Cell Phone Study Blows Lid Off the Obvious
By Scott Reeves Mar 10, 2009 2:30 pm
Flawed methods, tiny sample get laughable results.
A study conducted by San Diego’s Utility Consumers’ Action Network, which purports to show cell-phone users pay an average of $3.02 a minute, falls somewhere between skewed and laughable.
The consumer group’s conclusions: Deregulation has increased costs for some local services as much as 346% and -- get this -- “There is no meaningful phone competition for San Diego households.”
Whew! That’s a lot to swallow. Let’s hope it’s satire.
Apparently, Verizon (VZ), AT&T (T), and Sprint Nextel (S) are neither phone companies or competitors for purposes of this study.
First, the sample size of “over 700” raises the basic question of validity. The latest estimate by the California Department of Finance pegs San Diego’s population at about 1.3 million. That means the survey sampled about 0.0538461% of the population. Even someone high on life wouldn’t call that a representative sample.
The study assumes that most customers use only a small percentage of the airtime they buy each month. If so, this drives up the cost per minute. Well, duh. Don’t buy more time than you’ll use - unless you feel compelled to make monthly contributions to your good pals at the phone company.
It’s hard to tell from the group’s summary of the study, but it appears a good chunk of the survey population spent about 10 to 15 minutes -- or less -- on the phone each month. Is that you or anyone you know?
Once again, dear consumer group: Don’t buy more time than you need.
The study also ignores text messages - an increasingly popular form of communication, especially among kids. Failure to include time used sending text messages artificially inflates the cost per minute.
The consumer group warns darkly that fees and taxes are added on to the basic monthly fee, further driving up the cost of each call. Zowie - someone went to the mountaintop to come back with that vital insight. There's no cure for fees and taxes, but the smart customer reads the contract before signing on the dotted line.
San Diego Utility Consumers’ Action Network says that unlimited land-line packages are also a bad deal, costing users an average of $0.55 a minute. This is getting tedious: If you don’t yap a lot on the phone, don’t buy service that you won’t use!
You can bet the usual suspects will quote the study as gospel, and jaws will drop as some nattering ninny proclaims, “The average cost of a cellular phone is $3.02 per minute."
Yeah, sure. But take a look at the study’s purported methodology before accepting this tripe as gospel.
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2009-03-10 14:58:28
No, it's not obvious.
Sir,
One again, your sarcasm comes through loud and clear. Can you hear me now?
You're making a narrow minded mistake in your article. You assume that up to now, consumers were actually paying attention to what they spent each month and that they're as proactive and vigilant as you are when it comes to getting a good deal.
They aren't. Period! Most people are lazy and don't even read the bill. If the amount due is similar to last month, they just pay it. As far as they're concerned, this amount is now part of their monthly cost of living.
And I know a few people who own cell phones, are paying for the 45 or 60 minute plan and only use 15-20 minutes a month. Why?
Usually because that's the cheapest plan available. The carrier says take it or leave it. So they take it for various reasons. Plus many carriers now have some type of friends and family allowance, meaning that a substantial portion of cell phone usage isn't recorded on the bill as a charge.
Verizon and other carriers admit that many people over estimate their expected cell phone usage and rarely adjust the original choice after a few months of experience. Some assume that can't and others simply never get around to doing it.
For every person you see on the street talking on the phone, there are 10 more with phones in their pocket they don't use that often. Contrary to popular belief, cell phone usage is slowing. What's exploding is the G3 Internet portion of cell phone usage. Actually using your cell phone to make a phone call is so yesterday, dude.
Read the Verizon Wireless annual report for some indication of cell phone usage and trends. It's eye opening.
One again, your sarcasm comes through loud and clear. Can you hear me now?
You're making a narrow minded mistake in your article. You assume that up to now, consumers were actually paying attention to what they spent each month and that they're as proactive and vigilant as you are when it comes to getting a good deal.
They aren't. Period! Most people are lazy and don't even read the bill. If the amount due is similar to last month, they just pay it. As far as they're concerned, this amount is now part of their monthly cost of living.
And I know a few people who own cell phones, are paying for the 45 or 60 minute plan and only use 15-20 minutes a month. Why?
Usually because that's the cheapest plan available. The carrier says take it or leave it. So they take it for various reasons. Plus many carriers now have some type of friends and family allowance, meaning that a substantial portion of cell phone usage isn't recorded on the bill as a charge.
Verizon and other carriers admit that many people over estimate their expected cell phone usage and rarely adjust the original choice after a few months of experience. Some assume that can't and others simply never get around to doing it.
For every person you see on the street talking on the phone, there are 10 more with phones in their pocket they don't use that often. Contrary to popular belief, cell phone usage is slowing. What's exploding is the G3 Internet portion of cell phone usage. Actually using your cell phone to make a phone call is so yesterday, dude.
Read the Verizon Wireless annual report for some indication of cell phone usage and trends. It's eye opening.
2009-03-10 20:45:47
Wow
Your diatribe is at least as inaccurate as the study. 700 people for one metro area is not a terrible sample size in the media world. Presidential elections are prejudged by much smaller percentage samples.
Your article never even touches on what most would consider to be the one real reason why this study is inaccurate. The carriers subsidize the phones that are provided to the customers, and so they have to set a fairly high minimum bill in order to make a profit. That is also the reason that in most monthly plans, there is no way to get a plan with fewer minutes than several hundred. That way you feel like you're getting some value for your $60.
That shortcoming aside, the study is correct in stating that there is very little legitimate competition between the U.S. carriers. It made headlines last month when T-Mobile decided to offer a discounted rate to customers with expired contracts. Aren't T-Mobile's customers so fortunate? Their service provider has decided to stop gouging them needlessly!
Your article never even touches on what most would consider to be the one real reason why this study is inaccurate. The carriers subsidize the phones that are provided to the customers, and so they have to set a fairly high minimum bill in order to make a profit. That is also the reason that in most monthly plans, there is no way to get a plan with fewer minutes than several hundred. That way you feel like you're getting some value for your $60.
That shortcoming aside, the study is correct in stating that there is very little legitimate competition between the U.S. carriers. It made headlines last month when T-Mobile decided to offer a discounted rate to customers with expired contracts. Aren't T-Mobile's customers so fortunate? Their service provider has decided to stop gouging them needlessly!
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