Lack of oversight has created 'Wild West' among mobile providers that SMEs are paying for

Only one in 10 SMEs get a fair deal from their mobile providers, claims a new study

The mobile provider market for SMEs is uncompetitive and Ofcom is not doing enough to correct it, claims a new report from Billmonitor.

Billmonitor - whose tag line is ‘Keeping the networks honest' - claims that the average SME can save as much as 49 per cent on its mobile phone bills, with the largest able to save more than £24,000 each year.

The company alleges that Ofcom's hands-off approach has created an uncompetitive market, in which mobile providers take advantage of SMEs. Its report says:

‘We believe this lack of transparency, industry oversight and legislation has resulted in a ‘Wild West' approach from mobile providers, in which a likely combination of opaque sales tactics and / or stealthy tariff options has left SMEs out of pocket with no-one to turn to for support.'

Based on data received after multiple Freedom of Information requests, Billmonitor states that there is a 15-20 per cent cost difference between the big three mobile providers (EE, Vodafone and O2), although Ofcom would not confirm which was the most expensive.

The regulator claimed that the cost differences could be down to variations in usage, but allegedly provided no data to back up that assertion. Some time later, Ofcom told Billmonitor that there were ‘issues' with its data and the statistics could no longer be considered reliable.

Billmonitor built its own model, analysing bills from more than 350 businesses and - apparently - accounting for differences in usage. It said, with 90 per cent confidence, than EE was the most expensive provider, followed by O2 and then Vodafone, with an average 16.3 per cent cost difference between EE and Vodafone.

Only one in 10 SMEs get a ‘fair deal' from their provider, the company claimed. As a result, SMEs could be overpaying their mobile bills by as much as £1 billion per year, collectively.

"These findings, if verified by independent investigations, raise serious questions. Price differences of 15-20 per cent, not attributable to differential consumption patterns, indicate that a market is not close to being competitive," said Tommaso Valletti, professor of economics at Imperial College Business School and chief competition economist of the European Commission in Brussels.

"While generally we tend to think that competition among mobile operators is very intense for business customers, these results - again, if confirmed - depict a rather different picture, especially for SMEs."

Stelios Koundouros, founder and director of Billmonitor, pointed out that the Competition and Markets Authority (CMA) successfully intervened in the energy market after a similar investigation there in 2016, which showed that SMEs were collectively overpaying by £500 million.

Koundouros called on the CMA to investigate ‘this failure of competition that Ofcom seems to show little interest in'.

However, it is difficult to compare mobile operators against one another, especially in terms of business contracts. These can often vary wildly in value-added features, usage levels, contracts terms and more. Energy suppliers, on the other hand, are much more linear.

An Ofcom spokesperson said: "The vast majority of smaller businesses are satisfied with the value they get from the mobile market, but we're making it easier for businesses to switch to a better deal, including new measures that mean they can switch provider by simply sending a text."

EE contacted us after this story was published, to dispute the results. A spokesperson said, "The findings of this research are unreliable due to the very limited sample size and the fact that the analysis is based on probability rather than actual customer bills."