Bye Vodafone, Hello Lebara - time to switch from the Big 4

A Bit of History

Back in the day, there was a very small number of mobile phone providers you could use. Orange merged with T-Mobile to become EE. Vodafone has been around for a while. BT Cellnet demerged out of BT to become O2. Three was the newest addition, radically not offering the older 2G connections. (How quaint: 3G is about to be turned off.) So you had 4 choices.

But then, a number of new entrants arrived, "mobile virtual network operators", or MVNO. You could still sign up with the Big 4 (O2, Vodafone, EE, Three), who all operated their own network of cell towers and infrastructure. But you could also sign up with other smaller companies who licensed bandwidth from the big ones. About 20 years ago, I was with Virgin Mobile, who piggy-backed off T-Mobile at the time. There was a limited choice of MVNOs, and the actual network operators had a priority order for service quality: Their own contract holders came first, then their own pay as you go (PAYG) customers, then the customers of their MVNOs. So, in an era when mobile data was new and slow, you had inferior service if you saved the small number of pennies.

The Big 4 didn't want to lose market share, and as the market became saturated (everyone who wanted a phone already had one) they valued customer loyalty highly. So if you were thinking of switching to another company, including an MVNO, you could phone them near the end of your contract, and they'd almost always offer you a deal not on their website. So there was no need ever to look beyond the Big 4 - just haggle well.

Things have Changed

Consumer sites like Money Saving Expert still give you instructions on how to haggle with the dominant providers. But the world has moved on, and several things have changed.

• I've found this advice doesn't get you anywhere any more. It seems the network operators no longer value loyalty, and must make enough money from the MVNOs that they don't wish to offer anything to keep your custom.
• According to Ofcom, the network providers also now have to treat customers of the MVNOs equally to their own, so there is no longer a drop in network quality if you use one.
• There are also many more MVNOs around, and some have been around long enough to build a good history of customer service.
• The larger operators used to bundle handsets and airtime in a single contract. The problem was that when your contract ended you still paid the higher monthly rate for paying off a handset. So the law has changed and you now explicitly have two contracts - one for a handset and one for airtime, and the handset payments stop at the end of the 24 months. That removes one way retention team could offer you a deal, which was to knock the money off the handset bit of the bundle.
• The process of moving your number to another network is much more streamlined than it used to be. You just text the message "PAC" (stands for "Port Authorisation Code") to the number 65075, and your network will message you straight back with a PAC valid for 30 days. Give that to your new provider, and nominate a day to switch, and it's done. You used to have to phone up to request a PAC. While this was the team that could offer you a deal to stay, sometimes they were reluctant to give you the code. Now, it's automated and easy (but still phone to see what deal you can get).

So it's time to change the advice, and instead to look at the MVNOs for the best deals. Many people who have historically been a customer of O2, Vodafone, EE or Three now stay simply through inertia, paying many more pounds each month as a result.

Two years ago

I've been a customer of Vodafone for 15 years. 2 years ago, my contract was nearing an end, so I rang them up to see what they could offer.

I came away with an excellent deal. They had a plan with unlimited calls and texts that came with 5 GB of data each month, to which they added a bonus 25 GB of data. That took me to 30 GB, and the extra stayed for as long as I was on that plan. The plan should cost £15 per month, but they gave me a discount of 20%, so it was just £12. The discount would last for 27 months. After 24 months I could move to another deal or network, but I had 3 months grace on the discount to do so.

That contract came to an end, so I rang up to see what I could do.

Vodafone used to offer free European roaming with all their plans. With Brexit, they no longer have to, and they've chosen to make this a feature of only the high-end plans. I wanted this, and knew that their customer retentions team can offer such deals, so I rang.

Their website used to have deals of a certain percentage off the monthly fee, like I had just been enjoying. At the point when I wanted to renew, they were only offering deals that were half-price for the first 6 months of the contract. Again, no harm to ring.

Mobile phone contracts increase in line with inflation (plus 3.9%) each April, and I had had two of these increases, so I was now on £15 per month, not the original £12. When my 20% discount ends, it will go up to £18.75. Let's see what they can do.

Phoning the Disconnections Team

My first effort at phoning their disconnections team (aka Customer Retentions) was not a great success. I sat in a queue for 15 minutes, and then the call went beep and cut me off.

