The real cost of hidden deals
The real cost of hidden deals report 2.24 MB
Executive summary
Finding a good deal for your mobile and broadband services isn’t always easy or straightforward. Our research from earlier this year raised concerns that many of the best renewal deals are only available to consumers that ring up to negotiate when their contract ends - we call these ‘hidden deals’.
Negotiating at the end of a fixed-term contract is the most popular action consumers take, more common than switching or taking out a new contract with the same provider without negotiating. Even so, Ofcom has focused more on making switching easier as a way of improving consumer outcomes, and not done enough to address problems with the negotiation process.
And those problems are significant. Most telecoms consumers that negotiate on the phone at the end of a contract found at least one step of the process difficult, and most experienced a negative consequence - like stress or worsened mental health - because of the process. These problems were even more pronounced for certain groups of vulnerable consumers, such as those with mental health problems and those experiencing financial difficulty. On top of this, consumers are paying different prices for the same telecoms products or services, which can cost hundreds of pounds extra a year.
This whole process lacks transparency around what prices are available to telecoms consumers. We can break this down into three main information asymmetries:
Consumer vs provider: Consumers don’t know about all the tariffs their provider can offer.
Consumer vs market: Consumers don’t know how much other consumers are paying for the same services.
Provider vs provider: A consumer’s current provider knows more about their usage and spend than competitor providers and can offer more tailored deals.
Negotiating for a better deal on mobile or broadband contracts is a difficult and opaque process, and it is not working well for consumers or for healthy competition. We’re calling for an end to hidden deals and for Ofcom to tackle the information asymmetries in this market to make negotiation unnecessary. They can do this by:
Making End of Contract Notifications more useful to consumers
Eliminating difficult processes that make it harder to access good deals
Publishing more data on how much consumers pay for mobile and broadband
Using open data in mobile and broadband to improve competition