My Problem With Cellular Providers

Remember when the typical cellular phone advertisement showed a woman with a small child near a broken down car on a dark highway?  Cell phone in hand, she would call a tow truck and be on her way.  The message--don't let this be you or your wife/mother stuck out here on the road without a cell phone for emergencies.

Back in that time, expansion was easy for the cellular providers.  All they had to do was set up a few kiosks in the mall or a local retailer and wait for people to approach and sign up for new service.  Contracts were typically one year long, and growth was simply made by adding new subscribers.

Fast forward to today, and the situation couldn't be more different.  The two-year contract is the new industry standard.  Today's cellular phone advertisements often tout the GPS or data access capabilities of modern smartphones.  Many seem to have little to do with the cellular phone at all.  But now that the market for cellular phone subscribers has been saturated, the way to expansion has been to add more services.  The big four cellular providers (Verizon, AT&T, Sprint, and T-Mobile) all offer a bevy of services outside of traditional voice communications--email, web browsing, GPS, apps, and more.  In the US, text messaging has taken off driven largely by a young audience who use it as a cheaper, unlimited alternative to the constraints created by the limits on voice minutes in most plans.  The reaction of the cell companies to the popularity of text messaging?  They increased the average cost of text messages fourfold over two years.

Today's cellular phone plans are a complex mishmash of rate plans and options that are too complicated for most consumers to understand.  And the cell companies are in no rush to change that since it creates a good chance that you'll end up spending more on your service than necessary.  To add insult to injury, certain changes will automatically trigger increases to your plan, but the reverse is not true.  For example, if you go from a feature phone to a smartphone, your provider will automatically add a data option to your rate plan with no intervention required on your part.  Trade from that smartphone back to a feature phone, however, and there will be no decrease in your plan unless you request to have the data option removed.

Several years ago, the transition from digital cell phones to GSM was supposed to change the way we managed information on our phones.  Rather than losing our contacts and calendars every time we changed phones, we would store that information on SIM cards that switched between phones.  We would be able to switch phones without switching numbers, a common problem at that time.  But the cellular companies locked their phones to their networks, rendering them useless with SIM cards from another provider.  The claim was that they did it to enforce the contracts on the subsidized phones that were sold well below cost.  But even after the contract terms have been fulfilled, the Big Three still will not provide the codes required to unlock the phone, nor do they reduce the monthly service rates which are supposed to include the cost of the subsidy after the phone has been paid.  It was only after the threat of government intervention that they put the fee for early contract termination on a sliding scale; previously it cost just as much to end your contract after one month as it did after twenty-three months.

Finally, the rate plans themselves have crept up over the years, and when the prices haven't increased, the number of minutes allowed with each plans has decreased.  As indicated earlier, text messaging has gone up from five cents to twenty or more.  And other options like data, GPS, or calling circles can easily add $20 or $30 a pop to the base plan.  But more insidious than the increases in the rate plans are the increases to the supplementary fees that all providers charge.  For example, every cellular service provider has a rate plan of $59.99.  But after government-mandated taxes and provider-instituted fees, such a plan would probably cost well over $70 in practice.  In a four-way horse race for subscribers, nobody wants to step out of line and advertise a plan costing $62.49 when everyone else's is $59.99, so they hold the base rate the same and add the increase to the "regulatory fees" that are only revealed after the consumer receives a bill.

The cellular service providers should be made to abide by the following rules:

  • They should be required to provide the unlock codes for any phone that is not under contract.
  • They should discount the rate plan for those who are not under contract to reflect the end of the "subsidy."
  • There should be no additional fees in the bill besides those required by the government.  Any provider-generated fees should be folded in to the main rate plan.
  • They should automatically remove options that are not applicable to a particular user's situation.
Of course, I know that this is all a long shot (particularly that last point).  Cellular providers continue to lobby against any additional regulation, and the FCC has been slow to intervene for fear of triggering even higher costs to consumers.  Still, a guy can dream, right?