Mobile broadband meets credit crisis
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.
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What risk for the provider ?
Quoting an article statement:
"there is a significant level of risk for the retailer"
Consider mobile broadband. Sometimes the provider gives you a USB dongle for free (and it likely is a used refurbished device that many providers simply give you for free with pay-as-you-go), other times at a discounted price. And it is able to terminate the access for a specific SIM of a customer whenever it detects a problem in the monthly payment. So, what is the "significant level of risk" ? That a customer surfs the Internet for 1 month without paying later ?
I'd be curious to know how many such cases exist in history to justify the need for these credit check practices, that may bring to loosing up to 75% of the customers.
Funny to see that, for example in the area where I live, a company providing electricity to your house doesn't have any such concern: they only ask for a deposit if you don't set-up a direct bank bill-payment. However, if you do set-up automatic payments through bank, they don't even ask for a deposit.
Now, when I hear of people who see a mobile broadband access denied by a provider because they merely just opened a banking account, that simply sounds ridiculous to my hears.
Not to mention that I heard of many people who asked to friends or colleagues to provide their identities in order to start these bill-pay mobile broadband services, and thus overcome the system. However, the only net effect of this, is for the providers that they have incorrect information about who's actually using their services.
Again, ridiculous, IMHO. If I were a provider, and I had really these serious concerns about credit reputation of customers, then I'd simply ask for a little 1-month deposit to start the contract, and the problem would be solved without so many unhappy (non-)customers who go somewhere else.
By axullec on 9 Mar 2012 
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