UK consumers are using their phones and broadband more than ever before and are seeking better deals on their communications services, reveals new research from the telecoms regulator, Ofcom.

The annual Consumer Experience report looks at the overall experience of consumers in the communications market and shows that consumers are finding new ways to save money on their phone, broadband and pay TV services.

Bundles

An increasing number of consumers are choosing to take discounted 'bundles' with their providers. In 2008, 35 per cent of consumers took a discounted 'bundle' compared to 30 per cent in 2007.

The research also found that some consumers could make significant savings by taking some or all of their phone, pay TV and broadband services from the same provider. Typical communications baskets for some groups of consumers revealed possible savings of between ￡88 and ￡140 a year.

SIM-only contracts

SIM-only contracts typically offer lower monthly fees and also give consumers greater flexibility to shop around for the best deal. They often only require a one-month contractual commitment: over 20 per cent of new mobile contracts in the first three quarters of 2009 were for one month only, whereas two years previously these contracts were not available.

Longer contracts

24-month contracts are also becoming increasingly popular as consumers commit to longer periods in return for lower monthly fees and inclusive, or heavily discounted, handsets. In the third quarter of 2009, 42 per cent of new mobile contracts were for 24 months or longer, compared to only 5 per cent a year previously.

Switching slowing down

The research also shows that, despite consumers seeking better deals, there has been a large reduction in the proportion of those consumers who take bundles switching providers in last 12 months (from 24 to 13 per cent). More generally consumers are not switching as much in the communications sector as they are in other sectors such as energy and car insurance.

In order for consumers to fully benefit from a competitive market they need to be able to switch easily between providers.

Potential obstacles to switching

Ofcom aims to ensure that there are no unnecessary obstacles either in the switching process or in contractual terms in the way of consumers who choose to move between different companies and products. With an increasing move towards the sale of communications products and services by bundle, it is important that Ofcom considers regulations and processes that enable consumers to switch bundled products.

Ofcom has started a review of consumer switching to improve consumers' experience of switching providers. The aim will be to deliver processes that ensure there are no undue barriers to consumers switching now or in the future. Ofcom plans to consult on next steps in 2010.

Currently Ofcom is considering the impact of automatically renewable contracts in residential communications markets. Under automatically renewable contracts, contract terms are automatically renewed unless the consumer explicitly tells their provider that they do not want this to happen. Early termination charges may be applicable if the consumer wants to leave during the minimum contract period. We plan to publish a document setting out our approach to automatically renewable contracts in 2010.

Consumer information

Consumer information plays a critical role in competitive markets. If consumers do not have access to information about the products and services available to them, they may make poor decisions and be reluctant to switch.

Overall, consumers are finding it easier to make cost comparisons across all communications services. Compared to 2008, the proportion of consumers who find it easy to compare costs in the bundled market has increased by 11 per cent.