Consumer response to unit pricing for mobile telephony

This project is a co-operative study between ACCAN and Deakin University. It focuses on Unit Pricing, the practice of displaying the price of goods or services based on a standard quantity, to allow a direct comparison between competitive offers. This study aimed at gauging whether the new unit pricing information for mobile phone contracts assists consumers in assessing and comparing the value provided across alternative contracts within and between suppliers. Some 24 in-depth interviews were conducted with consumers who had recently bought or renewed a mobile phone contract.
The research showed that most consumers could use unit pricing information and some found it useful. Where consumers’ plans had unlimited or infinite capacity, unit pricing information was not relevant. Many consumers preferred voice allowances to be expressed in minutes, rather than in dollar allowances. Data was the most problematic category, as consumers typically had only limited understanding of the amount of data that various applications used. Most did have a broad understanding of what total capacity in data they would need, typically expressed in gigabytes.
Consumers commonly sought simplicity in deciding on which plan they would purchase or renew. A key issue for consumers was not “going over”, that is not exceeding their call, text or data allowances. For that reason, they were prepared to choose a plan that commonly resulted in them not using their full allowances each month. Some consumers used Apps on their smartphones to monitor their usage. Not all consumers had experienced advisory messages about nearing the limits of their plan’s allowances.
The Report recommended that:

R1. Unit pricing should be maintained
R2. Where unit pricing is provided for call costs, these should be expressed in terms of a one-minute call.
R3 Unit pricing for data should be expressed in terms of gigabytes or part thereof.
R4 In advertising mobile phone plans and at point of sales, customers should be provided with three levels of information – 1) overall plan features, 2) unit pricing information and 3) a data calculator.
R5 Level 2 and 3 information should be provided in a standard format across the industry, enabling consumers to make ready comparisons between plans and between competitive offers from different providers.
R6. Continuing public education is needed.
R7. Warnings about going over should always include the date when the allowance period ends and tell consumers what the rate will be if they “go over” based on the Level 2 information.
R8. The Consumer Protection Code should be reviewed in the light of these findings and recommendations.