The PhoneBoy Blog


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Use What You Paid For

Aswath reminds me that Michael Robertson of SIPphone wrote an interesting piece on Unregulated “Regulatory” Fees and the Myth of Flat Rate Calling Plans.

I left out one important “cost” in my analysis of how providers make money on unlimited calling plans: The ever popular “regulatory recovery fee.” Vonage, BroadVoice, and others charge a heafty $1.50 per line to recover their costs to comply with various federal regulations. Since it’s not a government-mandated charge, it’s basically a rate increase. It’s one of the reasons on the Voxilla Comparison Tool why we list the “total cost of service,” including these bogus fees. As Michael points out, these official-sounding fees are pure profit. All conventional telcos and several VoIP companies charge them.

It’s clear that a large number of people that have “unlimited” calling plans would actually save money on a per-minute calling plan, yet they still sign up for an unlimited calling plan. Why? For one simple reason: people like predictable costs. There is comfort in knowing exactly what a particular bill is going to be month-to-month. It makes it easier to budget for. Sometimes you make lots of calls, other times you don’t. But the bill is always the same. The “unlimited” calling plans allow for that to occur. People like that, even if the alternative–paying for the calls you use– would actually save them money.

Cingular, the mobile carrier that is owned jointly by BellSouth and SBC, two of the largest local phone companies in the US, have a cool gimmick called “rollover.” You get a certain number of minutes a month. If you use them all, great. If you don’t, any minutes you don’t use get rolled over to the next month. This means your calling patterns can fluctuate somewhat, but you can still end up with the same bill every month.

Let me give a real-life example. I started under a rollover plan with Cingular in December 2004. The plan gives me 850 minutes a month. Between mobile-to-mobile and night-and-weekend calls, I don’t use anywhere near that amount of minutes in a typical month. In fact, that’s one reason I added my wife to my account–I don’t use all the minutes. Even between the two of us, we don’t use 850 minutes a month. The average usage between us: around 500 minutes. That means an average of about 300 minutes a month is being deposited in my rollover account, or over 3,000 minutes.

This billing cycle, I have exceeded 850 minutes just on my own, let alone what my wife might use this month or other calls I make between now and the end of my billing cycle. On a conventional rate plan, I would be paying “overage” of up to $.40 a minute. With Cingular’s rollover, I’m covered. Why? Because I’m getting to use minutes already paid for to cover extra usage. While I doubt I will ever burn my rollover balance to zero minutes, it’s an insurance policy that covers me for periods of higher-than-average usage.

My question is: why hasn’t a VoIP provider tried implementing a rollover-type plan? Seems like it oughta be simple and fair, and you’d know exactly what the bill will be, unless of course you make frequent, excessive use of the bar.


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