Megan Youngren/Sun Star Columnist
October 9, 2012
It’s not commonplace to buy a cell phone outright in the U.S. You accept that your phone will cost somewhere between nothing and $300 and sign a two-year contract to get it.
Buying a phone outright and using a prepaid plan like StraightTalk could cost less overall even though the initial cost is higher. A shiny new iPhone 5 or Galaxy S III is $600 or more for you or your service provider to just buy. Your initial savings are made up by the monthly fee over the 24-month contract.
This monthly fee was always based on tiers of limited minutes for talk. Data was available
for $15 to $30 per smartphone line. Unlimited texting was usually $30 per family. Unlimited talk was unreasonable because it cost $60-80 per line, so most went for a $70-100 plan that added just $10 per line. So why are unlimited talk and text now included by default?
If not already, it will soon be feasible to use data to power all traditional phone functions. The only way it makes sense for a consumer to continue using carrier phone/texting is if those services’ data-using equivalents were no longer a cheaper substitute.
These alternatives are already out there, there just aren’t data-only plans. Skype and Google Voice offer personal numbers that can be dialed and texted to and from. While not available in Alaska yet, it is also possible to port your number to them.
While it may seem that you are getting a good deal with included unlimited talk and text, it’s at the cost of choice. Cell phone carriers do not want to become a
dumb pipe , a service from which you buy just data. Charging for features was a very lucrative business, and in the absence of that requiring voice/text keeps prices high.
Text messages were created as a way to piggyback on phone status updates that were sent over cell networks just by the phone being on. Being charged $30 for unlimited or 15¢ per text for something that already happens was almost robbery. Charging for minutes is one thing, as
making calls uses radio spectrum of which each carrier only has a certain amount. Buying more is expensive and might require changes to towers and new phones to take advantage of it. Spectrum scarcity is part of why data is so expensive. 4G is important because each user takes up less of it. Kids running up huge texting bills is a thing of the past, but there’s a new way to have surprisingly high bills.
Verizon and AT&T now offer Shared Data Plans. These include unlimited talk and text. The increment to increase cost is in amount of shared data. If one person uses too much and pushes over the limit, others’ usual data consumption will be in overage at $15 a gigabyte. Not giving some people on the plan a smartphone is an option, but unlike the old $10 it’s not much cheaper at $30 per line. Carriers are encouraging smartphone use. Shared and non-unlimited data is the new way to have overages. At least providers are diligent about notifying via text when you approach the limit.
Per line cost is not a good deal at $30-45 a line at AT&T or $40 at Verizon – imagine paying $230 a month for a family of four at AT&T for just 4GB of data. As the possibility of charging for features goes away, base prices have increased tremendously.
We’re continuing the tradition of wanting to
pay less for our phones to start off with, so cell providers can screw us on long term pricing. Alaska Communications’ new 4G plans which share data are even more expensive than the national carrier rates. While carriers may be increasing network speeds and coverage, that seems to be the only way they’re competing.
The idea that you should just choose a different option is a joke when they all offer the same plans. Hopefully, prices will change in response to increased competition in our state and pressure from Sprint and T-Mobile in the lower 48. If they don’t, it’s worth considering prepaid plans.