Mobile users wasting £4.9bn on contracts...

Three quarters of mobile phone subscribers are throwing away almost £200 a year because they are signed up to incorrect contracts, according to newly-released research.




Oxford-based data analysis group Billmonitor found that consumers often overestimate how many minutes they need each month, with some using just a quarter of their allocation.

After analysing more than 28,000 bills from the main mobile providers (except 3), researchers estimated that people were wasting £4.9 billion a year on the wrong contracts, working out at £194.71 for each customer.

Billmonitor found that the average mobile phone subscriber spends £439 a year on their mobile phone, sending 300 texts on average a month.

The organisation found that many consumers take more generous contracts than they need for fear of "bill shock", when they are charged extra for exceeding their minutes allocation.

In fact, three quarters of customers never exceeded their monthly allowance of free minutes, largely because they were on far too generous contracts.

Dr Stelios Koundouros, Billmonitor co-founder, told BBC News: "Everything is expensive when you go over your allowance. However, the over-compensation of a four times bigger contract that at least half of those on the wrong contract are getting, that's not a rational response."

The study also found that other mobile users on the wrong tariff actually underestimated their usage in the wrong belief that they could be more frugal with their minutes. These consumers were usually hit with heavy charges for exceeding their allocation.

Due to the growing usage of sophisticated smartphones, mobile phone users are also increasingly receiving data packages bundled into their service tariffs.

Billmonitor found that the average subscriber uses 133MB of data per month, but 5% of users exceed their 500MB limit, potentially incurring penalties. Dr Koundouros said that data allowances were likely to cause more confusion among consumers in the future.

"Data is tricky because you don't know what data translates to looking at a web page or downloading a movie. It could be a factor of 100 times between one case and the other," said Dr Koundouros.

"Data allowances are now being tiered by operators. Given the mistakes we have seen people make on their minutes, we expect to see them make far more mistakes on their data use."

Billmonitor's comparison system, which compares the real-life bills of mobile phone subscribers, is the only such system to be approved by media regulator Ofcom.