WSJ: Americans' Phone Bills Are Going Up

There's been some positive news in the last year (and the last few) for American cellphone customers: certainly there's more visible competition for their business among the largest players in the market. Nonetheless, the Wall Street Journal reports that while more competition may translate into some more attractive service bundles, flexibility in phone options, or smoother customer service, it doesn't actually mean that the customers are on average reaping one of the benefits that competition might be expected to provide: lower price. Instead, the bills for customers on the major wireless providers have actually gone up, if not dramatically, in recent months — which means U.S. cell service remains much more expensive than it is in many other countries. The article could stand a sidebar on MVNOs and other low-cost options, though -- I switched to one of these from AT&T, and now pay just under $40 for one version of the new normal of unlimited talk and text, plus quite limited (1GB) data, but still using AT&T towers. Has your own cost to talk gone up or down?

Comments

Virgin Mobile

[allaunjsilverfox2]

35 USD for "unlimited" data and 400 minutes of talk time. Texting is "free" using my google voice number. If I really needed to talk more than 400 minutes, I could use something like Skype for voice.

Re:Virgin Mobile

[AlphaWolf_HK]

I get tmobile for $23 a month per phone ($114 a month for 5 lines.) Everything is unlimited too.

Re:Virgin Mobile

[rhodium_mir]

Certainly the best network will vary depending on location. A buddy of mine works up in Alaska where apparently AT&T is the way to go and Verizon is useless. Here in Oregon at my parents' house and my family's cabin Verizon is the only network that has any signal.

Canada...

[Anonymous Coward]

It's still a lot cheaper than Canada. Here we're dreaming of having something as good as American plans! As a single parent I just can't afford what they charge here...

Re:Canada...

[ArcadeMan]

Not to mention the lack of competition of cellphone and internet providers in small towns far from the major cities.

Re:Canada...

[corychristison]

Tell me about it.

I live in Saskatchewan. We have Sasktel, Bell, Telus, Rogers and the "spinoffs" (Fido, Koodo, 7-11's SpeakOut).

My current plan is with Telus. $60/mo for unlimited nationwide talk (unlimited to anywhere in Canada, from anywhere in Canada), unlimited sms/mms, with 5GB of sharable Data. My wife also has the exact same plan, so we have a total of 10GB of usable data between the two of us. After 911 fee's and taxes, we are paying $133.24 total. As it stands this is about as good as it gets for my needs.

I was with Sasktel for many years until last July/2014. We were locked into a 3 year contract, and paying $60/mo each for 300 local daytime minutes, unlimited local calling in the evenings ,unlimited SMS (but not MMS, those were $1.00 each), and "unlimited" data. One gotcha they didn't tell you, is they also charged an $7-$8 "system access fee" on top of your plan, plus 911 fee's and taxes. In total we were paying ~$155/month. This does not account for overage or long distance fee's we would end up paying most months.

Mine has gone down.

[whoever57]

I was on contract with T-Mobile: a family plan and one phone (out of 4) 18 months through its 2-year contract (the other 3 were past their 2-year contract period). T-Mobile allowed me to switch immediately to their monthly plans, with a reduction of about $60/month.

Mine's gone down

[Nimey]

I switched from Sprint to Ting, a Sprint MVNO that does strict PAYGO. $6/mo per connected device and charges for talk, text, and data based solely on usage in a given month; if I talk less next month my bill goes down, if I use more data it goes up.

My phone bill for two devices is around half per month what Sprint charged us.

False advertising.

[whoever57]

I don't understand how businesses are allowed to tack on fees to bills without disclosing these fees in their prices. Somehow they can't quote these fees when you are booking the service, but they can calculate them when billing for the services.

Some years ago, I rented a car from a large airport and one of the fees tacked on was for the property taxes paid on the car. Why don't they just tack on another fee for the property tax on their buildings, or their staff costs, car depreciations? These are all costs that must be paid by the business whether or not I had rented the car -- just like the property taxes on the car.

I am just waiting for prices for cellphone and car rental services to be $1 with the rest of the cost as "taxes and fees".

Re:False advertising.

[Mitreya]

I don't understand how businesses are allowed to tack on fees to bills without disclosing these fees in their prices. Somehow they can't quote these fees when you are booking the service, but they can calculate them when billing for the services.

That's right, this should definitely be illegal. Airlines played those games for years and years ($50 ticket fee, but with taxes it works out to $100 or maybe even $300). A rather recent regulation had ended that crap

Re:False advertising.

