Mobile Operators Should Improve Consumer Choice Through Easier Comparisons

The Commerce Commission has told New Zealand’s three mobile network operators that they should provide more meaningful comparison information and guard against overspending by mobile phone consumers.

The Commission today published the open letter it sent to Spark, Vodafone and 2degrees outlining 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 mobile bill review found 64% of consumers did not change plans during the 12-month review period. It 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. It also found that 7% 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 says.

“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.

“We expect 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.”

The Commission has 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,” Mr Gilbertson says.

“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.”

The mobile bill review showed that consumers who proactively manage their mobile plan are better placed to match their usage and spend. The Commission is 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.”

More information on the mobile bill review can be found here.

Background

Telecommunications (New Regulatory Framework) Amendment Act
The Commission’s new Retail Service Quality work programme is made possible by recent amendments to the Telecommunications Act. These changes are intended to increase consumer safeguards and provide more regulatory oversight of retail quality standards and dispute resolution processes. The Act enables the establishment of regulatory codes if industry-led codes do not exist or are inadequate. The Act will also see the Commission periodically review the existing Telecommunications Dispute Resolution service.

We completed our study of mobile markets in New Zealand in September 2019, gaining a better understanding how mobile markets are developing and performing and how the competitive landscape for mobile may evolve as technology changes. We concluded that the conditions for effective competition existed, while identifying room for improved consumer engagement and possible consumer inertia, which required further investigation.

We commenced the mobile bill review in May 2019 seeking to better understand the usage and expenditure patterns of residential consumers in the mobile market and the extent to which these consumers could save money by changing their purchasing behaviour. The review analysed an anonymised random billing data sample of almost 80,000 mobile consumers for the 12-month period of Sept 2018 to Aug 2019.

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