One cellphone billing plan allows customers to upgrade to a new device in less than two years. Another allows a pool of data to be shared across multiple devices. Yet another offers unlimited data, but only at slower Internet speeds. All these perks are there for the taking, yet the average wireless telephone bill continues with its monthly sting.
Welcome to the confounding world of cellphone billing plans. Even executives at wireless telephone companies say their industry has created a Tower of Babel of competing plans, with highly specific requirements and offerings and even, in many cases, unique language buried in the fine print.
For cellphone customers, all this competition has meant they occasionally receive more for their money, or they might even obtain a better deal when they switch to a different phone carrier. However, with that savings opportunity has come the risk of telephone bill surprises, even for knowledgeable consumers.
“I think we’re propagating some confusion in the marketplace — us as an industry,” AT&T Mobility Inc chief executive officer Glenn Lurie said in a recent interview. “There’s been so much noise that customers are getting confused.”
It all started nearly two years ago, when T-Mobile USA Inc killed the traditional two-year contract, a move that shook the wireless industry. In the past, a phone subscriber signed a two-year contract to buy a telephone for a discounted price and paid a flat monthly bill. With T-Mobile’s new contract-free plan, a customer could pay the full price for a smartphone in monthly installments and the bill would be reduced once the phone was fully paid off.
The move set off a flurry of changes among carriers. Verizon Wireless, AT&T and Sprint responded with similar contract-free plans that allowed people to pay for their own devices in exchange for lower rates.
However, that was just round one.
“Since there are new deals every couple of weeks, even if you go with the best deal today, things might change tomorrow,” independent telecommunications analyst Jan Dawson said. “Ultimately, all this is good for consumers, but it takes more work now than it did to figure out the best deal.”
In February, AT&T and Verizon expanded the data packages for their family plans. AT&T offered 10 gigabytes of data for families to share, starting at US$130 per month for a family of two.
However, then there was the fine print: Brand-new customers signing up for the family plan would have to choose AT&T’s contract-free plan, Next, and pay off a telephone in monthly installments. Or they would have to provide their own device, like an iPhone bought from Craigslist. Or they would have to buy a new cellphone at full cost from AT&T.
Existing customers could sign up for the new family plan, but they would have to meet the same criteria once their contracts were up.
Also in February, Verizon sweetened its family plans, but it offered discounts only for certain types of customers. For example, subscribers to Verizon’s Edge program — an option to pay off a telephone over monthly installments — got US$15 off their bill.
This month, Sprint said it would, for a limited time, cut the bills of any Verizon and AT&T customers in half if they switched to Sprint, with one big caveat: Sprint said it could not promise that customers would be billed the same rates for future device upgrades.
On Dec. 16, T-Mobile announced an offer to roll over customers’ unused mobile data month after month. It was reminiscent of older phone plans, but remarkable in today’s market because cellphone customers often buy more data than they need to hedge against running out and paying more for going over.
Industry insiders acknowledge that, short of creating a spreadsheet to sort out the pitches, expecting consumers to navigate all of these offers is unrealistic.
“We’re in a state of the industry where the carriers have sown a massive amount of confusion,” T-Mobile USA chief marketing officer Mike Sievert said in a telephone interview. “Can you even decipher what’s going on with the carriers anymore?”
Sievert said T-Mobile’s goal with Data Stash, its new offering for rolling over unused data to the next month, was that customers would no longer have to guess how much data they would use every month.
Even T-Mobile’s plans can be confusing. Its plans are advertised as including unlimited data. However, what actually happens is that users pay for a bucket of high-speed data, and once it is depleted, the cellphone’s data connection is switched over to slower speeds. While the slower Internet data is marketed as unlimited, critics have said it is so slow that it is unusable. T-Mobile separately offers a plan with unlimited high-speed data.
“A T-Mobile user might be really disappointed in the end if they think they have an unlimited data plan, and then when they hit the ceiling of 1 or 3 gigs, it’s pretty much denial of service because you cannot use your phone,” said Toni Toikka, chairman of Alekstra, a research company that studies cellphone bills.
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