working through to respond to ComCom's request.
"Customers choose plans for a variety of reasons, and it’s not as straight forward 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."
Vodafone said it regularly contacted customers to inform them of the best plans available to them, including running quarterly campaigns to inform customers on older post pay plans about our new deals.
Spark said it already provided customers with monthly information on their usage of voice, and text services, as well as hourly, daily, and monthly usage information on data services for a 12 month period, all of which customers could access through their Spark app or MySpark account.
"But we’re always looking for ways we can improve our customers’ experiences so in light of the commission’s views, we will assess with our customers whether providing historic usage for SMS and calling would be valuable for them, allowing for the fact that the vast majority of our plans in market include unlimited SMS and calling," the company said in a statement.
"It is also important to note that our customers choose plans on factors beyond just data, SMS and calling – including the value added services we offer in a number of our plans (such as Spotify and Netflix), which are very popular.
"As the Commerce Commission recognised, it is difficult to factor that value into an analysis like this."
Spark said the commission’s expert, Aaron Schiff, also noted that his analysis excluded 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."
In a strategy update yesterday, Spark said it would be simplifying its services, and delivering more personalised and intuitive experiences for our customers.
"As we reduce the number of plans we have in market and move customers off legacy technology onto newer modern technologies, we are engaging with customers and advising them of their options to help them identify the most suitable plans available to them.
"For example, for customers who are on capped mobile plans and often get charged overage fees we have suggested they move to our 'Endless' plans for unlimited data and price certainty."
Gilbertson said the commission expected the operators to address these issues by increasing the usage information available to consumers and implementing measures to help keep consumers on plans that best reflect their actual requirements.
"This will improve transparency, empower consumers to make better choices and guard against overspending," he said.
The Commission also encouraged the wider industry to initiate a programme of work on a “consumer data right” so consumers can choose to share their usage, spend and product information with competitors and comparison services to help inform their decisions.
The Commission has asked the industry body, the Telecommunications Forum, to look at an industry-wide initiative in this area.
“We’ve identified important opportunities for the industry to step up to improve consumer outcomes,” Gilbertson said.
“We’ll review the industry response in our retail service quality work programme, which is focused on addressing key customer pain points across the industry as a whole, with a view to taking more active measures if required," he said.
The mobile bill review showed that consumers who proactively manage their mobile plan are better placed to match their usage and spend.
The commission was working with advocacy groups to raise awareness and support consumer choice.
“Our work shows that consumers need to ask themselves how much money they could be saving. Most mobile plans can now be changed monthly so it just might pay to shop around to see if you can find a better deal.”