[whoever57]

Trouble with this is the carriers won't be able to run national ads with their pricing. Instead the price will have to be concealed until you're about to sign up. Some states (Nevada) you pay around 7%, whereas others (I think NY?) it's 25%.

If it were purely taxes that the company must collect and hand over based purely on what you pay, I could agree with that, but when it is nebulous "fees" that are really cost of doing business that the company incurs, it's not reasonable. Furthermore, some of the fees relate to Federal fees that are the same in all states.

In the example I was quoting (renting a car at an airport), the company has enough information to quote the exact price with all fees at the time of booking.

Re:False advertising.

[bzipitidoo]

I beat an auto repair shop on an extra fees scam some years ago. Got a quote for a muffler replacement, and used it. After the work, they tacked on this extra $15 fee for "shop materials". That shop materials fee seems to be a common scam in the DFW area. When I objected, they trotted out the tired old justification that everyone does it, it's standard practice, etc. Also tried to claim it was a government requirement. EPA, you know. I pointed out that they had not included this cost on the quote, and they should have. That backed them off, and they dropped that extra charge.

It's relentless. Just because a business is big and well-known is no assurance they won't stoop to outright theft and try to pass it off as necessary or customary. Once had AT&T try to charge me a fee for dropping long distance service while keeping local. A fee for dropping a service? Ridiculous! When I complained to them, they tried to tell me that a particular law said they were allowed to charge this fee, so tough. I told them I didn't give a rats ass what some miserable obscure law said, as they'd doubtless pushed it through with bribes and lobbying, and warned them I would complain to the FCC if they didn't back down. They didn't, so I did. Evidently the complaint worked. AT&T responded by refunding the fee in the interests of "customer relations" while in no way admitting any fault.

The problem of ripoffs and poor service always seems to crop up wherever competition is lacking, and telecomms companies in the US certainly do not have enough competition. Ma Bell was an evil monopolist until their forced breakup in 1984, which it turned out, didn't help much. Today, telecomms in the US are still uncompetitive, price gouging, regulatory capturing, sluggish, backwards scum.

Re:False advertising.

[tenchikaibyaku]

Why is it more important that advertisers have the ability to advertise a single price all over the country than consumers being able to easily tell what something actually costs once they're in a store? This seems like a really weird (or at least one-sided) argument.

Re:False advertising.

[Wansu]

The problem of ripoffs and poor service always seems to crop up wherever competition is lacking, and telecomms companies in the US certainly do not have enough competition. Ma Bell was an evil monopolist until their forced breakup in 1984, which it turned out, didn't help much. Today, telecomms in the US are still uncompetitive, price gouging, regulatory capturing, sluggish, backwards scum.

I don't know how old you are but Ma Bell was nowhere near as evil as today's AT&T and Verizon. Ma Bell was a regulated monopoly with many constraints on what it could do.

The Bell System was broken up in 1982 by a lawsuit brought by Northern Telecom because they wanted to sell the DMS-100 in the US. As a result of that court ruling, the Bell System was broken up into "baby bells". Since then, the new AT&T has absorbed them one by one.

So now we have a few big companies running the show with very few constraints on what they can do. Competition will not happen. Instead, they merge into bigger companies that are too big to fail. Essentially the same thing has happened in the electric power industry. And it gets sold to the public as free market competition.

Re:False advertising.

[BVis]

Because the American consumer market exists to service the moneyed interests, of course. Duh. Did you think that it was there to provide consumers with quality, competitive services at a reasonable cost? That's cute.

Re:False advertising.

[Jason Levine]

Exactly. Here in NY, the tax rate is 8.25%. If a cell phone carrier was advertising $100 a month for their plans, I could easily add in taxes and come up with a $108.25 real cost. I'd have no problem if this was the only "below the line" fee that they added in. However, they add in a ton of other things that are basically costs of doing business. By the time I need to multiply in the 8.25% tax, we're talking $130 instead of $100. Somehow, Amazon and other major retailers are able to sell items nationwide without saying "This doodad will cost $25 plus $1.25 server maintenance fee plus $3.27 web app programming fee plus $2 executive hot tub installation fee...." Why can't the phone companies? (Besides the obvious answer of "Hiding these extra 'fees' makes them money.")

Re:False advertising.

[usuallylost]

AT&T got absorbed by Southwestern Bell Corporation (SBC) in 2005. Which is pretty much the worst of the baby bells split off from the original Bell System. They adopted the AT&T name, in part because theirs has a rather bad reputation, but the underlying company is SBC along with the bits of AT&T that they kept. So it is really SBC that is buying up everything not the company formerly known as AT&T.

