Finding cell-phone sanity
News Room | Columns by CUB's Executive Director | Finding cell-phone sanity
December 6, 2009—Following in the footsteps of a clever TV reporter who once did a story on a rocket scientist and a brain surgeon awkwardly trying to understand their landline telephone bills, The New York Times recently asked a Yale economist to decipher cell-phone plans. His reaction?
"The whole pricing thing is weird."
We couldn't have said it better ourselves. In fact we did, a couple months ago, when CUB released a report, "Surviving the Cell-phone Jungle," showing that visitors to our online cost-cutting tool, the CUB Cellphone Saver (www.CUBCellphoneSaver.com), were overpaying by hundreds of dollars a year on their wireless bills.
Just how weird is the cell-phone industry? Consider this: You pay $40 on up each month just to make a call. Then you get hundreds, even thousands of minutes for "free." If you go over your plan's bucket of minutes, you get some type of volume discount like other deals, right? Wrong. You start paying huge "overage" fees of 35 cents a minute or more.
There is a method to this madness. The wireless companies are obsessed with ARPU (pronounced ARE-poo), or average revenue per user, and how they can boost the amount of cash they make off of each customer. One way is to use those huge overage fees to scare the heck out of you—and too often it works.
Even though CUB's analysis of 7,000 bills found that callers were punished with overage charges less than 10 percent of the time—many consumers are so worried about those rare penalties that they're signing up for expensive calling plans packed with minutes they'll never use. In fact, CUB's report found that a majority of bills averaged more than seven hours of unused calling time.
We've seen some progress in the wireless industry recently, as more competition—though not nearly enough—has reduced the prices of some unlimited plans. But it can still be difficult to find the best plan, because, as The Times reported, the carriers try to bypass ARPU-reducing competition through tricks and services that don't cost them a lot but still manage to drive customers onto expensive plans.
Fortunately, there are tools to cut through all this baloney. Use the CUB Cellphone Saver to upload an online copy of your wireless bill and within seconds you'll see a detailed report that will show you if there are ways to cut your costs. It's been showing most consumers how to save an average of about $26.52 a month, or $318 a year.
In the bizarre wireless world, we need weapons against all that weirdness so we can find some cell-phone sanity.
"The whole pricing thing is weird."
We couldn't have said it better ourselves. In fact we did, a couple months ago, when CUB released a report, "Surviving the Cell-phone Jungle," showing that visitors to our online cost-cutting tool, the CUB Cellphone Saver (www.CUBCellphoneSaver.com), were overpaying by hundreds of dollars a year on their wireless bills.
Just how weird is the cell-phone industry? Consider this: You pay $40 on up each month just to make a call. Then you get hundreds, even thousands of minutes for "free." If you go over your plan's bucket of minutes, you get some type of volume discount like other deals, right? Wrong. You start paying huge "overage" fees of 35 cents a minute or more.
There is a method to this madness. The wireless companies are obsessed with ARPU (pronounced ARE-poo), or average revenue per user, and how they can boost the amount of cash they make off of each customer. One way is to use those huge overage fees to scare the heck out of you—and too often it works.
Even though CUB's analysis of 7,000 bills found that callers were punished with overage charges less than 10 percent of the time—many consumers are so worried about those rare penalties that they're signing up for expensive calling plans packed with minutes they'll never use. In fact, CUB's report found that a majority of bills averaged more than seven hours of unused calling time.
We've seen some progress in the wireless industry recently, as more competition—though not nearly enough—has reduced the prices of some unlimited plans. But it can still be difficult to find the best plan, because, as The Times reported, the carriers try to bypass ARPU-reducing competition through tricks and services that don't cost them a lot but still manage to drive customers onto expensive plans.
Fortunately, there are tools to cut through all this baloney. Use the CUB Cellphone Saver to upload an online copy of your wireless bill and within seconds you'll see a detailed report that will show you if there are ways to cut your costs. It's been showing most consumers how to save an average of about $26.52 a month, or $318 a year.
In the bizarre wireless world, we need weapons against all that weirdness so we can find some cell-phone sanity.