UK mobile pricing is 'significantly' cheaper than other countries in the western world, with Sim-only tariffs pushing down mobile prices.
Regulator Ofcom measured the UK alongside eight other countries, comparing offers for different types of connections from low to high use. France was the second cheapest country, taking the place of Italy, which slipped to third.
Ofcom's sixth International Communcations Report said prices for lower use connections were increasing but prices for higher use contracts were decreasing. Ofcom claimed this shift was an attempt to move customers onto contracts. Last year, the proportion of UK consumers on postpay increased from 41% to 46%.
The regulator said the UK's increasing demand for Sim-only deals was pushing down prices. In the first quarter of this year, one in five new mobile contracts in the UK were Sim-only. Overall, UK prices fell by 10% in the year to July 2011 but the price gap between the UK and other countries is narrowing. US' prices fell by 18% during the same period, with Spain (down 15%) and France (down 15%) also slashing prices.
UK consumers are among the most loyal customers with only 10% saying they were intending to switch provider. Only the US (9%) had a more loyal customer base. Spanish customers (23%) were the most likely to switch.
Meanwhile, Germany is the most popular market for MVNOs, accounting for 20% of connections last year. The fastest growing market is France, where it increased from 1% to 8% since 2005. By the end of 2010, 12% of UK mobile connections were MVNOs, up one percentage point since 2005.
The report also revealed smartphone take-up was higher in the UK than in other European countries surveyed. Ownership nearly doubled between February 2010 and August 2011 from 24% to 46%. The devices were most popular next in Spain (45%), Italy (40%) and Germany (32%).