Cellphone bills average $3.02 per minute, study says
By Chris Gaylord | 03.09.09
How much are you paying for your cellphone?
In San Diego, mobile users pay more than $3 per minute on average. That’s according to a new consumer-advocacy study featured in the LA Times yesterday.
The Utility Consumers’ Action Network surveyed 700 cellphone users and found that the average cellphone bill went down since 2004, falling from $57.92 for a single-line account to $37.15 today.
However, “cost per minute can be outrageous,” says the report. “Doing the simplest of calculations – dividing the total cost by the number of minutes – we find that the average ‘account’ is paying $3.02 a minute.”
This average is driven up by a small slice of consumers who buy large plans but rarely use them. If you cut out these big-spenders, the average falls somewhere between 50 cents and $1 per minute – far more than the “10 cents a minute” claim made in many ads.
The problem stems from three stumbling blocks:
1) Phone companies impose two or three plans, each with a set number of minutes per month. This is not so bad, until you consider the next issue.
2) Consumers are bad at guessing how many minutes they will really use each month. When forced to choose 450-, 900-, or unlimited-minute plans, they may overestimate or think they’re playing it safe by avoiding overage fees with bigger plans. The study found that “customers are only utilizing 32 percent of their plan allowance.” Rollover deals ease this issue, allowing users to stockpile unused minutes, but this horde often goes untouched.
3) After signing up, mobile users rarely think to adjust their plans to fit their habits. Among the study’s 700 participants, many never reviewed their bills closely enough to see their folly. Most phone companies are very amenable to consumers changing plans midway through their contract – especially if the tweak comes in the first few months.
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2. Aurelio | 03.09.09
ATT offers a plan with 450 minutes for $39.99. If people only use 32% of these minutes, as the article claims, they are using about 144 minutes. If they pay $39.99, that averages out to about $0.28 per minute, not “more $3.00 per minute,” as the article claims. Did someone forget about a decimal point:?
3. Lee McKusick | 03.09.09
Well, suppose the cell phone equipment burns 1 watt of electricity for the 1 minute of the phone call. If you buy electricity at $.15 per kilowatt hour then the cost of the electricity for the cell phone call is:
1 watt minute x $.15 / 1000 watt x hour x 1 hour/60 min => $ 2.5 millionths of a dollar.
If you sell that cell phone call for $3.02 then you have resold the electricity for a markup of $1,208,000 to $1 of electricity.
So the benefit of offering “Cell service plans” is the basic commodity of data communication is masked, relabeled and sold for a hefty profit.
4. nahzimm8 | 03.10.09
This is the most ridiculous conclusion that I’ve seen in awhile. I’m shocked that this made ABC morning news among others. Well actually not.
Do some simple math here. I use about 2000 min a month including anytime, nights and weekends and m2m. some may consider me a power user but even if you consider 1500 per month as average.
1500 min x$3.02 = $4,530
I understand that the article claims that people do not use all of thier minutes per month but I also believe that this study fails to take into consideration, Data Plans and free nights and weekends. Additionally they only sample 700 users. Hardly enough to draw any significant conclusions about cell phone usage overall. Where is the actually data that the study pulls from? Can anyone show me this?
5. b | 03.10.09
On the other hand, some of us pay only 10 to 20 cents per minute because of “pre-paid” and “pay as you go” plans.
6. Maximus | 03.10.09
The major cell phone service providers have spent many billions of dollars building the infrastructure and on advertising, yet coverage is patchy for all of them. Some areas are completely unserved. Competition has not always been to consumers’ benefit.
We could eliminate the need for cell phone service providers. We, meaning the FCC (which we voters own), determine who gets access and who doesn’t.
The U.S. needs a federal program to create a fiber optic grid nationwide, then blanket the spaces between the lines with long-range wireless broadband (WiMax and LTE), with a range of up to about 30 miles (it can go up to about 60 miles, but the Mbps speed decreases as the distance increases). Even rural areas could realistically see broadband speeds of 1 Mbps to 5 Mbps.
This would provide telephone (including cellphone/Voice-over-IP, or VoIP) and Internet to the entire U.S., including under-served areas. Broadband access has been shown in studies to stimulate the economy.
WiMAX, meaning Worldwide Interoperability for Microwave Access, is a telecommunications technology that provides wireless transmission of data using a variety of transmission modes, from point-to-multipoint links to portable and fully mobile internet access. The technology provides up to 72 Mbit/s symmetric broadband speed without the need for cables. The technology is based on the IEEE 802.16 standard (also called Broadband Wireless Access).