My recollection of the old Ma Bell isn't as rosy as yours. You used to have to rent the telephone from them. You were not allowed to work on the phone wiring in your own home. I can remember being charged a non-trivial amount to have a phone line in my parents home repaired. Because it wasn't allowed for me to do it and unless you bought their in home wiring insurance policy you had to pay Ma Bell to come do it. Before the break up I can remember it costing something like $2 a minute to call my grandmother in Illinois from Virginia. My dad used to stand there while we talked and time the call because he could only afford so much time per month. Before the break up my father wanted a new phone Ma Bell quoted him over $200. We didn't get it because it was so costly. A couple of years later after the break up that exact phone was sold under the AT&T brand name for $19.99.

The break up may have allowed many questionable practices but it also brought costs for the average person way down. The worst practices seem to be more related to the industry consolidating than to the initial breakup.

And

[The Cat]

Landline sound quality in 1975 was better than any mobile phone sound quality in 2014.

"Hi, I'd like to get directions on how to mmmRAWWWWW BOAWWWAAHH URRRBBEE URBEEE BUMPH RAWWWWLLLL at the corner of Park Street. Hello? I said, I want to get dir--fwwwwzzzzEEEEEEEEEEEEEEEEE URPP *crackle* ffffffFAZZZZZZZZZZZZZZZZZZZZZZ EEEP Park street."

The telecom companies raise prices, pocket the money and let their service rot, and the customers just keep shoveling cash at them.

Re:And

[Dorianny]

Landline sound quality in 1975 was better than any mobile phone sound quality in 2014.

This suprises you somehow? A landline provides a lot more bandwidth without any worries of signal interferance from walls or other radio sources. The switches were also analog, no need for converting analog sound into digital bits, compressing and then sending them in discreete packets.

Re:And

[Flammon]

You can thank the government corporate and IP laws for eliminating competition and causing this mess.

Re:And

[tlhIngan]

This suprises you somehow? A landline provides a lot more bandwidth without any worries of signal interferance from walls or other radio sources. The switches were also analog, no need for converting analog sound into digital bits, compressing and then sending them in discreete packets.

Analog phone service sounds better than digital landline - because it was all analog and very little filtering happened. Then in the mid-70's or so AT&T was switching to digital systems. They did research (heavily) into finding out what bandwidth they could limit to and still have intelligible speech, which was decided that the good chunk of human vocalizations exist below 4kHz or so.

This gave rise to the 8KHz sampling with 8 bits (or a 64kbps channel), uncompressed. Which is why our phone systems use 64kbps channel allocations. (56k modems were derived from the fact that every 8th byte or so, a bit was robbed from the audio and used for control purposes. Since you could never tell when this happened, they assumed you only had a 7-bit channel).

Of course, that voice is carried at a full 64kbps. GSM and other digital mobile telephony only really have datarates of 4kbps or lower, necessitating use of highly compressed, highly distorting codecs meant to get the most out of every bit - and let the brain do a lot of the error correction and such (speech has low enough entropy that the powerful organic audio processor running rather advanced wet software can do very good forward error correction to extract out what is being said, despite all the distortion).

Of course, with 3G and LTE and such, codecs are available that let you use more bandwidth to get higher audio quality, but like all things, it requires both ends to support it.

Bill went down after I threatened to leave

[artor3]

My bill with Verizon dropped 40% after I threatened to switch carriers. Cell phone plans are a beautiful example of how prices are set based on the market's willingness to pay, not on the actual cost of the good or service.

Expect prices to continue to rise as companies employ more and more psychologists and statisticians to extract the absolute maximum amount of wealth from their consumers.

Re: Bill went down after I threatened to leave

[AudioEfex]

I've been ready to split to a MVNO for my two phones, both out of contract and no need to upgrade anytime soon. Even went through unlocking process with ATT. I was getting ready to do it last month but life happened, but I was able to get the website to take my $120 service (unlimited minutes, texts, 1GB data) down to $90. It was the same plan - and irritated me that it didn't just automatically move me. Then I log in today, and they actually have applied another discount without my intervention - now my monthly service is $65. They also seem to be applying my company discount differently - before it used to only be on the phone plan portion of the bill, now it seems to be applying over my entire bill which is bringing it down that low. It's saving me about 7-8 extra bucks calculated this way.

So over two billing cycles my phone bill has dropped by nearly half. And all I did was click a different plan the first month, and this month I didn't do anything at all. Coincidentally, $65 was the price I was finding for the other services I had explored as alternatives. So, I've never had a problem with service (except on a visit to LA once, it was awful - maybe the smog? Lol) and I've gotten the price I was going to get without the hassle of changing anything. I'm going to keep a very close eye on my bill to make sure it doesn't creep up again, but I'm a happy camper all of a sudden.

