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'Confused' consumers paying too much for mobiles

MOBILE phone operators have been criticised for complicated and confusing pricing structures that lead to users paying way more than they need to.

Huge numbers of people choose expensive bundles that give them a certain number of minutes for telephone calls, a set number of texts and a defined amount of data.

But many are overpaying, according to a new study conducted by the Economic and Social Research Institute (ESRI). This happens when consumers exceed the number of texts and data they have on their plan and pay excessive "out-of-bundle" charges.

It also happens if people choose expensive bundles that give them more inclusive minutes than they actually use.

Those with smartphones are thought to be at the highest risk of overpaying. And separate research shows half the population of this country now has a smartphone.

The ESRI research indicates that most people do not understand the bundling of call minutes, text and data.

The bundles are so complicated that consumers are prone to making costly mistakes when they choose a phone tariff, the ESRI's Dr Pete Lunn found.

He uncovered evidence of low levels of switching from one provider to another, and what he called a "failure to select optimum tariffs".

"Evidence suggests considerable scope for consumer detriment in both cases," Dr Lunn said in a study commissioned by telecoms regulator ComReg.

Dr Lunn, whose academic paper has been seen by the Irish Independent, said complex phone pricing deals meant there was a strong chance that people made errors when choosing a payment package or bundle.

Other consumers end up paying massive "out-of-bundle" charges for going over the limits in their bundle package.

A spokesman for ComReg said it would apply the findings of the ESRI research to help consumers.

"ComReg advises consumers to thoroughly check the package they intend to opt for. Consumers should be satisfied the package suits their own communications needs in terms of the types of calls they make and the times of day they make the majority of their calls."

Consumers were told to use ComReg's www.callcosts.ie website to check if their bundle was the best available.

Editor of TechCentral.ie Niall Kitson said consumers were particularly vulnerable to being ripped off when it came to using data on smartphones.

Example

He gave an example of one bundle from O2 which costs €20.33 a month. This gives 150 call minutes, and 150 texts along with 150 megabits of data.

Go over the call allowance and the cost of phoning a landline or mobile is an expensive 30.49c a minute. Texts will cost 13.21c outside the bundle.

But exceed the data allowance in a month and the change is €5.08 per 150 megabit.

This would mean one hour of streaming a movie on a smartphone would cost €8.46, he said.

A spokesman for O2 said: "Increasingly customers are staying within their packages, with fewer going 'out of bundle' as people have become more cost-conscious."

The phone operator insisted that its out-of-bundle rates were competitive for those who exceeded their allowances.

Vodafone said it allowed consumers to design their own bundle.

Irish Independent