Smartphone Contracts a Leading Cause of Debt in U.K.

Smartphone Contracts a Leading Cause of Debt in U.K.

The U.K.’s National Debtline, an advice service operated by the Money Advice Trust, a charitable organization, reports a 261 percent increase in calls for help relating to phone bills since the launch of the first iPhone in 2007, and a 15 percent rise in the past year. In the first eight months of 2013, National Debtline staff spoke to 13,398 people about their phone debts, up from 11,698 over the same period last year. Of users who owe money on their phone bills and participated in a National Debtline program relating to such problems, over 15 percent owe more than £1,000 (US $1,600).

Tarifica’s Take

The National Debtline considers expensive smartphone contracts a very likely cause for the steep rise in the number of debtors and the size of their debts, and we are not going to disagree with them. While mobile operators are glad to ride the high-end-smartphone trends that have been proliferating since the launch of the iPhone and to reap the revenues from service contracts, no business wants bad debt.

For this reason, we encourage all operators to emphasize diversity in their plan offerings. Prepaid packages are no longer just for low-end users; in uncertain economic times, even relatively affluent users in sophisticated markets appreciate the security of prepaid, which eliminates the problem of unpaid bills. Among postpaid plans, unlimited flat-rate offerings also make it easier for customers to stay within spending limits decided upon in advance. And the recent trend—in the EU for example—of instituting anti-bill-shock measures should, in time, make a dent in the amount of bad phone debt.