Calling Cell Phones Could Cost More

tusixoh writes "CNN.com reports on another reason to keep a close eye on your phone bill. This fall, a subtle realignment in America's phone systems could cause a dramatic increase in what we pay to call cell phones that were once considered local now incur higher toll charges from landlines. The report states that it is unclear how many customers will be affected by these changes. No phone company would provide details on where people could be affected." Update: 10/25 12:31 GMT by M : The IP list carried a couple of informative articles on this: the original situation, and the informed commentary.

Comments

Europe

[GreenPhreak]

Isn't this how it has been in Europe and other countries since the beginning? I remember it costing a lot more to call someone on a cell phone from a landline when I was in England. Just another one of those things that Americans will have to get used to, that everyone else seems to have acclimated to already.

Other places do this, but better...

[boster]

Outside of North America, it is common for the party calling the cell phone to incur the extra cost.

Here's how it works:

• Cell phones get their own area code (thus you KNOW when you're calling a call phone).
• Initiator of a call to/from a cell phone pays the extra cost above and beyond a normal phone call.
• Thus, if you only receive calls (not make them), it can be quite economical (for you).

This is one reason mobiles are more common overseas. They didn't just start as executive toys. For example, workmen on call sites could be given a prepaid phone (with viturally no money on it), and then be reachable.

Re:SWITCH!

[The Good Reverend]

They won't die as long as my reception sucks - I can't get a signal worth anything at my house, and I'm not alone. Instead of the death of land lines, I predict a subtle murging of systems, you'll pay for "service" which will include landlines and cell.

Why that solution isn't better

[dachshund]

Outside of North America, it is common for the party calling the cell phone to incur the extra cost.

Oh goody. I get to post my favorite rant on why "caller pays" isn't better. In a nutshell, here's why:

When the person who owns the cellphone pays for their own calls, they have a strong incentive to seek out the cheapest plan they can get. Hence, they put direct pressure on their cellphone company to be more efficient and keep their operating costs as low as possible.

When the person who owns the cellphone doesn't pay for the call, the charges for the call are "reverse-billed" back to the caller. Since the caller isn't a customer of the cellphone company, the cellphone company has far less incentive to keep the reverse-charges low. (Ever notice that collect calls are more expensive than regular long-distance calls? A similar economic principle is at work.) Typically the government steps in to regulate the prices that companies are allowed to charge, and that's rarely as efficient as direct competition.

I'm convinced that over the long-run, the "caller-pays" system will result in higher costs than a "cellphone-owner-pays" system. This depends, of course, on the remaining competitive barriers coming down: in the US, for instance, it's still too difficult to switch from one provider to the other. Hopefully the new regulations which allow cellphone owners to switch providers without losing their phone number will help in this area.

Incidentally, if my explanation didn't make sense, here's a much more detailed explanation.