New smartphone services fall short of potential as consumers are confused by data price plans and mobile functions

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London, 10 October 2012 – Consumers are overwhelmed by new mobile internet services and increasingly complex mobile data price plans, according to The Mobile Maze, a new survey by EY. The survey, carried out in June, interviewed 6,000 consumers across 12 countries, and found that while smartphones offer the potential for new data services, regular usage of these services remains low.

Consumers’ rapid adoption of internet-enabled smartphones and tablets has been one of the most significant social, business and technology trends of recent years. Smartphone users are twice as likely to use data services as traditional mobile phone owners, however users are still not utilizing the devices’ full potential because of confusion over data tariffs, a lack of guidance from operators on the benefit of new services and concerns over privacy and security risks.

Lack of awareness is stopping consumers from using smartphones

When trying to understand the reasons why consumers were reluctant to adopt the latest mobile functionalities, the research found that smartphone users are clearly struggling to understand the relevance of using such services. Thirty-five percent of consumers said they had no intention of using mobile web browsing and 34% said they had never even heard of the service. Similarly, 63% of the respondents also said they have never heard of social media, while 46% said they didn’t know about operators’ app stores.

Customers struggle to understand mobile data tariffs and worry about overspending

The number one reason for customers discontinuing their use of a smartphone service or not taking the option is the fear of overspending. As a result, 38% of consumers have stopped using “mobile web browsing”, mobile payment at “a point-of-sale” (32%), “operator app stores” (28%) and “mobile money transfer” (28%) because they were either too worried about overspending or didn’t understand the different pricing options.

Jonathan Dharmapalan, EY’s Global Telecommunications Leader says:

“The widespread lack of understanding of mobile tariffs has a dramatic impact on customers trying new mobile services. Clear and consistent communications from mobile operators to their customers would help change this and may also influence people to try new services sooner. If operators do not change the way they communicate, by increasing billing transparency, improving level of customer service and producing clearer marketing messages, they will fail to take advantage of the opportunities that exist.”

In particular, almost one in three consumers, say they are either confused by mobile data tariffs and functionalities, or simply don’t understand the different options available to them. Looking across the board, older customers struggle the most with only 46% of 46-65 year-olds saying they can understand tariffs, compared with almost 70% for younger customers (18-24 year olds).

Consumers feel poorly informed about new mobile services

Forty-six percent of respondents either feel that their service providers do not communicate new service offerings effectively or don’t even know if they do or not. This represents a significant barrier to take-up of new services – 40% of users would try mobile payment services sooner if they had a greater understanding of the service benefits.

Adrian Baschnonga, Senior Telecommunications Analyst at EY says: “Consumers require high levels of reassurance from their service providers, particularly for functions such as mobile payments that have the capacity to transform the device into much more than a communications tool.”

Even in tech-savvy markets, consumers remain confused – in the US (64%) and Netherlands (52%), a majority of users fail to understand data tariffs effectively, suggesting that established mobile data service propositions need to be reassessed. Nevertheless, demand for new services is high – “pay as you go” customers take up just as many services as their pay monthly counterparts, while their spend levels in markets such as China, Russia and the UK are on a par with contract customers.

Jonathan concludes: “Overall, the survey shows that smartphones unlock new mobile phone services, such as web browsing, social media, instant messaging, music services and mobile video. But regular usage by smartphone owners remains low. Although non-smartphone users are more averse to using mobile data services, a high proportion of non-smartphone owners would actually consider trying new services if they understood mobile tariffs better, suggesting strong demand that provides growth opportunities for mobile providers.”

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Note to editors

About the study

EY has conducted a major global online customer research study covering 6,000 consumers in 12 countries worldwide. The research, carried out in May and June 2012, was designed to highlight short-and medium-term issues facing mobile operators involved in the mobile services/applications value chain. As part of our primary research, we asked consumers to detail their usage of specific mobile value-added services, exploring take-up drivers and inhibitors, along with their attitudes toward their mobile service providers in key aspects such as communications quality and payment preferences.

In this research report, we have supplemented the findings from our consumer survey with insights from EY’s sector practitioners, to help identify current and future customer needs and the competencies that operators will need to meet them.

About EY

EY is a global leader in assurance, tax, transactions and advisory services. Worldwide, our 167,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential.

For more information, please visit www.ey.com.

EY refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. This news release has been issued by EYGM Limited, a member of the global EY organization that also does not provide any services to clients.