Deal or No Deal: TV, broadband and home phone ‘deals’ leave consumers confused

Posted February 20, 2013 - Press Releases

  • A third (34 per cent) of people are dissatisfied with their current bundle
  • 42 per cent of bundle users are hit with higher than expected bills
  • Three quarters (72 per cent) of people find small print so difficult to understand that they didn’t read it fully

A new study released today by Freeview and Post Office Home Phone and Broadband1, reveals that consumers find many TV, broadband and home phone bundle deals so undecipherable that they are confused as to what they’ve signed up to.

The study combined research amongst 3,000 consumers signed up to bundles with analysis of current deals on the market by Professor Alison Black2.  The research found that three quarters (72 per cent) of people found the small print so difficult to understand that they didn’t read it fully and 42 per cent found themselves receiving higher bills than they were expecting.

Aside from cost, length of contract and exactly what the deal includes has also left customers in the dark. Over a third (39 per cent) said they rarely watch any of the TV channels they pay for and nearly half of respondents (47 per cent) don’t know how long their current agreement lasts.

In addition, nearly half (46 per cent) of respondents were put off signing up to a new supplier because they couldn’t work out the best alternative. One in ten (10 per cent) abandoned switching all together as they found the process too complicated.

Professor Black, Director of the Centre for Information Design at the University of Reading comments, “Having reviewed the research, I analysed 10 examples of bundle deal advertising across a range of providers3. Eighty per cent of them advertise six month offers but tie you in to 12 – 24 month long contracts. Whilst this is a completely legal practice and something that is replicated across advertising for many other products, it’s easy to see how people find themselves unsure of what their bundle includes.”

Other key observations from Professor Black’s analysis include:

  • Small print type sizes fall way below the size recommended for legibility4 and many terms contain external links to other web pages, making the consumer work hard to understand the full deal  Full pricing details, such as call costs and line rental, can be an average of  four clicks away5 from the original offer page
  • Some offers currently available online are being advertised for as little as £3.25 per month, but once you explore the full cost with line rental, installation and connection fee added in, this can increase by up to 246% over 24 months6
  • Providers employ a technique called ‘dripping’, which encourages consumers to absorb only the positive information communicated ‘up front’ and miss the full scope of the package explained later on
  • Where consumers are attracted by the positive aspects of a new bundle deal, they find it hard to let go of the offer and search for alternatives once they find out about additional costs – this tendency is known as loss aversion7

Consumers are clearly getting tangled in lengthy agreements – despite a third (34 per cent) admitting to being unhappy with their bundle contract, on average people stay with one provider for over five and a half years and 58 per cent have never switched. This means that, over this length of time, households are paying an average of £1,096.26 on unwatched pay TV channels8.

Guy North, Marketing Communications Director at Freeview adds; “This report has shown just how many people may be paying over the odds for TV channels in excess of their needs. With over 95% of the most-watched TV programmes available subscription-free9, people could be making considerable savings in the long-run by choosing an alternative to pay TV. We encourage people to carefully consider what they are entering into when taking out a bundle.”

Hugh Stacey, Head of Post Office HomePhone and Broadband, said: “Whilst some deals may seem great value for money on first glance, the small print can often tell a different story.  Often these introductory packages will give you a great deal for the first few months but take a steep rise in cost as soon as this ‘honeymoon’ period ends. We are advising consumers to take the time to thoroughly review any offer to ensure the very best pricing structure for their household and their needs before getting locked in to a contract.”

 

Notes to editors:

1 Research was conducted by Opinium between 21 December 2012 and 2 January 2013 amongst 3,006 adults who pay for a broadband, home phone and TV subscription package that does not include Sky Sports or Sky Movies

2 Professor Black carried out supplementary research to the Opinium study and studied 10 examples of bundle deals from a range of service providers to give findings on information delivery techniques

3 Examples taken from a variety of providers (BT, Talk Talk, Sky and Virgin included) and compared across mediums (online, direct marketing, print and banner advertising)

4 W3C Quality Assurance web site states that type should ‘look good, without requiring the user to enlarge or reduce the text size’.

5 When viewed online

6 Source: Talk Talk Essentials Deal with 12 months free

7 Phenomenon named by Kahneman and Tversky, in the 1984 paper, Choices, Values and Frames, American Psychologist, 38/4, pg341-350

8 The average monthly spend on bundles is £49 with almost half of this (£22) being spent on paying for extra TV channels, meaning that £2.7 billion is spent on unwatched pay TV channels across one year – this equates to £199.32 per home.

UK wide cost = 13,728,000 x £16.61 (average monthly cost of unwatched pay TV channels) x 12 months = 2,736,264,960

Annual cost per household = £16.61 x 12 months = £199.32

Annual cost for 1 year x 5.5 years = £1,096.269

972 of the 1000 highest rated programmes shown on UK TV (live or pre-recorded programmes watched within the same week) between 1st January and 30th June 2012 were available on Freeview. Source: BARB

About Alison Black:

Alison Black is a Professor of User-Centred Design and Director of the Centre for Information Design Research at the University of Reading. She specialises in research that addresses real-world communication needs in areas such as health promotion and care, digital inclusion, statistical decision-making and responding to weather warnings.

About Freeview:

Freeview is the most popular TV platform in the UK with more than 20 million homes using the service  Freeview is a subscription-free TV service providing over 50 digital TV channels, including four HD channels (when using an HD compatible product).  Freeview+ allows viewers to pause, record and rewind live TV.

Freeview is managed by DTV Services Ltd, a company owned and run by its five shareholders – BBC, BSkyB, Channel 4, ITV and Arqiva. www.freeview.co.uk

About Post Office: 

The Post Office, now independent of Royal Mail, is the largest retail network in the UK, with over 11,500 branches. It is also one of the fastest growing financial services companies and is developing its online and telephony services.

It provides around 170 different services and products spanning financial services including savings, insurance, loans, mortgages and credit cards.  Post Office also offers Government services; telephony; foreign currency; travel insurance and mail services.

It serves around 20 million customers a week and half of all small businesses.  99.7% of the total population live within three miles of a post office.  For many rural communities the post office is the only retail outlet. Post offices remain highly valued and trusted and are the focal point for many communities. For more information, visit postoffice.co.uk .

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