Makover needed: Cell phone plans
Filed under: Simplification, Technology
The cellular service world is a prime candidate for a makeover; the limited unlimited plans and the prorating and charging for texts and calls you don't want are two examples of the shell game the companies play with their customers. While some carriers have come a long way in the last few years in clarifying their charges, most still have a long way to go.
For example, Verizon imposed prorating on me earlier this year when I switched from a 1,000-text-message plan to an unlimited one. Even though I was under the limit, the company billed me almost $40 for overages incurred because it had prorated my plan. When a carrier prorates a change you make they basically look at how long you've used the service that month, for example half of the month and then charge you half price and half the allowance you would have had. In my case Verizon cut the 1,000 messages to 500 and the charge to $2.50 but in doing so caused any messages already sent to be billed as overages. To complicate matters, even when you don't get billed in that matter, prorating makes your bill jump up because you are being billed for 1 month and a partial month as well.
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Or consider unlimited plans, which seem akin to a one trip, all you can eat buffet! My friends have horror stories about unexpected charges on supposedly unlimited plans, such as data plans with caps or overage charges on unlimited minutes and texting plans.
Another common complaint lodged against cell phone plans is that users are charged for calls and texts they receive, even if they don't want them. While users can simply choose to avoid a phone call, they have no such option with text messages. Instead, they are charged for the text messages, even spam messages, they receive. It's no wonder subscribers are upset when their cell phone bills contain overages.
Where to start the makeover:
Making over cell phone plans wouldn't require choking off revenue streams for carriers. In fact, if carriers would only give consumers the option to postpone putting changes into effect until the next billing cycle, there would be less confusion and fewer disgruntled customers when that bill is received. Happy customers will stay longer than abused customers, netting companies more money in the long run.
Another way that carriers can make over cell phone plans is to stop offering 'unlimited plans' with 18 exceptions that trigger overage charges. This is another easy fix for carriers to implement.
Perhaps the most significant change that would improve the industry image is to stop charging customers for in-bound calls. This is the way carriers already operate in many other countries. Even though it would likely require a change in overall rate structure, and perhaps reprogramming the systems already in place, it's not impossible. At least one carrier, Centennial Wireless, already offers this exact service, and I would guess that it is drawing many a customer.
What other changes to the cell phone industry do you believe are needed? Add your suggestions in the comments below.
Reader Comments (Page 1 of 3)
10-23-2008 @ 8:35AM
Lori said...
Another way would be to stop forcing customers to sign a two year contract. If you cancel your service for any reason, you are charged a termination fee, depending on the carrier, Att charges 175.00 per phone, Verizon prorates their termination fee.
Reply
11-04-2008 @ 12:16PM
RICKY said...
Yes but you have to look at how this works,
you are getting a phone discount if you stay as a customer, if you leave early you have to pay full price of the phone, so it really aint a penalty
it could be worse and they charge you full price for the phone and if you stay for 2 years then they give you 200 bucks off your phone that you already used for 2 years.
10-23-2008 @ 8:42AM
Travis said...
The main reasons for the contracts Lori is so the companys can give the consumer a discount on their equipment...Verizon actually offers plans without a contract but you will pay 150-400 for a device
10-25-2008 @ 3:26PM
Vic said...
Lori,
I could not agree with you more!! These 2 year contracts are a total rip off and I don't even want to start on the disconnect fees
10-25-2008 @ 3:27PM
pdb said...
That is because you get the phone at a dicounted price. If you pay full price for the phone you don't have to sign a 2 yr contract.
10-27-2008 @ 8:59AM
Angela said...
ATT does offer a $5.00 credit per month for each month of the 2 year contract is fulfilled. Not much, but something.
10-27-2008 @ 12:40PM
jocrus said...
How many of you have had to deal with your carriers customer service agents, usually over the phone should be the easiest to conduct but it is not.
Dealings with AT&T have been good while Sprint may keep you on the phone for hours talking to one department and then another. They could save a lot of money by properly training their representives and cut back on the ones they do not need. This would also make a more pleasant and time saving experience.
If you go into a Sprint office it takes them for ever to get a sale completed. This is also because they have to deal with their own customer service that is insufficient(poor) again caused by poor training of their customer service and overlapping areas that really don't have a clue on what to do.It should be a quick and pleasant experience.
10-30-2008 @ 12:20AM
Jhumbo said...
Regarding contracts and phone discounts, I completely agree that it is reasonable to have a contract in order to receive a discount on a phone. However, I recently tried to sign up for service using an existing phone and found that none of the major carriers will allow you to sign up without contract period... whether you use the discount or not. I find this completely bogus!!
11-22-2008 @ 9:22PM
John R said...
I don't understand the 2 year contract to get a cheap phone. I am with Virgin Mobile, I bought a $10 phone at Wal-Mart and I don't have a contract, I simply prepay for my service.
10-23-2008 @ 9:03AM
Angi said...
I used Suncom once upon a time and had the "unlimited" plan which was simply voice calls only. I had to pay additional fees for text messaging and I wouldn't even begin to think that I could access the internet thru my phone since the price per kb was outrageous. I switched from Suncom right before they were bought out by T-Mobile because of their customer service (or lack thereof) to Sprint/Nextel. While the phones with Sprint/Nextel are a bit more expensive, the customer service is great and the Simply Everything plan is JUST THAT! There are no hidden fees or caps or limits anywhere on this plan. I have shopped around just out of curiosity at other plans that are being offered and nothing comes close to the Simply Everything plan. I used Nextel years ago and the signal was very poor. I have to say that both Sprint AND Nextel have come a long way!! I don't have any complaints at all about their service area since they DO have the option to have "hybrid" phones...which run off of both nextel and sprint towers.
