VMO2 persists in attacking competitors over ‘split contracts’

UK operator group Virgin Media O2 reckons its competitors don’t do a good enough job of protecting their postpaid mobile customers from overpaying.

A couple of months ago, VMO2 accused EE, Vodafone and Three of overcharging their customers through ‘opaque, confusing and out-dated mobile contracts’. The other operators subsequently defended themselves, on which more later, but apparently failed to persuade VMO2, which decided to send out some ‘secret shoppers’ to explore the consumer experience of trying to buy a phone and service contract from its competitors.

While it’s tempting to be highly sceptical of this exercise, especially since VMO2 framed the whole thing as the ‘Smartphone Swindle’ from the start, for the sake of argument let’s assume the shoppers were given no agenda other than to see if they could buy a phone and service contract separately. That’s what VMO2 means when it refers to ‘split contracts’.

In-store with EE, VMO2 claims ‘none of the secret shoppers were able to sign up to a split contract.’ Furthermore, when exploring its website ‘the expert secret shoppers were unable to find a ‘Flex Pay’ plan or any other form of split contract.’ The nature of their expertise is unspecified, other than a previous stipulation that they’re ‘professional’. Vodafone, on the other hand, offers split contracts in all stores, while Three did so in 80% of them, and both made them available online.

“It’s time for the industry to end this half a billion-pound problem by providing consumers with choice, consistency and clarity on their phone contracts,” said Gareth Turpin, Chief Commercial Officer at VMO2. “This is not about picking a fight with our competitors; it’s about increasing awareness of a key consumer issue and urging others to help solve it.

“Consumers are not getting the information they need, with millions finding themselves paying twice for phones they already own. Confusion abounds, with some claiming to offer split contracts that are seemingly impossible to get hold of online or in all the stores our expert shoppers visited.

“While it’s great to see more operators offering their customers split contracts, a decade on since O2 first launched these plans, we hope they’ll now join us in automatically rolling down direct customers once their device is paid for, and providing clear information when the phone is paid off to help end this smartphone swindle once and for all.”

The fact that Vodafone and Three seem to already be freely offering split contracts is somewhat inconvenient to VMO2’s narrative. But Turpin’s concluding point about automatically reducing the tariff after the (typically) two-year period of the bundled contract expires is a good one. Once the hardware has been fully paid for, of course people should financially benefit from any decision to sweat that asset further.

VMO2 deserves credit for including dissenting commentary from its competitors, albeit at the very bottom of the release, after the ‘notes to editors’. The only really pertinent one is from EE, so here is its statement in full.

We find these claims from Virgin Media O2 to be misleading and unnecessary – designed to chase headlines, at a time when consumers need confidence that the industry is clear and straightforward. This also comes at a time when VMO2 themselves increase broadband customer’s prices by as much as 50% when going out of contract.

Like VMO2, we offer split contracts with EE Flex Pay, while providing all customers with clear end-of-contract notifications, including the best offer for them based on their usage. With EE Flex Pay, once the handset is paid off, no further charges are applied. We don’t position this as a discount because it isn’t – the handset is owned by the customer.

Along with providing customers with great value, we are also doing all we can to support our financially vulnerable customers with our market-leading social tariffs. We currently have 80% of all social tariffs customers in the UK, another area where VMO2 could focus more attention.

While somewhat tu quoue, the point about VMO2 and its broadband contracts is still worth making, if only to call its motives for this campaign into question. The point about ‘EE Flex Pay’ would appear to contradict VMO2’s assertions but, on a quick scan of all the tariffs available for a Google Pixel 7 on the EE site, we could see no mention of it.

Obviously companies don’t invest time and money into projects like this without an ulterior motive. VMO2 is presumably hoping some media will take its narrative at face value, resulting in a marketing win. In practice, it looks like only EE needs to significantly raise its game on this matter, which it could easily do by announcing it will now automatically charge postpaid customers less when they reach the end of their bundled contracts.

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