Mobile phone deals

[mobiles4everyone]

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The majority of mobile phone dealers, including those on AF, AW and DGM offer cash back incentives to their pay monthly customers. Many of them advertise these incentives in the form of half price line rental or free line rental, where in fact the customer receives cash back to the same value after six or twelve months.

This can be incredibly confusing. For example, a free phone on the T-Mobile Relax 100 tariff (£23 per month) on a 12 month contract has 7 months free line rental. The customer actually gets 3 months half price line rental (£11.50 per month), line rental reverts to full price from month four and the remaining four and a half months free line line rental is usually awarded as two and a quarter months free (£51.75) after six months and the same again after 12 months in the form of cash back by redemption. Tarrifs are already very complicated - in the example above the customer will also get 100 free texts per month for three months and if these aren't cancelled by the end of month two then they'll be charged £5.40 per month from month four. This is just one tariff and one deal, it's only the tip of the iceberg, don't even get me started on a discussion about 18 month contracts!

Most consumers are confused.

Are these deals constructed to deliberately confuse them, or mislead them into thinking they are receiving discounted line rental, applied to their bill automatically? I'm all for everyone making maximum profits as this helps us all and if it means the customer doesn't claim their discount or cash back (I believe about 60% of them forget) then that's their fault and more than okay with me if it means we can all make more money.

Using the example above, "7 months free line rental" could be advertised as "3 months half price line rental and £100 cash back". Just as attractive. It also indicates exactly what's on offer. But would it result in more cash back claims being made?

[SimonH1]

Thank you for your comments, feedback like this is invaluable. I am the Business Development Manager for One Stop Phone Shop and as such I am your first port of call.

You have raised a well constructed point which, in principle I agree with. The line rental offers to consumers are confusing as the distinction between the network proposition and the dealer offer become more and more blurred. We actually made the same point to three (the first network to offer 1/2 price line rental for a sustained period), but they were happy that dealers 'added' further line rental discounts in an attempt to attract consumers. These line rental discounts have since spread to other networks and are now commonplace, even amongst high street retailers

However, this is a consumer driven promotion. Consumers prefer the tangible benefit of line rental discounts, a fact borne out by our own stats, and the networks own research

Cashback redemption isnt really affected as all cashbacks are broken down into component parts, whether they are line rental refunds or 'cash'.

Hopefully this clears up any confusion/queries.

Regards.

Simon

[EyeOfTheTiger]

I agree this can be a complete nightmare to the unsuspecting customer. While we compare deals from all merchants and networks and break them down tariff wise we also try to but deals on a similar level or explan them in different ways.

i.e. O2 100 at £25 per month

could offer £100 cashback

we tend to put

special offer £100 cashback (equivalent to 8 months 1/2 price liner rental). etc. etc.

Anyway, sorry I'm rambling. just got in from drinking. I may finish this post tomorrow

Good night all

tiger