Cell Phone Contracts

I held off getting a cell phone for a long time. I’m not a big fan of phones in general–I’m famous for not answering them. With cell phones, I simply didn’t want to be available 24/7 (especially by work). Unfortunately, a few years ago my work commitments required several days a week of me being on-call. My choice was to either hang around my home office all the time, or to pick up a cell phone and give myself the freedom to wander. I’ve since come to appreciate this once-loathed piece of technology.

When I was evaluating phones, I had to look into the various plans available. Then, like now, most useful plans started at about $30/mo. Unlike now, most plans had both 1- and 2-year contracts, and your phone number wasn’t transferable. Not being a fan of the hassle of keeping contacts updated on changes in how to contact me it became clear that I was going to have to be very selective. This was made tougher in that I don’t usually talk on the phone much–maybe thirty or forty minutes a month.

My solution was to avoid the contracts entirely and get a pay-as-you-go phone. Economics dictated that as the best choice. Yeah, every minute I use, incoming or outgoing, is charged (currently $0.25/min), but unless I consistently use the phone for more than 120 min/mo, it’s cheaper than a contracted plan…and I never get anywhere near that total. Even so, I still pay my $30/mo in order to maintain a landline. The unlimited local calls are free, incoming and outgoing, so why not take advantage of that? Also, and more importantly, since the incoming calls almost always get filtered via voicemail, I can use this number as my general contact number while only the people I want/need to talk to have my cell number. Sweet.

This isn’t to say that I don’t often reconsider my situation. It’s a pain having to maintain two phone services. When my cell phone dies, since I’m not part of a contracted plan, I _do_ have to pay full price for a replacement. On the other hand, the land-line connection is clearer and much more reliable, if less convenient at times. The main thing holding me back is the Faustian contracts all the wireless providers now have.

Almost all of the contracts now are two years long, with $200 out-fees if you find the service doesn’t work for you (i.e. your house is in a "dead zone" for that provider). Then there is the tying of particular phones to particular providers…another disincentive to switch, if you happen to like your phone. That isn’t a land-line problem. Quality of a particular phone aside, whether I plug an ATT, Uniden, Panasonic, or other brand of phone into the wall, I’m pretty confident that I’m not going to have compatibility issues. If I just happen to spy a cunning little cell phone at a store and buy it, odds are pretty good that I’m going to have connectivity issues (assuming I didn’t do research beforehand).

Cell phone providers complain that one of the reasons for the $200 escape fine is that the contract is subsidizing the true cost of the phone you got when you signed up. That may very well be. But the fact of the matter is that the industry and infrastructure has now sufficiently permeated our culture that changes need to be seriously considered for the sake of the consumer.

• Cell phones need to be made to a single connectivity standard without necessitating the hoops-jumping of unlocked phones. No more GSM, CDMA, or any other alphabet soup gobbledygook. One single extensible/tiered standard (i.e. even the lowliest of phones can make/receive calls–which is about all many people want or need; while cutting-edge standards and innovations are still encouraged).
• There needs to be service try-out periods for people entering into contracted service to see if a particular provider is indeed suitable. Since phones would not be tied to a particular provider, any subsidy/rebate on a newly-purchased phone can be deferred until a provider’s long-term contract is in force.
• Cell phone services should be, as much as possible, be a la carte.
• Both contracted and reasonable pay-as-you-go options must be available.
• Leaving a plan early should never cost more than the amortized cost of a subsidized phone plus a transfer fee that is no greater than a sign-up fee. E.g., you join a two-year plan (startup fee $30) with a phone that cost (street) $200, and the provider subsidizes the phone purchase–$200/24mo = $8.34/mo. You decide to leave after fourteen months in the contract. That’s tens months remaining on the phone subsidy plus the transfer fee = (10 x $8.34) + $30 = $113.40. Still steep, but reasonable given the known costs (and if you didn’t have the company subsidize the phone, the out fee would simply be the $30).
• Plan conditions need to be plain and simple. None of this free minutes on the third Wednesday in a month with a "U" in the name provided the Moon is in a waxing phase between 9:17pm and 10:13pm.
• The cost of receiving a call, if not free, should be less than the cost of initiating a call.

Overall, I’m quite happy with my cell service. I do think that the cellular companies and the banks are both learning the added-fee-for-simply-looking-at-our-logo tricks from each other, and it’s time that some brakes are put on all of that. Sometimes…SOMETIMES…the consumer needs to be considered. Since cell providers aren’t quite as bad as the banks, yet, they are still in need of some tweaking in order to better serve their customer base. Market forces alone don’t always do that.