Consumers left bewildered by mobile and broadband packages

Thu, Jan 31, 2013, 00:00

Large numbers of Irish consumers are afraid to shop around for better value when it comes to telecommunications while those who do switch providers frequently sign up for the most expensive packages by mistake, new research indicates.

An analysis of consumer behaviour carried out by the ESRI and published this morning found that the complexity of the broadband and mobile telephone market place has made it difficult for consumers “to assess the benefits of different offerings accurately”.

According to the institute’s Peter Lunn, reluctance to switch providers in search of better value is often put down to some kind of “irrational” loyalty or inertia but he suggested another possibility was that many consumers were not competent to decide on which package, from among many alternatives, offered best value.

He said international research suggested that “a large proportion of telecoms consumers” choose the wrong option for their usage even if there are only three or four alternatives presented to them.

He said many consumers were unable to chose phone and broadband tariffs to match their usage because of a “lack of self-control and over-confidence”. Effectively, people sign up for what look like low-cost tariffs but they exceed their allotted minutes or download allowance and are then charged penal rates by providers.

Mr Lunn said telecommunications providers make around twice as much profit from consumers who pick the wrong tariff.

He suggested a number of options to reduce the impact of product confusion on consumers, including the placing of regulatory limits on penalty rates for exceeding allowances and regulatory changes which would force providers to fully disclose the impact of certain tariffs on average consumers, and more transparent billing services.