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10-23-2008 @ 9:16AM
Alan said...
The one thing that I think Sprint could do to improve their overall service would be to improve the hardware. Sprint phones do not have a removable sim chip, so, if you decide to change phones, or lose your phone, or break it, all of your contact numbers ( if you're lucky ) have to be retrieved at a Sprint store. A tremendous inconvenience as far as I can see when all you would have to do is remove the sim chip and slide it into your new phone.
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10-23-2008 @ 9:33AM
Vicki said...
I has galled me for years that you get charged for incoming calls. This is great for the carriers - they both get to charge for the same minutes used. Or better yet, if both people have the same carrier, the carrier gets to double dip! What's up with that? I would like to see charges work as they do with land lines where only the caller is charged for the call.
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11-23-2008 @ 8:32AM
Krissy said...
That is why I am glad I am with USCellular they have free incoming calls, text, pics, etc. I know that UsCellular isnt everywhere. But they are expanding everywhere. All over the country. I think that I as a consumer shouldnt be forced to pay for someone else wanting to talk to me.
So when choosing a plan and carrier shop around just like you would when buying a car or house.
Its not rocket science. Just use your noodle.
Here is a hint if you call someone alot and you have the same carrier. Almost every carrier out there now days has mobile to mobile. I know USCellular does and its 9.99 a month for unlimited and works all across the country.
So as I have already said just look around. I am sure the right carrier and plan is out there for each and everyone of you.
Now a word to the people that are complaining about hidden charges. Now lets all be honest here. These charges are not really hidden. READ THE FINE PRINT!
As for termination of service fees. I think the fees are reasonable. These companies are out to make money just like you and I are out to make money with our jobs. Why should they loose money because you as the consumer decided to take your bussiness elsewhere?
10-23-2008 @ 9:47AM
steven said...
I am confused as to the huge scam that is INSURANCE for a product that you are basically leasing. The phones are truly not designed for two year contracts.
I have been through 3 phones in 21 months and its not due to breakage casue by me, they just DIE...
I have had to pay a deductible three times for a plan that I pay 8.00 a month for insurance for as well as 100.00 bill. I have been a customer with T-MOBILE for seven years, and they would not waive my 50.00 deuctible again nor give me an early upgrade at three months before the end of a contract. So I have been paying at least 100.00 a month for the almost two years... so I have paid for this phone 10X over.
Yet... any random joe can go into a store and get the same phone for 29.99! it's a Joke!
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10-23-2008 @ 9:49AM
reesagirl said...
U.S. Cellular isn't every where, but I get free incoming everything. If my phone rings for any reason (call, text, picture) then it doesn't count against me. Because like it says in the article, you can't control other people's actions and why should I be penalized because they contacted me? Isn't that being double charged? The person sending is using up their mins, text etc and the person recieving is being charged too. Sounds unfair to me.
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10-23-2008 @ 10:11AM
Candace said...
Totally agree, especially text messaging, paying for text msgs that people send you is not fair because you can't control it. Personally, I don't text in a situation where it is feasible for me to call, but I have friends who are the opposite, hence, most of the time I am paying mostly for the text messages that people send me. Whereas a phone call, you have the option of answering, once a text has been sent, you get charged for it, whether you read or not. Also, turning off your phone will not change the fact that you get charged for it. I
10-23-2008 @ 10:00AM
keith said...
Why do cell phones still cost between $200-$300 if you have to pay for one straight out. With technology today, it seems like a rip off. You should not have to keep a phone 2 years. They could prorate them. If you are only a few days into your contract, then you pay full price for a phone if you need one, but if you are halfway through your ontract, then you should be able to get a pnone half price.
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10-27-2008 @ 8:59AM
Pam said...
You are very smart. They sell us phones that don't last 2 years and we are out of luck when they die. Not fair. Can't they just charge us a fair price for a phone all the time? Isn't there some other way they can get people to commit to a contract? My phone is 4 months old and the keys are splitting in half! Nothing I could have possibly done could have caused this but if I need a new phone I have to pay full price? These companies make me sick.
10-23-2008 @ 10:11AM
jennifer caraway said...
Wow-
this article and comments are eye opening for me since I am in the process of picking a cell service. I was using Trac phone pay as you go(when it dawned on me that my 800 minutes, cost $99 and only lasted 40 dys).
Now here I am trying to match apples to apples and having difficulty.
I couldn't believe it when my dad told me the contract of 2 yrs is for paying for the phone.....say what? I said, but today, you all confirmed that. My family lives out of state and they use Verizon so it is making sense to me to use their basic plan, but I will get charged an activation charge,prorated bill 2yr contract which I don't want,and if my credit is poor (it is...I will pay a deposit of $125 or $400). So I am posing a few questions to those of you who know this company:
1) do you get good reception or is it "do you hear me now"
2) do you all get lots of unwanted text msgs? I don't text, telling my friends not to text me (their texting fools). and Verizon says pay $0.20 per text incoming or outgoing or spend extra $5.00 for unlimited. WHAT DO YOU ALL RECOMMEND?
I'm sure I could ask a bizzillion more ?'s, but any responses would be greatly appreciated. Thanks.
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10-23-2008 @ 10:49AM
nikkii said...
I have trac phone and love it. get a new phone and two models come with double minutes for LIFE. That feature "pays" for all my text in or out. Also trac phone has really great signal all thru the west and southwest ( I havent tried it east of the rockies yet...lol)