March 8 2010|02.34 PM UTC

Erik Chang

Dissecting The Mobile Phone Plan Markup

Category: Featured, WirelessTags: , , , ,

Mobile phone companies provide the basic service of transferring information, whether that be in the form of phone calls, text messaging or internet data plans. However, the method in which they charge for these services is not so basic. By coupling various services into packages and failing to disclose specific details, these companies make it difficult to understand exactly what you are paying for, and exactly how much you are paying for it. With messaging and phone calls, both the sender and the recipient are being billed, doubling the charge on the transfer of the same data. When we took a look into exactly how much data is being transferred, and how much it is costing the customer, we found that each service is each being charged at relatively high and largely different rates.

(click image to enlarge)

Dissecting The Mobile Phone Plan Markup

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{ 79 comments… read them below or add one }

Off-White Hat March 10, 2009 at 2:09 am

If you’re unhappy with your phone bill, just get someone on the phone and bitch and moan until they cut it in half. That’s what customer service is all about.

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Larry Fisher March 10, 2009 at 2:30 am

I use TracFone and I end up paying just over 7 cents a minute with no monthly/yearly charges whatsoever. It might not be the best option for some one who spends a lot of time chatting, but most of my calls are under 15 minutes each, with maybe one or two calls a week going over this. So for me it works out great. I’ve been doing it this way for 6 years now and I don’t miss the monthly plan setup at all. The only real downside I can see is that if I lose my phone I’m screwed. They won’t refund the minutes.

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Steve Song March 10, 2009 at 3:05 am

This is a tough and inequitable situation in North America but consider how much worse it is for the economically disadvantaged in developing countries. SMSes are potentially the most affordable form of communication yet mobile operators collude in charging 10 times their cost for an SMS.
Time for a change. http://manypossibilities.net/2009/02/a-modest-proposal-the-1-cent-sms/

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Gubatron March 10, 2009 at 3:54 am

The whole SMS situation in this country sucks. It’s a lousy service compared to email yet we pay for it, and even when we receive messages, something that’s only happening in the US.

But in the defense of mobile carriers, SMS isn’t a big deal, nor it’s as fashionable in this country as in other countries like Venezuela… why? Because calling is almost free on a cellphone. Outside this country mobile calls are extremely expensive, and there are cultures of ringing people, or performing calls under 1 minute since some carriers will charge you the first minute, some will charge you by the second and it’s very expensive. They offer free SMS, or very cheap SMS plans, receiving SMS is free, so people are texting all the time, calling is only reserved for special ocassions.

Here you just call and there’s no long distance, that’s what I like about carriers in the US.

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parkers March 10, 2009 at 5:46 am

BillShrink: I work for an ISP that offers a wireless 1-3 Mb/S connection for $29/$39 a month uncapped, we rely upon building towers just as the cell phone companies do, and use Motorola equipment that operates on an RF frequency just as you have stated. I feel you have far too much pity for these companies, their prices are outrageous.

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parkers March 10, 2009 at 5:48 am

oops, I meant that towards Mike– Thought the authors name was on top!

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Manohar Siluvaimuthu March 10, 2009 at 11:06 am

http://www.nbcnewyork.com/news/business/Your-Cell-Phone-Plan-Probably-Costs-You-3-Per-Minute.html

Check out this article. A new statistic to know what an average customer pays at the end of the day, all said and done, black and white.

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Timothy March 10, 2009 at 11:48 am

Wow, that’s bonkers

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rcw March 10, 2009 at 12:01 pm

I pay $100 per year. I can make and receive all the calls I need to.

Too many people appear to constantly be away from the people they need to converse with. Maybe you need to either stop talking so much or get closer. Or both.

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Jizmak March 11, 2009 at 11:01 am

Very informative article. For anyone saying that this comparison is invalid for whatever reason, i pose the following question:

What justification is there to charge $0.75/MB voice and $90.00+/MB text?

