Ofcom pushes for fairer pricing for UK customers

Ofcom’s latest pricing trends report found that UK consumers pay less that in France, Germany, Italy, Spain and the US for their services, with the average cost of mobile calls, text and data packages (ARPU) now £13 per month, which is £2 lower than in 2018.
Although the report focuses on what UK consumers pay for broadband, phone and pay-TV services, its findings are important for B2B service providers to be aware of for a number of reasons. Firstly, because many business customers are still on consumer packages (homeworkers, microbusinesses, sole traders etc), and secondly because consumer pricing and engagement naturally influences business services pricing and engagement.
This year’s report notes the rise in the popularity of SIMO (SIM-only deals), which decouples the buying of telecoms services from the buying of handsets, with 38% of customers now taking this option. This is an important trend that B2B service providers should be aware of and be baking into their business models. Many customers don’t want to have to carry two handsets – one for work and one for home – and dual SIM handsets mean that this is no longer a necessity. Likewise, they don’t want to renew their handsets as frequently as in the past, or are looking for cheaper deals.
The Ofcom report also highlights that many customers are paying more than they have to, which creates a market opportunity to target them. It says that around three-quarters (73%) of out-of-contract mobile customers could save an average of £11 per month by switching to a SIM-only deal. While out-of-contract broadband customers could save £8-10 per month by moving to a new deal. It’s unsurprising that with such an acquisition-focused strategy, loyalty continues to decline, with a third more contract customers switching in 2019 than over the previous 12 months.
Meanwhile customers are feeling the need for speed. In the last 12 months, take-up of superfast broadband has increased by a fifth.
To ensure fairer pricing, Ofcom  has secured commitments from service providers to reduce the prices out-of-contract customers pay, and from 15 February 2020, broadband, phone and TV companies must tell their customers when their contract is coming to an end.
Ofcom continues to focus on improving the satisfaction ratings in telecoms which currently stand at 93% for mobile, 86% for broadband and 83% for landline services. It has joined forces with regulators in the water, energy and banking sectors to compare how customers rate the biggest companies who provide services to them.  The aim is to make it easier for broadband, landline and mobile customers to find which companies perform best for customer satisfaction, complaints and value for money.
Inevitably, these changes will drive up expectations that business customers are also able to see the performance of different B2B service providers and ensure they’re on the cheapest or best deals. Providing analysis of customer spending – for example, highlighting the end of contracts or discount periods – and driving up transparency is going to move from being a differentiator to being table stakes rapidly in the next few years. B2B service providers should be aware that their customers will increasingly expect similar service levels and features to B2C customers, and ensure they are able to provide them.

Morgan Lewis
Morgan Lewis

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