Mobile broadband meets credit crisis

 

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By Stewart Mitchell

Posted on 6 Dec 2008 at 09:17

Mobile broadband providers are turning down as many as three in four potential customers after credit checks, according to figures from Broadband Expert.

Mobile data access has grown exponentially in 2008, in part due to free laptop deals for customers signing up for long data contracts, but suppliers Orange, Three and Vodafone are becoming increasingly choosy about who they accept on the give-away deals.

"Companies are spending huge amounts on advertising campaigns promoting these offers, yet when the consumer comes to sign up, there is a strong chance they will be refused based on a credit check," says Broadband Expert commercial director Rob Webber.

"Of the sales that we have seen, on average half have fallen through once the mobile operators have run a credit check on the consumer. One provider has rejected 75% of sales after running credit checks."

The statistics were based on the details of around 500 customers, Webber said.

Most mobile broadband and laptop deals have contract periods of between 18 and 24 months with a typical monthly cost of £25 to £40. Since these contracts carry no upfront charge for the laptop or the dongle, there is a significant level of risk for the retailer.

Vodafone and Three both confirm that they run credit checks on customers signing up to contracts, but refuse to say what percentage of potential consumers are turned down as a result of the findings.

Consumers who are refused by one provider may, however, be accepted by another. "These rejection rates demonstrate a different strategy with some companies prepared to take more of a gamble to fill their order books and others choosing to play it safe by only targeting better off consumers," said Webber.