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Brian March 14, 2009 at 9:56 am

Great illustrations. Very good example of technical communication. These telcos aren’t even available in my are but I enjoyed the article just for the graphs.

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toastyaroma March 19, 2009 at 11:37 am

@anonymous in sweden – I’d rather pay more for my cell phone bill than have my government buying people’s votes with cheap/free goods and services paid for by deficit financing.
Socialism is not a sustainable model. Hugo Chavez is about to find that out.

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C March 28, 2009 at 6:59 pm

I took up the challenge for you to help find me a better cell plan, and I got back a plan that could save me over $200 – except it’s the exact plan I’m already on! I don’t understand where I’m already missing the savings.
Please don’t spam me to death now.

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Big Al March 29, 2009 at 6:30 am

Folks! You are missing the point here. Remember, take it for granted that Life Isn’t Fair to everyone, BUT it is your job to make it More Fair for You. Research & Nego- tiation (when U have leverage: B4 purchase) is the key. Like futurich post on 3/9 above, I took the insiders deal with Sprint & it worx great for me. Earlier this month I ported my land line/home phone no. to Tracfone in protest of a $3.95/mo ERC (Energy Recovery Charge ie pure BS) my carrier started assessing in 7/08 without any warning. BTW I’ve got a complaint in w/State Communications Commission for the local carrier’s blatant failure to conform to regs. but the state is a front of red tape to continue allowing it… In any event, you’ve just got to do your homework (or take advantage of the knowledge from those who already have) & take your power back. Just like when you’re in a car show room being worked over by salestaff to buy a car, remember you’ve got the power to say NO DEAL and walk out! Use it in great frequency & don’t let lack of patience show. Call back until you find a rep. who’ll give you what you ask for/expect. Don’t get nasty, just stay firm and use NO & hang up when you need to. When it gets you what you’re thrilled with (or even just well satisfied) you shouldn’t worry about how other customers are not getting as good a deal – afterall, they may not feel they’re being screwed!

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Rog in Miami Gardens April 22, 2009 at 8:27 pm

Big Al, you couldn’t have put it any clearer. You are so right about that. We Americans need to become better, more informed consumers. We consume a lot in this country, so it only makes sense for us to make sure that we educate ourselves on the things we consume, i.e.: where they’re made, how much we’re REALLY paying (from conception to manufacturing to end-usage to disposal) and how reliable the product is. Frankly, as citizens, it is our duty. This article is definitely a start. Thanks for posting it.

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Mark April 30, 2009 at 9:07 pm

Consumer cellular – I have two lines 100 minutes 35/month. No contract. More minutes cost more of course but 100 is all my wife and I need.

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karlos May 18, 2009 at 8:36 pm

Also when comparing cost of network operations to the United States and other countries, try to keep in mind the massive differences of population density. US is a lot more spread out, costing more in transport and leasing fees for all the cell towers. Other note, what happened to Sprint on this chart? Are they dead yet?

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karlos May 18, 2009 at 8:42 pm

@Rog I agree, we need more informed consumers. We also need consumers to RTFM on their handsets. Supporting customer care centers drive up costs on plans. Users call customer care for more simple to handle issues than other countries, issues that they could solve if they read the phone, checked user forums, or paid attention. Sprint actually refunded customers due to excessive calls to care.

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Wirelessdude May 26, 2009 at 2:28 pm

Wow.. there is MOST DEFINATELY a cost that goes along with text messaging.

