Sunday, March 4, 2012

Ofcom: Consumers do not Understand how Mobile Data Works, so they Pay!

The UK regulator, Ofcom, published a "an action plan to tackle the problem of unexpectedly high phone bills including publishing new online consumer advice." 

Ofcom action plan "to tackle unexpectedly high bills" consists of "Extending EU Roaming Regulation, Encouraging providers to set financial caps, Exploring introduction of maximum liability limits and Reminding providers to make tariffs transparent"

On the mobile data part, Ofcom finds that bill shock resulting for excessive data use is particularly challenging (see the document - "Review of Unexpectedly High Bills /Findings and Next Steps" - here):

Source: Ofcom

"It is likely to be particularly difficult for consumers to prevent unexpectedly high bills arising in respect of data services (without becoming so risk-averse that they do not benefit fully from the services and applications that are available). Usage alerts could help consumers to ‘learn’ to estimate data usage, but they are still likely to find it difficult to estimate the cost of data usage once they have used up their inclusive allowances, or if they use data services not included within their allowances"

"There are three reasons for this, which we identified from what consumers told us in their complaints to us and in their responses to the Call for Inputs:

a) First, there is no clear relationship between time spent using the service and the cost incurred; it is harder to estimate the cost of downloading a video, which is charged per megabyte (“MB”), than it is to estimate the cost of making a phone call, which is charged per minute.

b) Secondly, smartphones are complex devices and the evidence we have gathered suggests that some consumers do not understand fully how they work. For example, consumers can inadvertently download emails or software upgrades, or can download data via a mobile network when they think they are doing so via a Wi-Fi connection.

c) Thirdly, charges for downloading data tend to be much higher once consumers exceed their allowances.

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