The Real Rip-Off in Wireless

Verizon and AT&T recently cut prices on their unlimited voice and data plans. Whoop de doo. Text messages are still a rip-off. Data still isn’t truly unlimited. People seem to really be focusing on these data plan prices. Meanwhile, people are ignoring the voice prices. Let me tell you, that is where the real rip-off is coming from.

I remember when I was a kid, and landline phones were still huge. Sprint made a big deal about their ten cents a minute.

The number of cents you paid per minute was a huge deal. I remember my grandmother would dial a five digit number before making a long distance call in order to get the price down to five cents per minute. With truphone you can now make many international calls for under three cents per minute. Taking inflation into account, voice calls have gotten ultra cheap over the years.

Now, I’m someone who doesn’t talk on the phone much at all. I still need a phone number because it’s sort of necessary for engaging with society. I also do call family and relatives, and occasionally friends when necessary. But most of my calls are very very short.

So what am I paying for this voice service I hardly use? I have AT&T’s “Nation 450 Rollover & 5000 Night/Weekend & Unlimited Mobile-To-Mobile Minutes” plan. It costs me $39.99 a month. There is no smaller plan available. If you do the math, this comes out to under ten cents per minute. If I’m paying for just the 450 minutes alone, each minute is under 9 cents. Good deal right?

It would be a good deal if I talked on the phone. As it stands, 4135 rollover minutes available. Oh they’re so generous letting me rollover the minutes, right? Wrong. The rollover is just an excuse. It makes you feel less bad about paying for all these minutes you never use. The thing is, if you never use them, you’re paying lots of money for absolutely nothing.

On my last bill I used 20 of the 450 minutes, 4 unlimited M2M minutes, and 64 night & weekend minutes. Even if I were paying a ludicrously high price of 25 cents per minute, for all the minutes, my bill would have been $22. Instead, I’m paying 45 cents per minute.

The way they structure the plans is highly deceptive. You don’t think about your voice costs in terms of cents per minute anymore, because you are paying a fixed rate. But when you really think about it, you’re either paying for something you don’t use, or you’re paying way too much for the little that you do use.

Now, for someone who talks on the phone a lot, this probably isn’t a problem. If I actually used all those minutes, I would actually be getting a pretty good deal. It wouldn’t be an amazing deal, but certainly not a rip-off.

The other carriers are no better. T-Mobile and Verizon have similar minimum plans of 450-500 minutes for $40. Sprint has a voice plan of 200 minutes for $30. I think somewhere in the fine print there’s the option to not pre-pay for any minutes, and pay only for the minutes you actually use. Of course, they charge 45 cents for those minutes, making it moot.

There is an argument to be made that wireless minutes should be more expensive than land line minutes. That’s acceptable, but it’s not true. Remember, if I used all my minutes, I’d be paying a reasonable price for them. The problem is that the minimum tier is much too high.

I’m willing to bet if you looked at the books for any of these wireless companies you would see millions upon millions of dollars paid for unused minutes. I’m paying as much money for unused minutes as I am for unlimited data, which I use a lot. It’s about 30% of my phone bill, and I wouldn’t be surprised if it was 20-30% of their revenues.

Yes, text messages are a rip-off. Yes, data plans are secretly and evilly limited. But most of the money people like me are losing is paying for minutes we never use. Over the course of my two year iPhone contract, I’ve probably paid over $700 for unused voice minutes.

It’s nice that we’re actually seeing a little price war for the unlimited plans. These guys are actually starting to cut some of their ludicrously high margins on the high-end in order to push high-end smart phones to more customers. That’s well and good, but let’s also see some competition for the lower end plans. I want to see unlimited data and text for $30-40 with 100 voice minutes for $10-20. Even those prices are a little high, but they are far more reasonable than what I’m forced to pay now.

Maybe soon I’ll be able to ditch voice service altogether and use a VOIP solution. Perhaps the reason they don’t improve their data networks and expand coverage more quickly is to prevent me from doing that very thing.

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