Some Waldman's Blog – Finding Balance in the Flood of Information

Cell Phone Downfall March 12, 2010

I wrote about cell phones almost exactly one year ago. And now, here I am after a year trying to figure out how I am going to handle the end of my contract. The technologist in me is dying for a new fangled little machine in my pocket. But the conservationist in me is not finding any justification for it. In case you are wondering how the cell companies can afford to advertise as much as they do, keep reading.

To start, there are three levels of phones out there now. And Verizon Wireless has decided to make a very clear distinction by forcing them into three specific contract plans. Number one is the smart phone market that gets the greatest advertising dollars. These phones cost upwards of $600-$800. Of course, average consumers rarely see those prices since the cell carriers subsidize the price with their 1 and 2 year contracts. To do this, they charge typically $30 per month… $720 over two years on top of their standard voice plans, which run $40 to $70/month depending on your minute needs. Just so you don’t have to the math… the cost of owning a two year contract runs you $1,680 to $2,400. That seems fair, right? Oh, wait, to walk out the store, the top smart phones are still going to cost you another $150 – it is not a complete subsidy. For that, you are essentially carrying around a small computer with constant access to the Internet with no usage limits.

Granted, that is your most expensive option. Option #2 is the mid-range phone. It still gives you basic Internet access and email functionality. But lumped into this mid-range phone is the basic usage plan, only $240 over the two years, but you only get 25MB per month. There is no good measure of what you can really do with that on the web and email. Of course, the provider would be happy to upgrade you at any point to the more expensive plans. Don’t forget, you are still going to pay for the voice, too, at at least another $960 for the two years.

And option #3 is called the “feature phone.” Ironically, these phones have the least amount of actual features. These are these phones the carriers will basically give away just to get you on the basic $960 for two years contracts. They may have limited “modern” features, but nothing like the above options. But that is not why you get these phones – you just want a PHONE.

The cell phone carriers are racking in the money. And because of this, they can control how you get and pay for their services. If you want basic voice services, you can not get the option 1 or 2 phones. Above is the current phone I want, but am not willing to pay the extra $240 for. If you have to pay for the extra data services you don’ t want, the company is taking advantage of its customers. To me, this violates monopolists regulations… forcing you to pay for more because they can and just because you want a specific device.

Arrrgggh! So, this is why I am now waiting. I can barely justify the cost of the voice plan – which is why I am on a family share plan with someone who can justify the expense. In this new economy, I hope everyone is looking at the expenses they think they need versus what they really need. Everything comes at a price, you just have to know what it is.