Going into a phone store is a lot like taking a car to a mechanic, for the most part you don’t know what it is you are actually getting and you’re pretty sure it shouldn’t actually cost that much. But what can you do?
They’ve developed the ridiculously convoluted and ultimately meaningless breakdown of services, fees and surcharges that, by making a lot of money for one company first, has become the standard that all of us have to deal with.
Even though just about every phone out there today is simply a computer that transmits ones and zeros across radio waves to other computers, the phone companies have found very creative ways to separate some of these bits from others and charge you much more for them.
Rhett Allain, at Wired.com, wrote a great analysis last June of how all these charges break down and how much the companies are inflating the price.
Allain begins by pointing out that AT&T’s most basic plain data plan, $25 for 2 gigabytes, costs $12.50 per gigabyte of data.
Following rough approximations of data usage during a phone call, Allain concludes that a 450-minute per month plan for $40 comes out to $1,558 per gigabyte. If you buy the unlimited package for $70 and spend three hours on the phone every day, the rate comes down to the completely reasonable $228 per gigabyte. If you go over your plan though, the rate for overages varies between $2,000 and $7,000 per gigabyte.
Another of the innovative means of making you pay a lot for what you already have is text messaging.
Texts are also data, but because they are only a few characters, they are incredibly small, less than an email, less than one millionth of one gigabyte.
Allain studied AT&T plans that are either $20 for unlimited text messages or $10 for 1,000 text messages per month.
For what he considers a moderate usage, 500 per month or 17 per day, Allain figures that the unlimited plan is actually charging $1.08 million per gigabyte. The $10 plan works out to only $538,000 per gigabyte.
He also explored options from Verizon and T-Mobile, which were more complicated and occasionally a little cheaper, but still requiring you to pay thousands of dollars per gigabyte for one kind of data and around $20 for another kind.
For fun he even calculated the cost of buying a hard drive and FedExing to a destination to compare the cost of data transfer. He found it would cost about nine cents per gigabyte.
And these rates are more expensive now than they were a few years ago.
When I got my first iPhone, I signed up for unlimited data for $30. They no longer offer that option, but my contract has been grandfathered in and they can’t take it from me.
Recently, AT&T has started deliberately slowing down data transfer rates for people with these older plans, to make them behave like newer plans with low data rates.
In Allain’s work, AT&T was the most expensive. T-Mobile was the cheapest.
Some of this cost does go to cover the cost of the phones. New iPhones cost $600. AT&T sells them, with a 2-year contract, for $200. They pay Apple $400 for every phone. But the contract ends up gaining them, for about a $100 per month phone bill, $2,400.
Sprint recently announced a plan to sell the phones for full price, $600, but then only charge $35 per month for unlimited texting and data, with a few hundred minutes. Not perfect, but simpler.
$200 phone + $2,400 in two-year contract = $2,600 on AT&T’s current plan
$600 phone + $840 in two years of noncontract bills = $1,440 on the new Sprint plan, with the added freedom of stopping any time without massive penalties.
However, Sprint doesn’t really “do” Montana yet. AT&T only started here in the past year or so
There are some other options with rational choices, but they can be rare in large cities and, like Sprint, nonexistent in places like the Hi-Line.
Like many things, I don’t know what we can do but wait.
Last year, when AT&T was trying to buy T-Mobile, and the Department of Justice stepped in, we had AT&T people come into our office and tell us about how they would only upgrade our towers and service if their plan to buy out their cheaper competition was approved. They showed us maps of what was covered now, not much, and what they would bring in if they could buy T-Mobile, some large orange blobs on the map, hoping that we would write an editorial in support of their deal.
This is probably not the kind of coverage they were hoping for.
One day we will have one bill, with one rate and one charge, for our Internet access. Like a water bill, electricity bill or heating bill, it will be a regular cost for access to, and contribution to, a public necessity.
Until then, I guess we can grumble.
Or, I don’t know, write a letter or something.
(Zach White is a reporter with the Havre Daily News.)