I tried again. A queue for 15 minutes. (This means there are a lot of people wanting to leave - that team is busy). This time I got through to someone. Here's how it went

Me: I've come to the end of my contract, and am looking for another 24 months SIM-only deal. The thing is, other providers are cheaper than what you offer on the website. Asda Mobile offers me plans from £5 per month or I could have £12 GB of data for £10. You've also stopped including European roaming, whereas these other providers still offer it. Rather than ask for a PAC and cancel, I thought I'd ring and see what you can do.

Agent: I'm afraid our unlimited data plans all cost a bit more than that.

Me: I'm not looking for unlimited data, though. Just enough for my needs.

Agent: Thank you, let me check how much data you use. I can see your busiest month used 8 GB of data.

Me: Precisely. So if I had a plan with 15 GB of data, that would give me a nice buffer so I don't run out, but I wouldn't be paying for a bigger buffer than I need. Obviously the other providers I mentioned are 30 day contracts, so I can pay for more or less as I need, but if I'm committing for 24 months I'd want to make sure I've got enough.

Agent: Have you looked at the deals on our website.

Me: Yes, I have, but they currently only offer half price for the first 6 months. If I'm going to have to pay full price for 18 months out of 24, they'd all work out really expensive. And they don't come with European roaming.

Agent: If you average out that half price over the life of the contract, it's a decent saving.

Me: It's 12.5% discount over the life of the contract, so not that big. Can you offer me anything to make it worth my while to stay.

Agent: OK, let me see what I can do. {Pause}. The best I can find with European roaming is £19 a month. That would give you 50 GB.

Me: I don't need 50 GB. Do you have anything smaller that is cheaper?

Agent: Sorry, that's the best we've got.

Me: Then I'll go and look elsewhere. I'm currently on a plan that would see me paying £18.75 a month. I've come here to try and save money, because that's more than I could pay on many other providers. The best you've got is £19 a month, which is more expensive than my current plan. I'd be committed for 2 years, and would have two more increases because of inflation. We don't know what inflation will be at, but at current levels I'd be on nearly £25 by the end of the contract, and I'd be trapped there however high inflation turns out to be.

Agent: Is there anything else I can do for you?

Me: No thank you

Agent: What phone do you currently have?

Me: A OnePlus 8T.

Agent: I think I've heard of those before, is that Android?

Me: Yes

Agent: We have a discount on an Android tablet. Interested?

Me: No. I either use a phone or a laptop, but not a tablet.

Agent: We have deals on laptops.

Me: Still no. Mine is relatively new and works fine.

Agent: Anything else I can do for you?

Me: No thank you - goodbye.

Conclusions

It took me a while to get through: Disconnections are busy. That means lots of people have noticed it's more expensive, and are on the way out.

They don't want to retain customers any more. I wasn't asking them to price match the cheaper operators, just to give me some incentive to stay. They had nothing to offer. Their cheapest deal cost more than my current one, and was no cheaper than I could have found for myself.

They probably make more money selling phones and other hardware than selling airtime these days.

Their staff are not particularly well trained or knowledgeable. There was a day when OnePlus was a slightly niche brand, but they've since merged with Oppo and are one of the very established phone manufacturers. For a sales assistant not to even have heard of them does not fill you with confidence at whatever they're about to recommend.

So, after 15 years, I'll walk. I'm moving to Lebara. I found a deal with them that gives me 12 GB of data for £6.99 per month, with the first 6 months reduced to £1.99. They use Vodafone's network, include 5G as standard, and included European roaming as standard as well (capped at 30 GB of roaming each month).

This makes no sense to me. I don't know what Lebara pay Vodafone to use their network. But unless it's less than £6.99 for my use, they aren't making a profit, so Vodafone must be getting less than £6.99 from Lebara for me. Therefore anything they'd offered me would have given them more profit than taking Lebara's money for the wholesale use I represent. So why do they not at least try to retain direct customers?

It seems they'd rather have a much smaller number of customers who pay through the nose for their service (because they don't move for sheer inertia) than have more profit but smaller profit per customer. Somehow they have to fund their high street stores from this business model.

I don't understand why Vodafone are taking the new approach they are, but the lesson for you (dear reader) is clear. Don't stay with inertia. They hope you won't bother to shop around. But in my case, I'd be paying three times what I am now going to pay.

• If you want to use Vodafone's network, use Asda Mobile or Lebara
• If you want to use EE's network, there are fewer choices, I'd suggest 1p Mobile
• If you want to use O2's network, use GiffGaff
• If you want to use Three's network, use Smarty or ID Mobile

Thanks for reading