Mobile contracts 'better value for money' in 2018

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UK customers are getting better value for money than they were ten years ago, but not everyone is benefiting as much as they could be.

Ofcom says that as a proportion of household spend, the cost of landline, broadband, mobile and pay TV has fallen eight percent in real terms. This is despite the wider availability of advanced services such as superfast broadband and 4G networks.

The amount of data transmitted over fixed broadband networks has risen 44 per cent within a year and 45 per cent over mobile. Indeed, the average data consumption per SIM has risen from 1.4GB to 1.9GB over the same period, but the cost per gigabyte has fallen from £0.74 to £0.11 since 2012 in real terms.

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The advent of triple-play and quad-play packages of services, the shift from pay as you go tariffs to pay monthly and intense competition in the sector has also improved matters. And that’s before you consider over-the-top services like Netflix and Amazon disrupting the market.

For fixed broadband customers, many could upgrade to superfast broadband at no extra cost. Additionally, those who only take landline services are now paying £7 a month less thanks to Ofcom’s intervention.

However Ofcom is concerned that not everyone is benefiting from this trend. It says the biggest savings are to be had by consumers who are engaged with the market, whereas those who don’t actively participate tend to pay higher prices.

Around 1.5 million mobile customers whose deal included a handset continue to pay the same amount after their contract has expired – even though the device has been paid off. Even if they exit their contract upon expiration, Ofcom believes most users will have paid more than if they purchased the device and a SIM-Only tariff separately.

In the case of the iPhone 8, this could be as much as £200 – more than the interest rate of most credit cards.

The regulator noted that although monthly allowances are becoming more generous, out of bundle charges are becoming more expensive. Indeed, a one-hour phone call costs 36 per cent more than in 2012.

There’s also a warning about fixed broadband contracts. Many subscribers enjoy a promotional introductory offer before being bumped onto the normal rate. Ofcom says most people can renegotiate for a better deal.