'We wanted to flip those anti-consumer practices on their head' – how one UK mobile network is tackling phone contract price rises
The last week in March brings with it a nasty shock for many mobile phone users in the UK with the arrival of the dreaded yearly price rises. However, one mobile provider is looking to make these inevitable price rises a thing of the past.
This year is seeing some of the largest annual price rises in recent memory (if we forget the absurd inflation rates we saw last year that is). With UK consumers increasingly being squeezed from every direction, it begs the question, are these price rises really necessary? To answer this, I had a chat with Andy Aitken, co-founder, and CEO of mobile provider Honest Mobile, an MVNO (Mobile Virtual Network Operator) that is aiming to buck this trend in one of the best ways possible, to discuss why our pockets face an annual squeeze and how Honest Mobile is looking to stand apart from its competition.
"Practices that didn't have any right to exist anymore"
Aitken and co-founder Joshua Mihill founded Honest on a simple enough premise: take away all that isn't essential to your phone plan, and provide the best service possible, and one of the first areas to face the chopping block was, of course, annual price rises. As we discussed how this – as Aitken put it, "weird" – practice came about, it became apparent that the problems lie much deeper than you might think, with Aitken describing the mobile sector as "this archaic industry where everything was built in a world that doesn’t exist anymore” – and he has a point.
this archaic industry where everything was built in a world that doesn’t exist anymore”
When we saw the first data plans emerging around the launch of the first iPhone, the infrastructure was limited, the speeds were slow, and the demand was much lower – so why is it that now the infrastructure is more accessible and more efficient, it's more expensive? "It doesn't make any sense that prices are going up when data prices are plainly coming down," Aitken noted
Phone contract price rises are not expressly necessary in order for big phone networks to survive. They serve purely to help businesses balance the books against business running costs and varying inflation rates, all to the detriment of the customer, and it's only getting worse. Most businesses will now increase prices by the percentage of CPI or RPI - depending on which the network uses - plus 3.9% to offset business costs and continue development, putting a bigger financial squeeze on customers year-on-year. This year O2 customers are set to be worst hit, with the mobile network increasing prices by a whopping 8.8% over last year.
"It feels like it's missed the point completely"
The issue of ever-increasing phone contract prices hasn’t gone unnoticed, with the telecoms regulator Ofcom attempting to limit the impact; however, those efforts have had the opposite effect. Last year, Ofcom forced mobile networks to make price increases more understandable, stipulating that in-contract price increases should be set out in pounds and pence rather than in percentage increases, with the hope being that this would increase consumer confidence and boost the market. This, frankly, didn't work.
When asked about the response of larger networks to Ofcom's interventions, Aitken explained: "They've almost said we're actually going to put bigger increases through, but they'll be in pounds and pence so they're easier for people to understand."
The impact of these increases is only getting worse. In part due to the rising price of phones, but also due to incessant price increases by providers, finding a good phone deal is now more deals-season-oriented than ever. It’s increasingly the case that you'll have to walk a fine line when deal-hunting if you don't want to be stung, and this simply shouldn't be the case.
"We can say thank you to our customers for being loyal"
Honest Mobile has taken a simple enough approach to tackling the culture of in-contract price rises Not only does it promise to not increase prices at all for the duration of its contracts, but it actually reduces the price of its contracts incrementally, so the longer you're with Honest Mobile, the less you spend. When asked about the decision to introduce a loyalty scheme for Honest Mobile customers, Aitken explained that “we wanted to flip those anti-consumer practices on their head”.
If you haven’t heard of Honest Mobile before, you wouldn't be alone. The company offers 30-day rolling SIM-only contracts, with no in-contract price rises, no complicated benefits, and no convoluted data plans or contract terms to worry about. Plus, as we've mentioned, your contract price reduces over time, with your monthly price dropping by up to 30% over the course of your time with Honest Mobile.
Something that might be considered a drawback for Honest Mobile would be its limited choice of plans. It only offers 4GB, 10GB, and Unlimited SIM-only plans, leaving a fair gap in data packages that competitors can offer as an alternative. However, being powered by Three's infrastructure means Honest Mobile is not only able to offer competitive pricing, but also offer speeds that its MVNO competition simply cannot handle in most cases thanks to Three’s 5G network, with the added benefit of not being hit by the up to 7.9% price increase Three customers face in a few days.
The model Honest Mobile has used with its loyalty scheme is something that makes perfect sense for those looking to make long-term savings on their mobile bill. New phones are now lasting upwards of five years, with some flagship Android devices now getting updates for seven years, and having a SIM-only plan you can rely on to not only power your phone but improve your bank balance over such a long period will become increasingly key for consumers – and it would appear that Honest Mobile is leading the charge.
