Image may be NSFW.
Clik here to view.
The implementation of the ‘midata’ vision is without doubt a prerequisite for ending confusion facing UK consumers about how much they pay for goods and services. But in my view it’s about more than just that. It’s an opportunity to engage people: to help them choose the better deal and to care about making a choice – an opportunity to democratise the markets.
So what is the real cost arising from the lack of open data standards?
There’s the obvious monetary cost: For example, in the mobile phone industry, the formats of bills are often complex, and tariffs often hard to understand. One of the challenges we faced in setting up billmonitor.com was spending significant resources to understand user data, so we could tell customers whether they were under or over-using their mobile phone tariff and how they could save money. This mirrors the challenge facing consumers themselves: faced with a large Search Cost, 74% of them are on average wasting £171 per year on the wrong contract. That’s equivalent to a 40% overspend on their bill. This amounts to an amazing total of £6 billion in the UK every year.
Interestingly, 76% of us on the wrong contract have a tariff that’s far too large. 26 million Britons use only one third or less of their monthly calling or data allowance. This strikes me as a genuinely defensive attitude on the part of customers who don’t understand their bills or the potential costs of their tariffs. Lacking the right data, most customers resort to the strategy of getting a safe tariff to avoid “bill shock” – essentially the negative reaction you can experience if your phone bill has unexpected charges. Since mobile tariffs are, by design, expensive if you exceed your allowance, users are justified in being apprehensive, but this normally means people end up getting a tariff at least three times larger than they need.
That’s a bad deal for consumers and a deal that will be much improved by implementing ‘midata’. Ensuring that billing and tariff data is available in an open format will transform the ability of consumers to understand their bills and make better choices.
And yet implementing ‘midata’ doesn’t stop with the monetary benefit. This is a deal we can and should make even better:
The other cost to the public from the lack of consumer-friendly data is less obvious, yet maybe more important. It’s the cost of what I’d call ‘consumer resignation’. In addition to displaying a defensive attitude en masse when choosing tariffs, I believe consumers are also resistant in engaging with the challenge of choice (in a market whose very health depends on the function of choice). “It’s so difficult to figure out the best option by yourself” is one of the most common comments we get from our users.
Remarkably, when those same consumers get the chance to understand the data underpinning their choice, their attitude changes overnight – we hear, “It is a marvellous eye opener as to how much money I am wasting on unused (but paid for), minutes, texts and downloads” or “I now have peace of mind knowing my present contract suits my requirements”.
A billmonitor survey found that 96% of our users valued our advice and the savings they could make by switching tariffs. To our surprise, over and above savings, users valued the insights and understanding into their bills which we could provide.
As well as better deals for consumers, implementing the ‘midata’ vision will help generate engagement. Making the right data available through open standards will help people understand the market choices facing them, and I believe this will lead to more engaged consumers. You’ll be able to be more confident in the ability to research and choose the better deal, and perhaps most importantly, care about making that choice.
