Consumers pay more to insure against mobile phone bill shock, research finds

Mobile phone customers are paying more for their plans than they need to and may need the skill of an accountant or maths honours student to properly unpick the detail of telco plans, Deakin University researchers have found.

In a series of in-depth interviews commissioned by the Australian Communications Consumer Action Network (ACCAN) to look at whether consumers can understand telco plans, Deakin researchers Associate Professor David Bednall and Professor Michael Polonsky found:

* Consumers only had a limited understanding of data and what common apps used,
* Consumers feared 'going over' or exceeding their call, data or text allowances and as a result bought a plan that was larger than what they really needed,
* Consumers rarely looked closely at the detail in the plan, with some finding them overly complicated and difficult to understand. Instead they chose a plan in other ways based on numbers of calls and texts, certain amounts of data, pre-history with a supplier or family and friends' advice.

"Unit pricing was introduced by mobile phone companies following the revision of the industry code by the Australian Communications and Media Authority (ACMA) in 2012," Associate Professor Bednall explained.

Associate Professor Bednall said consumers could use the unit pricing to work out the costs involved when the researchers asked them to do so.

"But most people normally cannot be bothered or are too busy to go into the detail of the plan on offer," he said.

"Where plans offered unlimited or infinite capacity for some features, unit pricing became irrelevant."

Associate Professor Bednall said consumers had difficulty comparing plans to work out the best value.

"Only two of our interviewees, one a maths honours student, the other an accountant, were able to work out what they considered the best value," he said.

"One of them actually entered the figures into a spreadsheet and based on their usage worked out the best value plan.

"However for most people that's too complicated."

Associate Professor Bednall said key issues in evaluating mobile phone plans was people's understanding of data and worry about 'going over' their monthly allowance.

"People have a broad idea of what their plan entitles them to, and are satisfied so long as it insures them against going over their limit", he said.

"There was some uncertainty about data in the sense that people do not really know what a Megabyte or Gigabyte means in terms of using their favourite apps. People were also unsure how data was charged for."

"Another uncertainty for people was whether 1800 and 13 numbers were included in their plans or resulted in extra charges."

Associate Professor Bednall said the telecommunications companies should provide information in a standard form enabling people to compare plans easily across providers and between plans. He also said a data calculator should be provided online.