During the launch of its new iD MVNO service, Dixons Carphone suggested that UK customers overall overpay on their mobile bills by more than £5bn each year. If you look at Ofcom’s figures, which state that the UK has around than 83.1m mobile subscriptions, then you can assume that this £5bn figure equates to an additional £60 per year for each person who owns a phone.
While that news will undoubtedly raise the collective eyebrows of mobile phone users, we would argument that if users paid more, the mobile industry would be able to offer substantially more benefits in return.
Users will undoubtedly object to paying more for what they already consider to be pricy smartphone contracts. But when considering the fact that UK mobile operators receive four times less average revenue per user than Japan, two and half times less than the US and one and a third less than the rest of Western Europe, maybe UK users are still paying less than they really should?
The lower average revenue per person generated by UK consumers translates almost directly into a lower spend on networks by mobile operators in the UK compared with other countries. A 2013 report in to Europe’s telecoms infrastructure found a 34% difference in investment per head between Europe (£111,000) and the US (£167,000). What’s more, the report found that European investment is declining at a rate of 4% per annum. The lower spend shouldn’t be surprising — the money to invest has to come from somewhere, after all.
Without the money to invest, operators cannot roll out their networks to deliver the coverage and capacity we need. Since poor coverage costs UK businesses over £30m a week as employees waste time hunting for mobile phone reception, the need to eradicate black spots has never been more pressing.
Without the money to invest, mobile operators are cutting costs by sharing networks, resulting in little differentiation between competing operators — something that could reduce competition out of the market in the long term. We used to have unrivalled levels of competition with five operators, but that number is soon likely to reduce to three.
The challenge for mobile operators is to persuade customers to use their voice and data services more to generate additional revenue for investment. The benefit to users of mobile is around 8–10 times that to the operators — a great investment in anyone’s money.