Re: Bill went down after I threatened to leave

[Wolfrider]

--Coincidence? This is East 'Murika, comrade - they probably scraped your cookies and found out you were checking out the competition.

Cheapest Plan

[bradray]

I haven't taken a look at plans in the past year, but a year ago I looked at all of the plans available to find the cheapest possible service for someone that doesn't have many needs. I ended up with TMobile pay as you go plan. They had a unique feature that if you put $100 on your account, the money would stay in your account for 1 year. $100 a year for a cell phone service is hard to beat. This obviously won't work for someone that uses their phone quite a bit, but it is perfect for someone that can mostly use land lines and wireless internet. It's also perfect for a child whom you want to give a phone, but make them responsible for their own account balance.

Re:Cheapest Plan

[Mendenhall]

You missed the good part of the T-Mobile PAYGO plan: once you have paid the $100 once (or accumulated it via smaller payments), all your future added minutes last a year. So if you haven't used $100, you can top off with $50, or even $10, at the end of the first year, and it roll the leftover minutes forward to the next year and add the new minutes. If you buy fewer minutes, you are paying a bit higher price per minute, but you never lose the old minutes as long as you top off. This is why the original purchase of $100 is worth it, since you get the best rate ($0.10/minute).

Also, T-Mobile has great deals on refurb phones often. I bought a Dart (not a great phone, but it works), For $90, which came with a $50 card for minutes. Thus, a useable Android phone for $40. It does support WiFi data tethering, so I can pay the $2 or $3 rate for a day when I need data, and have that for my other devices, too.

Republic Wireless, but there are other options

[RR]

There are options from most of the carriers. I'm doing the Republic Wireless $10 unlimited talk and text, but with no data. Having a 4G phone with no data sucks, but the price is compelling, and I should be able to add a prorated data plan for the times when I expect I do need it. Having WiFi calls when I'm at a place with no cell reception is also nice. However, counting the phone, my bill is higher than if I had been able to keep my dumbphone on somebody's T-mobile family plan.

Ting is a great choice for Sprint, Airvoice is a great choice for AT&T, PagePlus is decent for Verizon.

One interesting option is FreedomPop, but they seem to be in beta. Earlier versions of FreedomPop phones had poor performance and very poor voice quality, but they're supposedly improving. It would be interesting to see if they go anywhere with that.

Re:Republic Wireless, but there are other options

[Jade_Butterfly]

For several years now I've been paying $80 per year for 2,000 minutes with Page Plus. I usually have a few hundred minutes left over at the end of the year, and leftover minutes are retained with continuous service. I've been pretty happy.

My friends tell me that once I get a girlfriend, my low phone bills will be history. However, I've been enjoying my cheap phone service and laughing at my friends with girlfriends for years now.

Re:Ting

[symbolset]

You can configure your Nexus 5, and specific apps and services on it, to not use mobile data in the background. In Settings -> Data Usage scroll down and you will see apps. Select the app, scroll down again and you will see the setting "restrict background data". Check this box and it will stop using mobile data while the app is in the background. This is especially critical for things like Google+, where if you take one HD video it will try to sync it in the background and kill your monthly quota. My kids were making videos with my phone while I slept...

Ting looks like a nice deal, and enthusiastic support. I was very frustrated dealing with Sprint to acquire a SIM for my Nexus 5. They were abhorrent in person at three stores and in online chat as well. That kind of put me off. I did finally manage to get SIMs from Ting real easy like. But the experience put me off even of using Sprint towers.

Besides, T-mobile has been really nice to me. That's worth a few extra bucks.

Stay away from Microsoft Skype on your Nexus 5. It has a known issue that kills the battery. Imagine that.

Re:Spin?

[SeaFox]

WSJ is in the back pockets of big businesses. How can we be sure this is not anti-competition (i.e, pro-oligopoly) propaganda?

Yes, the WSJ is helping big business by pointing out to their customers the major carriers are raising rates on them. That makes perfect sense. -_____-

Re:US cellphone service sucks

[mjwx]

Here in Australia I pay $19.99 per month and get $300 worth of cap value to use on everything except international calls, premium rate calls/SMS and international roaming. (3 services I never use)

G'Day, Australian here.

Allow me to explain how this works for our American friends.

