U.S. cellphone users reportedly paying $3 per minute

By | March 9, 2009 at 3:31 PM

The average cellphone customer pays more than $3 per minute, according to a report being issued this week by the  Utility Consumers’ Action Network, a San Diego consumer advocacy group.

Researchers arrived at the average $3.02-per-minute charge by comparing the average number of minutes charged in more than 700 San Diego consumers’ telecom bills and dividing by the average number of actual minutes used.

“We knew it was a myth that wireless costs were going down,” said Michael Shames, UCAN’s executive director. “But we were blown away by the actual costs.”

That $3-per-minute figure is skewed by the relatively small percentage of people who pay for a lot of minutes but barely use any. But even when those folk are taken out of the mix, most wireless customers still pay between 50 cents and $1 per minute, the study found.

Shames said this wasn’t a problem just for San Diego residents. He said the findings of the report were representative of cellphone use and bills nationwide.

That’s something to keep in mind as an increasing number of people abandon traditional land lines and embrace a wireless-only lifestyle. More than ever, you have to make sure you’re in a calling plan that fits your needs.

Among other findings in the report:

* Only about 8% of land line customers pay less than 10 cents per minute for long-distance calls. The majority pay well over 10 cents per minute, with 20% of people paying more than 50 cents per minute and 10% paying more than $1.

* The cost of additional phone services has soared. In AT&T’s case, the cost of call waiting has risen 86% since 2004, the cost of an unlisted number is up 346% and the cost of directory assistance has skyrocketed 1,630%.

* The average cellphone customer uses only about a third of “any time minutes” allowed by most wireless plans. The rest are paid for but wasted.

Many of the findings — particularly the average cost per minute of wireless service — have been speculated about for years by telecom observers. The UCAN report represents one of the first attempts to quantify costs based on a relatively broad sample of customers.

Bottom line: Most telecom customers are buying more product than they use, and that’s pure gravy for service providers.

“It’s hard for customers to gauge how much of this product they’re going to use,” Shames said. “The phone companies basically force you to calculate in advance something that’s very difficult to calculate.”

The big dogs of the telecom industry — AT&T Inc. and Verizon Communications Inc. — insist that they’re dedicated to making customers happy and ensuring that people have the best possible calling plans for their needs.

“We encourage people to look at their bill, question their bill, and call us if they see anything that’s not right,” said John Britton, an AT&T spokesman.

Ken Muche, a spokesman for Verizon Wireless, echoed this sentiment. “If you’re not using the total amount of minutes in the bucket, we’ll work with you to get you on the right plan,” he said.

The trick, of course, is that consumers have to be proactive in tracking the number of minutes used each month and shopping around for the most suitable plan. Shames said the UCAN study found that most people don’t take the time to look closely at their telecom bills.

For that matter, the study found that most bills were written and formatted so opaquely that even when customers tried to decipher their statements, they often couldn’t make heads or tails out of what they were being charged for.

Shames said land line customers needed to be wary of long-distance plans that included monthly fees along with per-minute charges. He also said cellphone customers should explore pay-as-you-go plans that allow you to purchase minutes in advance, and to buy additional minutes in relatively small amounts so no money is wasted.

Be careful, though. AT&T, for example, offers pay-as-you-go plans that might seem penny wise at first but actually can cost some serious coin.

One plan charges cellphone customers 10 cents per minute plus $1 for every day you use the phone. Another skips the daily fee but costs 25 cents per minute.

The UCAN report recommends that federal regulators require a “cost-per-minute box” on all phone bills so that customers know exactly how much they’re being charged, and standardize taxes so that customers can more easily compare one service with another.

Providers frequently list taxes and fees differently, making it tough for many people to understand exactly what they’re paying for.

“We have millions of customers grossly overpaying for services,” Shames said.

A copy of the UCAN study is being presented to the Federal Communications Commission this month.

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