UK operators giving too much consumer value on 12-month contracts?

Pure Pricing, a mobile pricing specialist, has calculated that the value given to consumers on popular 12-month contracts was more than doubled by some UK operators during 2006.

Overall, there was an average value increase of 44%. The analysis is based on Pure Pricing’s Value Rankings, the industry benchmark for measuring value and competitive positioning on contract plans.

By comparing the Value Ratios in December 2005 to those in December 2006, Pure Pricing has calculated that some operators significantly increased the value given to consumers taking the popular 12-month contracts with £30 - £40 monthly charges.

- The greatest increase in value was from T-Mobile who more than doubled its Value Ratio with the introduction of its new Relax plans in 2006.

- New plans and strong promotional offers from Virgin Mobile saw its Value Ratio also more then double.

- The average Value Ratio across all operators increased from 2.28 in December 2005 to 3.27 in December 2006 – an increase of 44% in value.

- 3 was the highest ranked operator for value in both December 2005 and December 2006, increasing its Value Ratio by 24% over the year.

- Value increases were not seen from all operators. O2 and Orange concentrated increases in value towards 18-month contracts, and as such the Value Ratio on 12-month contracts for Orange remained static; whereas for O2 the Value Ratio decreased.

Value Ratios for 12-month consumer plans with monthly charges between £30 and £40. Pure Pricing Value Ratios calculate the return on spend a consumer receives for £1 of spend. A Value Ratio of 1.3 implies a return of £1.30 in communication value for every £1 spent.

Jo Lynch, director of Pure Pricing said, “As part of our research for our Annual Mobile Pricing Review, we analysed the impact of competition on prices and value for consumers in the UK. We found that in 2006 the market has absorbed some significant price decreases and also increases in value, in terms of more minutes and texts to consumers. This is generally good news for consumers, however we also believe that contract plans are becoming increasingly difficult to compare; Pure Pricing’s Value Rankings provide an essential and independent assessment of value in an increasingly complex market.”