How to cut your business phone costs

If you run a business, you need to make sure you’re not being ripped off by your mobile-phone company.


Nine in ten small and medium-sized enterprises (SMEs) are getting a poor deal from their mobile providers, according to new research from the price-comparison site BillMonitor. It accuses the big three providers, EE, Vodafone and O2, of operating a "Wild West" market, in which the average small business could cut its costs by as much as 49% by shopping around for a better deal. That's worth more than £24,000 a year to the bigger businesses included in the research.

BillMonitor's study focused primarily on the different prices charged by the three big providers for similar services. It suggests that the same SME customer would typically pay an average of 16.3% more for mobile-phone contracts with the most expensive of the three providers than with the cheapest.

Subscribe to MoneyWeek

Become a smarter, better informed investor with MoneyWeek.

EE comes out worst

The study has seen the price-comparison site dragged into a spat with Ofcom, the telecoms regulator, which argues it is already taking action to improve competition. Ofcom's own data, released earlier this year, also found a 15% to 20% differential between the cheapest and most expensive provider in the market. But the regulator has subsequently withdrawn these figures as out of date; it refused to tell BillMonitor which company its data revealed charged the most. However, according to the comparison site's study, EE was the most expensive provider of mobile-phone contracts to business customers.

All three providers have rejected BillMonitor's analysis, which was based on a sample of around 350 SMEs. However, Ofcom's research also identified several problems with how the mobile-phone market works for small businesses. One particular issue is that contracts are often treated as a group of individual contracts, taken out by individual employees at different times, rather than as a single deal with the business itself. This can make it hard to switch provider in order to access a better deal.

Advertisement - Article continues below

The picture is also muddied by the extent to which the purchasing power and negotiating skills of businesses varies. The smallest businesses tend to pay the provider's standard tariffs, but larger firms are more likely to negotiate deals individually. While this may lead to some businesses securing a better deal, it also makes the market much less transparent, preventing firms from quickly working out whether they could save money by switching.

BillMonitor has concluded that Ofcom has failed to do enough to protect SMEs, and has called for the Competition and Markets Authority (CMA) to intervene in order to improve transparency and encourage greater competition.

How to pay less for mobile phone contracts

While mobile-phone costs can take a big chunk out of the profitability of small businesses, there are several ways to reduce your bills.

Use price-comparison sites to shop around the leading platforms have increased their coverage of small-business services in recent years, making it easier to use them to identify good deals.

Be prepared to look beyond the biggest providers. In research carried out earlier this year by, Virgin Media and Plusnet came out as significantly cheaper than the big three for small- business customers.

Don't pay for what you don't need. Small businesses routinely sign up for premium contracts they may not require; for example, if your staff are connected to Wi-Fi in the office most of the time, then they don't need generous monthly data allowances.

Advertisement - Article continues below

Be prepared to negotiate: bigger firms can cut their own deals rather than paying standard tariffs, so talk to other similar businesses about what they have been able to secure.

Don't forget service if you and your staff depend on good-quality mobile-phone service, cheap may not always be cheerful;

Ofcom publishes regular updates on current customer satisfaction ratings with mobile providers.



Small business

Small business: how to chase late-paying customers

Many small business have trouble getting their customers to pay up on time. Here's what you can do about it.
23 Jan 2020
Small business

Is your business paying enough VAT?

Any business with annual sales of more than £85,000 must be registered for VAT.
23 Jan 2020
Small business

Small business: where to find funds for your company

There are plenty of potential sources of money to help your startup business flourish, says David Prosser.
7 Jan 2020

Most Popular


Want to make money in 2020? Gold and silver are looking like a good bet

If you want to make money from investing, says Dominic Frisby, it’s simple: find a bull market and go long. And in 2020 gold and silver are in a bull …
22 Jan 2020

Money Minute Friday 24 January: the key to UK interest-rate cuts

Today's Money Minute looks ahead to the release of data that could hold the key to UK interest rates cuts. 
24 Jan 2020

Money Minute Thursday 23 January: European interest rates

In today's Money Minute we look ahead to Christine Lagarde's second interest-rate-setting meeting at the European Central Bank.
23 Jan 2020

How the boom in passive investing could create better-run companies

ESG investing, or "ethical investing" as it used to be called, is mostly about the marketing, says John Stepek. But it's not all bad.
24 Jan 2020