Consumer Watch: Cell Phone Fees That Sneak Up on You
I used to think that the hardest part about owning a cell phone was settling on a rate plan: How many anytime minutes? How many prime-time minutes? National or local? Should my husband and I get a family plan? But lately I'm thinking that the bigger challenge involves figuring out how to keep track of all the ways carriers and their partners are trying to milk me for additional dough.
Wireless carriers have jargon for this topic: ARPU (or just RPU), pronounced "ahr-pooh." The acronym stands for Average Revenue Per User (or Revenue Per User), and carriers are forever trying to raise it--that is, to squeeze more money out of us hapless users. Increasingly they're doing it through new services offered on their high-speed data networks and the sophisticated handsets built for them.
Data Is Gold
For customers, the huge expansion in data services means that we'll be seeing a growing number of applications and services for everything from entertainment and companionship to shopping and GPS navigation aids. Some of these offerings will be ad supported, some will be subscription based, some will be pay-as-you-go, and some will be hybrids (some content may even be free, but with charges for premium features).
Where fees apply, they are usually indicated. (Be sure to note, however, whether it's a one-time fee or a monthly subscription.) For example, play a demo of the game Bejeweled on a Cingular phone (as I did on my husband's Motorola handset, in the name of research), and you'll be asked whether you want to pay a few bucks to get the full version.
Fair enough, but apart from the way many small charges--for games, ring tones, ring-back tones, music, and so on--can mount up, you might find additional charges that contribute to an unexpectedly big bill at the end of the month.
Bucks for Bytes
Whatever you do that involves sending data, the biggest hidden expense can be charges for use of the network itself, normally the amount of data you both send and receive (measured in kilobytes or megabytes). You constantly run into the disclaimer "carrier charges may apply," but you rarely see how much bandwidth you're using and what it costs if you aren't on an all-you-can-eat data plan.
Sometimes you get clues about impending charges: After I downloaded a game demo on my husband's phone, a message appeared saying that I'd used 46,000 bytes of his data plan's allotment.
But such on-the-fly notification is atypical. Listen to a snippet of a song in the Sprint Music Store, for example, and even if you don't buy it, you'll be charged for the data if you don't have a Vision data plan.
I should mention here that in researching this column, I was reminded of another cell phone pet peeve of mine, which is just how difficult it can be to determine cell phone service costs in general. Carriers often make you go through the motions of choosing a handset and signing up for service before they'll provide detailed information on what they'll be charging you.
Money for Messages
Messaging--instant, text, picture, you name it--can be another stealth budget buster. That's because, regardless of your data plan, most carriers charge separately for messaging.
On Verizon Wireless, for example, you pay 10 cents per message sent or received. Again, heavy users of messaging services can save money by purchasing bundles: Verizon offers a $10-a-month messaging plan that covers unlimited messages to fellow Verizon customers, plus 500 messages to non-Verizon phone numbers; $15 and $20 plans cover 1000 and 2500 out-of-network messages, respectively.
The cost of text messaging may come as a shock if you're accustomed to using AOL, MSN, or Yahoo instant messaging services on the desktop, where they're lumped in with all of your other Internet traffic and there's no economic incentive to keep conversations short.
On a cell phone, carriers typically limit text messages to a relatively terse 160 characters. But the bigger issue is that every message you send, regardless of how long or short it is, racks up a charge--typing and sending "OK" costs the same amount as transmitting a long sentence--so it's to your advantage to keep your conversations brief and the number of messages you send to a minimum. (The exception to this rule is Sprint, which includes unlimited AIM, MSN, and Yahoo instant messages for Vision subscribers.)
Using your camera-enabled cell phone to send pictures is even more expensive: Cingular and Verizon both charge 25 cents per picture message sent or received (plus data charges if you're not on an all-you-can-eat plan). With Sprint, if you don't have a Power Vision plan, you must pay $5 a month for access to its Picture Mail service, plus 2 cents per KB for each photo you upload. Consequently, sending a typical 50KB image would cost $1 on top of the $5 fee. That's a lot more than the U.S. Postal Service charges for a picture postcard.
In fairness, your photo will get where it's going much faster, and the temptation to bombard friends with images probably isn't as strong as the urge to continue responding to text messages.
High Tab for Texting
What's insidious about text messaging is the way it's being used to power services (and more income for carriers). American Idol voting is just the tip of the iceberg: PayPal, for example, now lets you initiate payments via text messaging.
SMS.ac, a popular teen community site, invites you to sign up for a dizzying variety of message services. You can receive messages from people who want to meet you based on the profile that you create when you sign up via the Web. You can get news alerts. You can arrange for calendar reminders. You can obtain photos. You pay SMS.ac only for the messages it sends you, but they cost up to 50 cents apiece, and the charges show up on your phone bill. If you become popular on the site, you could incur big charges without realizing it until your bill comes. And you have to send text messages to stop the messages--so you pay to stop paying.
SMS.ac is clearly mindful of the potential for overenthusiastic customers to rack up big bills. Among other things, it published a Mobile Consumer Bill of Rights on its Web site, which includes a clause stating that "mobile consumers have the right to know exact costs for all products and services prior to purchase." But the fact remains that you don't always have all this information at your fingertips when you're on your handset.
Subscription services are another source of swollen monthly cell phone bills. Amp'd Mobile, the teen-oriented cell phone service, now offers its customers the ability to buy movie tickets from their cell phones--after they sign up for a $2-a-month subscription. But you'll still pay the usual convenience fee for buying tickets online. Do you really want to pay $24 a year just to use a feature that's widely available on an Internet-connected PC?
Most real-time navigation services catering to GPS-enabled cell phones will also be available exclusively via subscription, with monthly fees in the vicinity of $10. But downloading map and routing information may result in additional charges.
Your best defense as a smart cell phone shopper: Ask carrier sales reps for pricing details that will help you determine the true costs of any services that interest you, and ask if there's any way to track your bandwidth and message usage between monthly bills. Cingular, for instance, shows data usage as well as voice usage on customers' account pages.
Look into alternative services and workarounds. For example, on many PDA-phone hybrids you can avoid instant messaging fees by using Intellisync Verichat, a universal IM client that circumvents messaging fees, at a cost of $25 a year. And instead of downloading songs from a carrier's music service, get a phone equipped with a memory card slot so you can play tunes you've ripped on your PC.
Don't give your cell service easy access to your wallet. Say pooh to ARPU.