Mobile plan costs: "Convenience is exploited with combination plans"
21.8.2020
Translation: machine translated
The market for mobile phone plans is hotly contested. Network operators are competing for new customers with aggressive pricing models. Jean-Claude Frick, telecoms expert at comparis.ch, wonders in an interview why many people still have horrendously expensive plans.
Jean-Claude is already sitting at the table in front of the Starbucks in Zurich's Europaallee at the appointed time. In front of him is a large paper cup of coffee. He needs it to get up to operating temperature, as I know from my time working with him at Comparis. His iPad Pro with Magic Keyboard is his mobile office. He stops his keyboard work and we greet each other. As cordially as the coronavirus period allows. With a gentle elbow check. I tease him because he only has two mobiles in front of him. He tells me some news about the team at Comparis and I tell him how I'm enjoying my first few weeks at Digitec Galaxus. Then we get started.
Why do so few people actually change their contract?
Jean-Claude Frick: There are certainly a lot of fears involved: It's complicated, it can go wrong, you lose your number. All that is in the back of your mind. But changing contracts is very simple these days. It's been working for 15 years.
You hardly have to do anything yourself, do you?That's right. Whenever I explain to people that the new provider takes care of everything, they are surprised. They clarify the cancellation period, take care of the number transfer and let them know when the new SIM card needs to be inserted.
Does the change of SIM card scare some people?
Also. We still remember the days when contacts were stored on a SIM card. Or when you had to manually transfer all your addresses and phone numbers when you changed your mobile. Fortunately, today everything is in the cloud.
And yet Mr and Mrs Swiss don't like to change...
You can also see this in the example of health insurance. You save 100 francs a month there, and yet many people don't switch. In Germany it's different, the "cheap is cool" German switches if he saves two euros somewhere. In Switzerland, saving 10 or 20 francs a month is often not enough motivation. People often say "That's too much effort for me... it's not that much...". As far as that's concerned, we're probably just doing too well.
When do we change our behaviour?
A brief excursion into theory at this point: it's a question that interests scientists and marketing experts alike: Why do customers fail to change their behaviour in many situations, even though it would make rational sense to do so? Is it because they would save a lot of money by changing their insurance policy? Or because they would live healthier lives if they ate fruit and vegetables more often. Answers to such questions are provided by the discipline of behavioural economics, among others. One widely used model is the "behavioural model" by B.J. Fogg, a behavioural economist at Stanford University in the USA. For him, it is clear that three components are necessary for a certain behaviour to occur:
- The motivation to do it
- The ability or opportunity to do it
- A trigger or a trigger that reminds you to do it.
If one of the components is missing, a person will generally not change their behaviour. Think about the last time you changed your behaviour. Maybe someone in your circle of colleagues prompted you to start jogging. It could have motivated you to imagine running 10 kilometres at some point. And because you are physically able, have the time and have also bought some nice running shoes, you have the opportunity to do it. And suddenly now you're running regularly.
When it comes to mobile phone plans, we often lack the motivation to switch. We also underestimate our ability to make the switch. And providers are also pretty good at not giving us triggers. One trick, for example, is that you pay monthly by direct debit and often forget how much your plan costs per month. This means that you are triggered by adverts to think about switching to the competition. And you should be motivated by a lower price.
Jean-Claude, do you know how many people still have an old and therefore sinfully expensive contract?We don't know. But at Swisscom, for example, around 70 per cent have a combined subscription, where they combine landline, internet, TV and mobile telephony in one contract. This makes perfect sense for many people. The individual parts, on the other hand, are very expensive. You hear the same thing at Sunrise: The aim is to sell bundles. They are also exploiting the convenience of customers who prefer to have everything from a single source. The focus on price is often forgotten.
Where does a Frick actually have his mobile contract?Swisscom.
Ah!
Yes, for one very simple reason: the flat rate. I make a lot of calls, sometimes for hours a day. And I'm a special target group: I want three SIM cards, an Apple Watch that is self-sufficient and lots of roaming data abroad. And then 5G. I'll pay more for that. But that's because of my job. I also test a lot of mobiles, and I always want to have the same number. Otherwise nobody can call me.
And what advice would you give to people with less extreme mobile phone use?
You shouldn't pay more than 40 or 50 francs. I understand anyone who wants a flat rate. Even if two or three gigabytes are actually enough for most people. And if you need more volume, it only costs a few francs more for that month. You don't pay for the remaining months.
Doubtful love for flat rates
Why is the flat rate so popular? Or, to put it another way: why is it obviously so easy to market?
Most people don't want to use 14 gigabytes like Frick. But they are afraid that it will suddenly become expensive if they exceed their limit. But that's no longer the case. And as a rule, contracts today also have an upper cost limit. It's a simple calculation. With a flat rate, you might pay 55 francs a month. That's 660 francs per year multiplied by twelve. For a plan with 3 gigabytes for 25 francs a month, you pay 300 francs a year. And even if you need more volume in two or three months, you'll still save a lot of money here. Actually a no-brainer. But obviously still too difficult for many people.
So do you have to offer people psychological support?
Apparently so. My tip is that you should measure the volume of data you use. Simply set the counter to zero in the settings at the beginning of the month and then see how much was used at the end. Most people will be surprised where they end up. Even those who need 5 gigabytes can save money without a flat rate.
And if someone really wants 5G?
It's not really a big topic yet, but in a year or two at the latest, it will certainly be different. So far, the rule has been that you can get 5G from the big suppliers, i.e. Sunrise or Swisscom. And that you couldn't get it from the low-cost offshoots like Yallo or Wingo. But that is also changing. Especially because then all mid-range mobiles should be able to use 5G and not just the top-of-the-range ones like now.
Another technical question: What's the point of the eSIM anyway?This is of course practical for a smartwatch, but especially for iPhone users. The newer iPhones - from the XS generation from 2018 - all have dual SIM. But they don't have two slots for cards. The eSIM works instead. I can store my main subscription on it, for example. And if I buy a prepaid SIM abroad, I can insert it into the slot. Or think of people who have a private mobile phone and a business mobile phone - they still exist, unbelievable! But of course it's also super practical for them because they only have to carry one device around.
So far, we've elegantly avoided the fact that digitec also offers a mobile phone subscription. You don't have to flatter us, but what do you think?I think you're focussing on the topic of "family". Swisscom is also trying to do that a little. It's an exciting approach that the more people join in, the cheaper it becomes. And I always keep an eye on what's going on for my family. But now I only have a wife and two children. That means there are only four of us. I'm one person short of a flat rate. But that's not why I'm having another child (laughs).
A little tip: It could also be the grandparents, a flatmate or an uncle ...
Ah, that makes it easier. Then the person just has to be close enough for me to collect the money.
Exactly, you've understood how it works.
Thank you. Can I make another wish?
Clearly.
I would like even more options, preferably at an extra charge. For example, another SIM for my watch. Or 5G as an option. An all-inclusive modular system, so to speak.
Thank you, I'd be happy to pass that on. And thank you for talking to me.
You're very welcome.
Header image: Jean-Claude Frick is a smartphone fanatic and also a mobile communications expert at the comparison service Comparis.
Martin Jungfer
Head of Content
Martin.Jungfer@digitecgalaxus.chJournalist since 1997. Stopovers in Franconia (or the Franken region), Lake Constance, Obwalden, Nidwalden and Zurich. Father since 2014. Expert in editorial organisation and motivation. Focus on sustainability, home office tools, beautiful things for the home, creative toys and sports equipment.
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