{"id":23428,"date":"2020-08-04T13:09:18","date_gmt":"2020-08-04T12:09:18","guid":{"rendered":"https:\/\/www.ispreview.co.uk\/?p=23428"},"modified":"2020-08-04T16:09:48","modified_gmt":"2020-08-04T15:09:48","slug":"ofcom-uk-ponders-personalised-broadband-and-mobile-pricing","status":"publish","type":"post","link":"https:\/\/www.ispreview.co.uk\/index.php\/2020\/08\/ofcom-uk-ponders-personalised-broadband-and-mobile-pricing.html","title":{"rendered":"Ofcom UK Ponders Personalised Broadband and Mobile Pricing"},"content":{"rendered":"

The UK telecommunications regulator, Ofcom<\/a>, has launched a new discussion document that explores the potential impact of “personalised pricing<\/em>” on broadband ISP, phone and mobile services (i.e. when providers adopt the ability to set different prices for different customers, based on individual characteristics).<\/p>\n

Personalised pricing is a complicated area and one that Ofcom<\/a> intends to explore as part of their work to encourage the fair treatment of consumers (here<\/a>). In short, modern algorithms and AI \/ machine learning systems – based on data about our behaviour, interests and preferences – are increasingly giving firms the ability to personalise prices in more sophisticated ways.<\/p>\n

“These developments could give communications providers the ability to set different prices for different customers, based on individual characteristics and a prediction of how much someone is prepared to pay<\/em>,” said Ofcom<\/a>. But the regulator also recognises that such things can have both “risks and benefits<\/em>” for customers.<\/p>\n

In theory some consumers could benefit from such a system as they may be offered a lower price for a service that might otherwise be more expensive (e.g. if you take a mobile plan with a huge allowance, but have no history of using all that, then you may be ripe for a cheaper deal). But on the flip side others may end up paying more for the same service and thus grows a risk of “unfair<\/em>” price discrimination.<\/p>\n

At present various UK laws already place constraints on how businesses can use personal data held on customers and individuals (e.g. Data Protection Act \/ GDPR, Consumer Rights Act, Equality Act etc.), which provide consumers with protection and legal recourse where their rights have been infringed. Suffice to say that any changes to these would have to be very carefully considered.<\/p>\n

\"ofcom<\/p>\n

We’d add that it would be difficult or expensive for smaller broadband and mobile providers to implement such systems, which might leave them at a competitive disadvantage. Similarly price comparison sites, which tend to rely on a fairly linear model of pricing for their engines, would be presented with the incredible difficulty of trying to accurately compare a market where there could be several different prices for every product (each provider may also have its own unique algorithm).<\/p>\n

At present most people will have little awareness of personalised pricing in the UK since it’s a fairly new concept for the telecommunications market. The principle is at least fairly easy to grasp, as per above. Despite this Ofcom’s research<\/strong><\/a> found that most people “felt personalised pricing was \u2018unfair\u2019, with a lack of transparency about how the price would be calculated and uncertainty about whether they had a good deal<\/em>.”<\/p>\n

Equally if there was transparency then there’s uncertainty around whether or not people would understand what was being explained.<\/p>\n

Ofcom – What might mitigate concerns for consumers?<\/strong><\/p>\n

Our research found that the potential benefits of personalised pricing did not outweigh participants\u2019 concerns. With the exception of lower prices for low income households, there was a lack of faith in possible benefits, including expanding access to new or varied services.<\/p>\n

When asked what would overcome participants\u2019 concerns, only banning the use of financial data or the practice of buying in other data appeared to help, though participants still questioned how this could work and felt that further clarity was needed.<\/p>\n

Greater transparency around what data is used and how it fed into results was seen to be useful. However, it was still unclear to participants how their result would compare to the \u2018market norm\u2019 or \u2018average\u2019. The ability to compare prices using price comparison websites was seen as helpful, although participants were unsure about how they could be used to get a personalised recommendation. Outcomes had the potential to raise questions and cause frustration where participants knew that they were paying more than others for the same product.<\/p>\n

Better explanation of the collection or use of personal data upfront was thought to provide useful reassurance but did not overcome concerns about specific types of data being used, for example, financial or demographic data.<\/p>\n

The case study in the research presented a customer who opted out of sharing their data and therefore was not offered a lower personalised price. In response the ability to \u2018opt out\u2019 of data sharing was not seen by participants to be a positive outcome, as they considered that people could be penalised for not sharing their data.<\/p><\/blockquote>\n

Personally, we’re not huge fans of the Personalised Pricing idea, where there appear to be too many cons and realising the pros, without discrimination, would seem likely to make the whole market a lot more complicated to understand. Ofcom’s discussion paper broadly echoes all these concerns and merely notes that they will “continue to monitor how personalised pricing develops in the future as technology evolves<\/em>.”<\/p>\n

At this point it\u2019s probably worth noting that a degree of personalising pricing already exists in the market, albeit set more by a provider\u2019s sales and retentions staff via individual negotiation (haggling) than automated systems. Granted it’s not quite the same thing, but there are similarities.<\/p>\n

Ofcom are separately consulting on their initial thoughts for a new initiative called “Open Communications<\/em><\/a>“. This would enable people and businesses to share their own data – for example, what products they use, the price they pay and how much data they use – with comparison sites or other providers, to receive recommendations about the best products for their needs.<\/p>\n

“Enabling people to share their data could make this process quicker, easier and more effective. However, it is critical that data is shared securely, and that customers have control over what data they share, who they share it with and how it is used<\/em>,” said Ofcom.<\/p>\n","protected":false},"excerpt":{"rendered":"

The UK telecommunications regulator, Ofcom, has launched a new discussion document that explores the potential impact of “personalised pricing” on broadband ISP, phone and mobile services (i.e. when providers adopt the ability to set different prices for different customers, based on individual characteristics).<\/p>\n","protected":false},"author":1,"featured_media":23429,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"ngg_post_thumbnail":0,"footnotes":""},"categories":[1],"tags":[36],"class_list":["post-23428","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uk_isp_news","tag-ofcom-regulation"],"share_on_mastodon":{"url":"","error":""},"yoast_head":"\nOfcom UK Ponders Personalised Broadband and Mobile Pricing - ISPreview UK<\/title>\n<meta name=\"description\" content=\"The UK telecommunications regulator, Ofcom, has launched a new discussion document that explores the potential impact of "personalised pricing" on\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.ispreview.co.uk\/index.php\/2020\/08\/ofcom-uk-ponders-personalised-broadband-and-mobile-pricing.html\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Ofcom UK Ponders Personalised Broadband and Mobile Pricing - 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