Study Claims Average Cell Phone User Pays $3.02/Minute

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Found this odd claim reported in the Christian Science Monitor:

In San Diego, mobile users pay more than $3 per minute on average. The Utility Consumers’ Action Network surveyed 700 cellphone users and found that the average cellphone bill went down since 2004, falling from $57.92 for a single-line account to $37.15 today.

However, “cost per minute can be outrageous,” says the report. “Doing the simplest of calculations – dividing the total cost by the number of minutes – we find that the average ‘account’ is paying $3.02 a minute.” This average is driven up by a small slice of consumers who buy large plans but rarely use them. If you cut out these big-spenders, the average falls somewhere between 50 cents and $1 per minute – far more than the “10 cents a minute” claim made in many ads.

The study says that part of the problem comes from consumers overestimating how many minutes they need, which makes them overpay for plans (study claims that they only use 32% of their total time allowance). In addition, consumers rarely change their contracts once they’ve signed up.

This is a strange study. How could an average cell phone user possibly pay $3/minute? The study doesn’t mention data usage, cost of the phone (which is heavily discounted with most contracts), night/weekend/anytime minutes, text messaging, or taxes.

The study (located here) needs to clarify its claims. At the moment, they don’t make much sense.

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Comments

  1. John's Gravatar Comment by John on March 10th, 2009 at 10:55 am

    At first, I wasn’t all that surprised. It’s entirely plausible for the occasional person to be coerced into a $60 plan when they really just need a phone for emergencies. One older gentleman I know has a cell phone in his car for that purpose. He mostly doesn’t use it at all.

    However, the source looks like a propagandist, which causes me to take the whole study with several grains of salt. Perhaps they grouped everyone into blocks of “those who pay too much” vs “those who don’t” and then averaged those 2 numbers?

  2. Jonno's Gravatar Comment by Jonno on March 11th, 2009 at 7:26 am

    This article highlights beautifully exactly why I switched to a prepaid phone with NET10. I used to have the same kind of problem with trying to match up my minutes to the contract I was on. I just couldn’t win! If I used less minutes than the plan, I paid for those unused minutes anyway. If I used more, I suddenly ended up paying 40c per minute! Somebody will have to explain the logic behind those overage charges to me one of these days… But actually, I don’t even want to know. Because now I pay 10c a minute, anytime, anywhere – local and long distance. And if I want to use more minutes? I just buy more at, yes you guessed it, the same low rate. Plus I don’t have to be tied into a contract.

  3. CK's Gravatar Comment by CK on March 15th, 2009 at 3:01 am

    Haha… This is funny. It’s exactly how Telcos make billions yearly.

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