The PhoneBoy Blog

CTIA: Apples and Oranges

13 Aug 2009

Picking on the CTIA is a bit like shooting fish in a barrel–they make it so easy. Their latest attempt at misinformation is their supposed “debunking” of the OECD report on Usage and Costs for Mobile Phones.

Part of the problem with doing any sort of comparison between the North American markets and other worldwide markets is that the phone systems evolved in fundamentally different ways. Generally speaking, outside North America, incoming calls are free. However, you generally pay more to make a call to a mobile phone. North American mobile phone plans often have various “free” minutes like night/weekend, mobile-to-mobile, or friends and family (unlimited calls to some number of telephone numbers).

Because of these differences, you have to make “assumptions” to compare the numbers between, say, the US and UK–assumptions that might not exactly be true.

Let’s forget comparing ourselves to other countries for a moment and just look at some cold hard facts. The CTIA says the average wireless consumer in the US has an average bill of about $50. This is your typical $39.99 voice plan, which typically includes 450 anytime minutes, free nights (starting at 9pm) and weekend calls, and mobile-to-mobile (within the same carrier). Oh, and taxes and “regulatory recovery” fees, which are bogus in my opinion. This gets you really close to $50.

My rough per-minute calculation on that plan is $0.11 a minute. That assumes you use ALL 450 of those minutes. Theoretically you can make more than 450 minutes of calls in a month, if you call during one of your “free” times, thus making your effective cost-per-minute lower.

Let’s say, though, you only use 100 total minutes–including all those supposedly “free” minutes. Guess what your effective cost-per-minute is? $0.50! Same rate plan, but different usage patterns dictate a different effective per-minute rate.

As you can see, the concept of breakage—using either too many minutes or too few mobile phone minutes–is where the mobile phone companies make money. You pay the same amount every month, but your usage varies widely.

For my wife, anyway, we got off the post paid mobile phone plan ages ago. The concept of paying for minutes I will never use is, quite simply, dumb. Using T-Mobile Prepaid, $100 worth of minutes lasts my wife somewhere between 6 to 9 months. Every single minute paid for gets used. No breakage, and at $0.10 a minute, the price is right.

My question to the CTIA is: how did you calculate our per-minute rate: using the bucket prices or the actual minutes used? I’m willing to bet it’s the former. It might explain why the CTIA believes we pay the lowest per-minute rates for our service when, in reality, we are getting fleeced so much more than in other counties.