1) The price of the bandwidth from the cell site to the switch location. Is that free?? You want someone to blame for high prices of cell phones?? Blame the people who provide the bandwitdth (t1′s, DS3′s, OC3′s and above). These are the LIONS share of the costs, and they are controlled by a small few companies. Who? Hmmm.. AT&T, Verizon and Sprint are the 3 largest providers of these circuits. So they control the costs of the circuits for almost ALL of the wireless industry. And they all (except for 1 major US carrier) also have a wireless unit of their business. The costs are rolled downhill, like in every other business out there. Except 3 of them are creating the costs to begin with. And they have their associated costs as well.
2) The price of the equipment in the switch locations to decode it, and re-route it to the end receiver. If that receiver happens to be across the friggin globe, that is A LOT of space to cover. Thus, a LOT of bandwidth across the country. Do you see a pattern developing?
3) Cost of the cell sites. Those aren’t free.
4) Cost of the leases for the cell sites. Are you going to let someone plant a tower in your back yard for free? Neither am I.
5) Cost of the permitting for city/county/state…

…and the list goes on and on.

Do you see where this is going? All this has to be in place for you to make one stupid “LOL” text on your phone. Yes, the bandwidth is already there for the cell site but to say it doesn’t cost anything is, at best, rediculous.

FLAME ON!

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Stephen June 11, 2009 at 5:18 pm

just a question, why wasn’t Sprint or Boost included? Boost’s $50 unlimited plan includes tax!

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Big Diddy June 13, 2009 at 3:37 pm

So is there a better explanation of why MetroPCS, Cricket and Boost aren’t included in Billshrink? I mean they are in the top 25 NFL markets in the country so distribution is pretty wide, like nationwide right?

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Michelle June 29, 2009 at 12:59 pm

What about US Cellular? It’s ridiculous what they charge, and they seem to have a monopoly on my calling area… I am looking into switching to another carrier if I can find one. I am out here on the prairie…

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thedarkprincedc July 8, 2009 at 1:33 pm

Some of you people arent mking any sense. Text messaging cost the company more money. idoesnt makes sense a phone call requires a dedicated connection between the two parties and consumes more bandwidth. A sms message is it at most 250 character long at most they are sent very infrequently thus some channel reuse can occur. They are just raping the hell out of you guys. It seems that it would be a better vale to get a smart phone and a data plan and use aim. rather than have all 3 options. Also cell phone towers dont have the upkeep costs associated with land lines. just think if there something going wrong with the land lines they have to send someone out to check out a large port of the infrastructure they have worry about replacing poles, trenching if they have to its a whole lot more involved. spring att nextel verizon they are taking advantage of every one by having the plans i ay everyone should just stop using phone data all together. verizon even blocs features such as wifi and gps that is built into the phones tell me that isnt a dick move.

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ralph July 14, 2011 at 10:44 am

Nailed it, dude

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dimepiece26 December 20, 2009 at 8:05 pm

There have been laws that have passed while everyone has been asleep…These major corps have lobbied so that they could have free reign over the market. They are eliminating all of the small, more competitive companies, so that they can monopolize the cell phone, internet, and cable markets. AT&T, Verizon, and T-Mobile are all leading cell phone businesses. Their prices are running “neck and neck” (and are VERY overpriced). They feel that there is no need to negociate because they have eliminated the compitition. So, the consumers don’t have many providers to choose from and we get screwed!

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Tad January 23, 2010 at 12:45 pm

MetroPCS is available in the wider San Francisco Bay Area, Los Angeles/Orange County, New York City area and other major metropolitan areas. Metro PCS is not available in the boonies and upcountry rural areas. So Billshrink is faulty and erroneous in their comparisons when they do not include MetroPCS. MetroPCS is available everywhere where people actually live, not Alaska, and rural hillbilly areas.

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Sophie Lopez April 19, 2010 at 5:59 pm

You guys forgot about Fuzion Mobile?! They’re my provider that I seriously am so excited about. It’s an autopay service that works on any smartphone for only $50 a month. Unlimited! You guys should check them out.

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Andrew November 2, 2010 at 6:58 am

I like the figure I saw in popular mechanics which calculated the cost of sending text messages to sending messages to the moon during the apollo missions, and they realized it costs about 200x more to send text messages.

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Synth February 4, 2011 at 10:59 am

That’s why your $600 iPhone is only $200 and your Android phone is “free.”

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