More here: http://en.wikipedia.org/wiki/Wimax
3GPP LTE (Long Term Evolution) is the name given to a project within the Third Generation Partnership Project (3GPP) to improve the Universal Mobile Telecommunications System (UMTS) mobile phone standard to cope with future technology evolutions. Goals include improving spectral efficiency, lowering costs, improving services, making use of new spectrum and refarmed spectrum opportunities, and better integration with other open standards.
More here: http://en.wikipedia.org/wiki/3GPP_Long_Term_Evolution
7. Dylan | 03.10.09
Chris, the $3.02 per minute figure seems especially large when considering that one study I saw indicates that the average roaming fee cell users pay is $2.61 per minute. The bottom line is that we’re overpaying, and certainly paying more than we often think we are, for our cell phones. I have found, however, that there are some incredibly effective ways to reduce these expenses. Not to blatantly plug, but for example, I work for the website http://www.fixmycellbill.com that cuts down the average cell bill by around 20 percent which typically equates to several hundred dollars of savings per year. You can check out our recent profile on Good Morning America at http://www.abcnews.go.com/GMA/story?id=6887412&page=1 so clearly we’re legit. If people have found other new and effective ways to save on cell phones in this tough economy, please post, and if you’ve tried out fixmycellbill.com, please let me know how much you saved!
Dylan
8. JakeD | 03.11.09
The answer for most cell users is to go prepaid.
Using a 450 minute plan for $39.99 like Aurelio described? With the hidden charged added to your bill, you are unlikely to get away with 10c a minute even if you use EXACTLY 450 minutes a month. Every minute you use the phone more or less that you pay for! The unused minutes you pay for anyway on your bill, on the minutes over your limit you pay up to 40c per minute.
Compare this to a prepaid, (I use NET10 myself), at 10c a minute. Anytime. Anywhere. All distances.
You cannot beat that, plus I didn’t sign a contract to get the ‘lower rate’.
It is only really power users that could save with contracts.
9. Richard Rider, Chairman, San DIego Tax Fighters | 03.11.09
Cell phone calls cost $3 a minute???
http://features.csmonitor.com/innovation/2009/03/09/cellphone-bills-average-302-per-minute-study-says/
This preposterous assertion from UCAN San Diego should have set off skeptical alarm bells in any reputable journalist and editor. It didn’t.
This bogus story has been circulated around the nation. Newspapers, TV stations and blogs mindlessly published this story without any effort to fact check, or even to apply the giggle test (it fails miserably).
UCAN is a far left advocacy group, masquerading as a consumer organization. They favor nationalization of the utilities, and vehemently oppose deregulation, competition and the private sector in general. The study was a classic example of junk science, or, more accurately, junk research.
UCAN’s “scientific study” (87 pages, no less!) http://tinyurl.com/b563dc
surveyed their OWN membership — a group dominated by low income senior citizens sporting tattered Che Guevara T-shirts. A third of those who responded had signed up for cell phone service and then seldom if ever used it. And this is the polling sample on which UCAN tells the nation that we are averaging $3 a minute for cell phone calls (and a ludicrous $.55 cents a minute for land line long distance, I might add).
Pathetic.
10. JonV | 03.13.09
JakeD:
I have said ATnT plan, and after regulatory fees and the like, the total is approximately 48 dollars per month. I also get better than .10 cents per minute. How?
The 5000 Night and Weekend minutes - I use my cell phone a lot “after hours”. Last month, I “used” only 128 of my “450 allotted minutes” during the day. However, I had 1263 minutes I used “evening and weekends”. I also had 934 minutes I used while talking with other ATT customers (”free”). So I used up a grand total of 2325 minutes, but was charged 48 dollars for it. That’s a grand total of about 2 cents per minute. Or, if you also get free “minutes” between operators of your pay as you go plan, that’s 3.4 cents per minute.
So, it is certainly possible that you’re getting ripped off. However, I routinely use more than 480 minutes per month total. For which I pay 48 bucks for. For me, then, it makes sense to have one of these plans.
Though, the article does point out that what greatly skews the numbers is that many people massively under-utilize their plans - paying for “900 minutes” for ($60+fees) and using up 12 minutes of it is a recipe for crazy expensive per-minute costs. Huh. Now I’d like to see how the original study came up with their numbers - who did they interview, did they make appropriate sample sets (size of the sample isn’t quite as important as how well you screen the sample sets, btw), and did they control for the inherent variability? I suspect that the answer is “no”.
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1. Uthor | 03.09.09
Does this take into account plans with data usage? I pay a little more per month to be able to check my e-mail or surf the internet, which would drive my per minute costs up, but I find the premium I pay to be worth it.