Cell service bogus charges and limitations

If there's one thing that chaps everyone's butt it's how the cellphone carriers seem to just keep grinding away to extract a few extra cents from their customers through bogus charges and ridiculous limitations.

One of the most famous of the charges is the ubiquitous 15-second voicemail instructions that all of the carriers insist we listen to. I think I can speak for just about everyone on this topic: ENOUGH already! WE ALL KNOW THE ROUTINE BY HEART! FOR THE LOVE OF GOD, WE DON'T NEED TO HEAR THE $%$&%$# INSTRUCTIONS EVERY $%$&%$# TIME!

BUZZBLOG: Verizon offers two defenses of indefensible $5 fee

But, oh no, you WILL listen to the message and when you have finished recording, you may hang up or press 1 for more options. To leave a callback number, press 5. Beep.

Why, you might have wondered, do the carriers insist on this rigamarole? The answer? Well, it's simple; it's a historical artifact.

In the dim 'aughties (the first decade of the 21st century), cellphone billing was typically in one-minute increments; you talked or listened for less than a minute but you got billed for 1 minute. Use your phone for 61 seconds, you get billed for two minutes, and so on, so adding 15 seconds to leaving or retrieving a voicemail was a valuable "revenue enhancement."

How valuable? Back in 2009 David Pogue noted in The New York Times: 

"Is 15 seconds here and there that big a deal? Well, Verizon has 70 million customers. If each customer leaves one message and checks voicemail once a day, Verizon rakes in -- are you sitting down? -- $850 million a year. That's right: $850 million, just from making us sit through those 15-second airtime-eating instructions."

Allow me to digress for a moment and recommend an interesting paper on the subject of billing increments: "The Revenue Potential of Billing Increments." In this discussion from 2010 on the Clearly and Simply blog, the author, Robert, explains the models of incremental billing and asks: "Be honest: do you know which incremental billing model is included in your mobile phone or fixed line tariff? No worries, I suppose most people do not know. However, incremental billing models represent a considerable part of mobile or fixed line operators' revenues. ... Today's post presents a simulation model to reveal and evaluate the revenue potential of different billing increment models. As always including the Microsoft Excel workbook for free download."

Incremental charges are still important and in use today. Here are the terms for the "AT&T Shared Business Solution Plans": 

"Airtime and other measured usage are billed in full-minute increments, and actual airtime and usage are rounded up to the next full increment at the end of each call for billing purposes. AT&T charges a full-minute increment of usage for every fraction of the last minute used on each wireless call."

But the voicemail intro is just the tip of the bogus charge iceberg. Some of these charges are far more devious, such as the "Surcharges and Other Fees" on AT&T bills which the company explains are "Charges required or authorized by law" ... by which they mean "we can bill you for this stuff one way or the other." (I cite AT&T because I have an AT&T bill in front of me, but all of the carriers do much the same.)

My favorite of AT&T's "Surcharges and Other Fees" is the company's "Carrier Cost Recovery Fee" which is explained thusly (the emphasis is mine): 

"This fee helps AT&T recover costs associated with providing state-to-state and international long distance service, including expenses for national regulatory fees and programs, as well as connection and account servicing charges. This fee applies for each month in which you have any AT&T state-to-state and/or international charges on your bill including monthly recurring charges (MRCs) or minimum usage charges ( MUCs). This fee is not a tax or charge required by the government."

This fee "helps AT&T recover costs"! Need I delve into the weaselly nature of this statement? All of the carriers do this kind of thing in order to maximize ARPU, the "Average Revenue Per User," even if it makes their customers furious.

Consider a more recent bogus charge: The premium for turning your smartphone into a mobile wireless hotspot. You already have a data plan for your smartphone, but to use it to provide Internet access for your laptop or pad device you have to cough up more money. For example:

"T-Mobile's new Unlimited Nationwide 4G Data plans don't allow mobile hotspot usage; if you tether other devices to your phone's cellular broadband connection, you'll have to opt for one of T-Mobile's traditional [read: throttled once you've reached a specified amount of data usage] data plans." -- Laptopmag.com, Aug. 22, 2012

There's no rational reason to charge more for you to use your smartphone as a hotspot, and yet, one way or another, the carriers are making you pay a premium for doing so.

The latest nonsense in the cellular service world comes from AT&T which, after much brouhaha, will now allow the use of Apple FaceTime video calling on cellular connections (it has always worked over Wi-Fi connections), but only if customers enroll in one of AT&T's Mobile Share plans which can be more expensive than the current individual plans. Oddly enough, Skype and Google+ video calling have always worked over cellular connections (albeit poorly). AT&T described the new service thusly:

"AT&T will offer FaceTime over Cellular as an added benefit of our new Mobile Share data plans, which were created to meet customers' growing data needs at a great value. With Mobile Share, the more data you use, the more you save. FaceTime will continue to be available over Wi-Fi for all our customers."

I particularly like the assertion "the more data you use, the more you save." That's such a bogus marketing line that words almost fail me!

Once again, it's obvious that the lack of competition has created a market where all of the carriers play much the same game. They don't have to collude to manage terms and conditions and pricing, they simply have to all make changes to their offerings very slowly and have plans complex enough that they can claw for a tiny market edge without sacrificing profits. Will a more competitive market never emerge?

So, how happy are you with your carrier? How are you being gouged with BS charges?

Gibbs is charged up in Ventura, Calif. Pay your respects to gearhead@gibbs.com and follow him on Twitter (@quistuipater) and on Facebook (quistuipater).

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