For the GP's $20 real Australian dollars he doesn't get $300 real Australian dollars worth of value, what he gets are $300 imaginary dollars. Australian telco's do this to obfuscate the real cost of services. So they can continue to pretend that a single SMS costs $0.25 and one minute of talk time costs $1.50 or data actually costs $0.20 per MB. In reality that cost is less than 1/15th of the advertised cost. The money has no real value in the outside world and is only valid for 30 days (or however long is stipulated by the contract). This way telco's can continue to confound the ACCC and regular consumers and bold faced lie about the true cost of services.

I'm with Telstra who are shamelessly Australia's most expensive telco... but I don't mind. I'm on a pre-paid plan (PAYG) and for $30 real Australian dollars I get $250 imaginary dollars as well as 400 MB of data for 30 days. Phone calls are $0.90 per minute and SMS's are $0.29, but in reality I'm paying $0.06 per minute for voice calls and $0.019 per SMS taking into account that at $2 per MB the data is 45% of my cap. However if Telco's advertised the real cost of services, they wouldn't be able to get away with charging $0.30 per SMS in real Australian dollars when post-paid (contract) customers go over their cap (feel free to Google "Bill Shock" for sensationalist tabloid pieces about this).

This is a far cry from some places where if you have so much as 1 Peso on your account you can send infinite SMS's. However in that land I also swapped towers 3 times walking from one end of my hotel room to the other so I guess there's a trade off. I'm not all that unhappy with Australian prices, it's more the deceptive advertising that I have an issue with.

Maximizing profit

[GPS Pilot]

companies employ more and more psychologists and statisticians to extract the absolute maximum amount of wealth

There's definitely a price/profit curve, the apex of which is the price that maximizes the seller's profit.

If you were the owner of a struggling small business, wouldn't you try to find the sweet spot that maximizes your profit?

If your honest answer is "no," then what price would you target --
      the price that gets you 50% of your potential profit?
      the price that gets you 10% of your potential profit?

-- and why would you choose to "leave money on the table" like that, to the detriment of the family you provide for?

If your honest answer is "yes," why should a large company act any differently than you would? In many cases the owners (shareholders) of a large company are just as needy as the owner of a struggling small business. Think a senior citizen who's very dependent on a pension, and the pension fund owns shares of Verizon. Should Verizon be "charitable" to its customers (many of whom are wealthy), to the detriment of its shareholders (some of whom are financially struggling)?

Re:Maximizing profit

[CrimsonAvenger]

You know what else is fair? Taxes and regulations.

Taxes and regulations certainly CAN be fair.

There is, however, no real requirement on the part of lawmakers to make taxes and regulations fair.

Republic Wireless

[EronCohen]

I recommend Republic Wireless. $25/month gets you unlimited 3G (5 Gigs, then throttled to 2G) data, voice and texting on the Sprint Network. You have to purchase the phone outright (Moto X) and they hope but don't absolutely require that you offload to WiFi. The WiFi turns out to be a great feature because you can make calls and send texts seamlessly--great if you work in a basement or live in a bad cell area like I do. I wrote a blog posting about my experience here: http://www.eroncohen.com/2013/...

T-mobile has changed the dynamics.

[140Mandak262Jamuna]

I have been a long time customer of T-mobile, mainly because my brother and sister-in-law were in it and back then in-network and out-of-network mattered. But many of my friends switched to AT&T because their kids wanted iPhones.

One of them told me yesterday, "I think I should send T-mobile a donation. AT&T has cut my price in half because of T-mobile". He was paying 300$ for five lines. AT&T reduced it to 160$ for unlimited talk and text and 10GB of high speed data, combined data quota, and hot spot ability, free international roaming at 128 kbps, free international texts.

It is to be expected, there are no new killer must-have features on the new phones, and so the customers don't feel the need to run on the upgrade treadmill. So they days of giving a "free" phone at some 200% margin in installments to the customers are gone. US cell phone market is trending towards sanity now.

The "good" old days

[sjbe]

Landline sound quality in 1975 was better than any mobile phone sound quality in 2014.

Do you really want to go back to 1975? There was no such thing as mobile service. There also was for all practical purposes no data service. There was no voice mail and no answering machines. Text messaging didn't exist and email wasn't available outside of academia and some research labs. You had precisely one company to deal with in the US (AT&T) and they're weren't exactly friendly what with them being a monopoly and all. You would get charged an obscene amount of money to call anyone more than a few miles from your house and you didn't even want to think about the cost of calling someone outside your country. Rotary dial phones were still commonplace. And I'm old enough to remember all this.

Yeah they had voice service that was optimized for voice and nothing else. Cell phones might have their problems but I'm not exactly eager to turn the clock back.