SIM Frustrations Reflect the Need for Change Among European Operators
Some difficulties I’ve encountered recently with 3 have highlighted an interesting tariff challenge for operators. I subscribe to a SIM-only monthly tariff from 3 that offers 2GB of data per month, with no texts and no minutes — a pure data tariff. I’ve run this for several years, using it to test new phones. Last month I decided to use it in a seven-inch tablet I’d been lent for evaluation and found that 3 blocks the use of SIMs with this tariff in tablets.
The operator argues that the tariff is for phones, not tablets, and that it has a range of mobile broadband tariffs that are suitable for tablets. In my view, I’ve bought a block of data and it shouldn’t matter which device uses it. The mobile broadband plans currently offered by 3 in the UK are three times the price per GB of my older plan — it feels like the operator is trying to move the goalposts and renege on a contractual commitment that was made in good faith.
We’re used to the idea of different competitors charging different amounts for similar things. There may also be reasons for the price to vary from a single provider: if you buy in larger quantities it should go down (and certainly not up threefold, as appears to be the case with 3’s plans); if you buy with a guaranteed quality of service, it could go up. But when a single provider tries to charge a very different amount for an identical product depending on how it’s used, this causes problems.
When you visit a filling station you do not expect to pay more per litre for diesel if you’re driving a van not a car. Similarly, you don’t expect electricity companies to supply power on condition it’s only used boil a kettle. These are undifferentiated products and consumers expect the price per unit to be the same regardless of how they use it.
From a consumer’s point of view getting a basic data service through a SIM is not philosophically different from getting petrol through a fuel nozzle or electricity through a cable. Operators may claim they are not utilities, but in my case there were no service differences between the two tariff plans.
Operator tariffs in Europe are a long way behind how people use their mobile devices. Our surveys show latent demand for greater use of multiple devices with cellular connections. We believe this is being choked off by data tariffs that make such usage unattractively expensive.
We expect to see multi-device tariffs sweep rapidly through the Europe during this year and next, just as they are shaking up the US market at present. These tariffs will mean the data you buy can be used interchangeably between devices, and will reinforce consumers’ view that a basic data service is conceptually similar to diesel and electricity. Operators will not be able to sustain large differences in unit prices.
It is likely that 3 is trying to withdraw a tariff it introduced a few years ago and now regrets. The usual way to do this is to gradually impose restrictions until customers get fed up and cancel their contract. Everyone I’ve spoken to at 3 so far has succeeded in the first part of this strategy.
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