Conclusions and recommendations
1. The market is confusing for consumers.
Competition in the telecommunications
market is well established, bringing a wide range of choices for
consumers, including which company will provide their phone line
and which tariff they should choose. Whether consumers can make
informed choices depends on whether they can make meaningful comparisons
between companies.
2. Consumers may not have the right information
to identify the best deal. Many telephone
bills do not provide enough information to allow customers to
determine the best tariff and discount options, and the differing
ways in which companies quote phone tariffs means that comparisons
can be difficult. Ofcom should disseminate guidance on how consumers
should identify the best supplier, using a series of typical phone
bills as case studies.
3. Consumers may be confused about what they
are paying at present. Consumers will
find it harder to make an informed choice if their current phone
bill is obscure. Ofcom should work with phone companies to develop
more standardised and transparent charging structures that enable
comparisons to be made.
4. Many consumers are not taking advantage
of existing opportunities to save money. Ofcom
should conduct a study into the take-up of the BT Light User scheme,
to quantify the existing level of take-up and establish the reasons
why more eligible consumers do not take advantage of the scheme.
Ofcom should also conduct an education campaign to ensure that
consumers know that it costs more to rent than to buy handsets.
5. Oftel was remote from consumers and did
not do enough to help them. Its guidance
did not give practical examples of how consumers might make choices,
and its external publicity budget in 2002-03 of £45,000 was
only 0.2% of its overall budget of £19.5 million. It nevertheless
told us that if consumers continued not to switch to the most
beneficial options, it would have to question human nature in
the face of overwhelming information.
6. Ofcom should actively encourage consumers
to switch supplier. Oftel did not follow
the practice of Ofgem and Energywatch in encouraging consumers
to switch supplier to get a better deal. Switching supplier or
tariff is, however, the best way to take advantage of competition
and Ofcom should tell consumers about the opportunities and risks
of switching, and draw public attention to the savings available
from switching supplier.
7. Ofcom should undertake a research programme
into the information needs of consumers. Oftel
claimed to place the consumer at the heart of its work, yet adopted
a hands-off approach to consumer information, allocated a small
proportion of its resources to improving consumers' knowledge,
and assumed that consumers conformed to a model of "rational"
behaviour. Where the market is complicated and changing rapidly,
however, there is a greater, rather than a lesser need for the
regulator to understand consumer needs.
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