Thursday, September 10, 2009

Your Regulatory Fees Are Showing


This past week my wife and I embarked on our bi-annual journey for a cellular phone service provider as our previous two year contract had been fulfilled and we were now free agents. The task is depressing, but unavoidable; much like paying taxes or catching Ryan Seacrest on cable. But as we walk into a cellular store, it quickly becomes apparent that the carpet, lighting, and strategically placed displays provide the atmosphere of a technological petting zoo; and yet this knowledge only makes it that much more tempting. Make no mistake; every facet of your cellular experience has been handcrafted by teams of engineers, marketing executives, and fee ambiguity specialists to generate the greatest amount of corporate stock options possible.

Your wireless provider realizes that there is nothing more intoxicating to a consumer than the illusion of empowerment through customization. It is with this in mind that their marketing team has created an array of deceptively-unhelpful options to fit your mobile communication needs. A seductive matrix of bright colors and exciting package names (Super Nationwide Family Share Unlimited Talk 4,000) assaults your senses as you peruse the brochure only to find you are presented with two choices: Overpay for a set amount of minutes with the possibility of a monthly overage suddenly forcing you into bankruptcy or drastically overpay for an unlimited number of minutes and enjoy a more gradual slide into bankruptcy.

Having decided on a voice plan, you are now presented a list “enhancements” like text, picture, and video messaging, roadside assistance, GPS navigation, data access, smart-phone tethering, and Canadian bail-bondsman voice-dialing. Once you have decided on a plan and enhancements, these choices will be conveniently consolidated into a single document: the service contract.

At twenty four months, the service contract routinely outlasts celebrity marriages and is revered for its ability to enforce cellular-monogamy through an intricate web of early- termination fees and penalty clauses. Only violent street gangs could sustain lower numbers of defectors and in either case the penalty is the same: a beat down.

The second wave of the onslaught involves the equipment, and one of the most soul-shattering weapons at their disposal is the mail-in-rebate. Like a siren’s song, it lures the unsuspecting to their doom with the promises of low-priced handsets and bargain smart-phones. It is only after you have left the store that you realize the rebate takes 2 trimesters to process, is likely to be sent to the wrong address, and will be issued in the form of an Arby’s gift card. As if this wasn’t travesty enough, you will be tempted to purchase “Wireless Insurance” to protect your newly acquired hand-candy only to find that it will not cover a replacement if the phone has ever been exposed to a “substantial amount of liquid”. However, these pale in comparison with the greatest deception of all: the first bill.

Waiting on the first cell phone bill of a new contract is comparable to sitting in a doctor’s office before you first colonoscopy; you do not know exactly what will be involved, but you can be pretty certain that it will be unpleasant. This overwhelming dread is an early symptom of “ambiguous fee syndrome”, a debilitating condition caused by terms like “regulatory recovery charge” and “911 access fee”. Would it really be that difficult to integrate the fees into the advertised plan price? Does it really require $40 worth of man hours to activate a cell phone in 2009? We all criticize the oil companies, but at least they have the decency to tell us the whole story on the sign before we even bother to pull up to the pump.

Of course, there is an alternative to all of this madness: the prepaid phone. Heavily favored by both Jason Bourne and transient narcotics dealers, the prepaid phone provides all of the convenience of wireless communication channeled through the most visually unappealing handsets available. It is as if the service providers hope to shame you into falling in line with the rest of America by distributing cell phones from the “Saved by the Bell” props department.

We are one of the only countries that tolerate proprietary phones and over-priced contracts. In Europe, virtually any network-proprietary stateside device (iPhone / Blackberry Storm) can be purchased independently and then used on any carrier by simply acquiring a SIM card. If for some reason that carrier is not satisfactory, you can take your business (and your beloved smart phone) elsewhere. If desired, you still have the option of a contract (albeit at much more reasonable rates) and in the case of Vodafone (the second largest wireless service provider in the world at 264 million subscribers) sometimes you can be unaware that you are even their customer.

I decided to compare apples to apples and shop for the same phone with comparable service from both European-provider Vodaphone and North American-provider Verizon Wireless:

On Verizon, the phone is $99 up front and a plan with 450 minutes and data is $75 per month with a $35 activation fee.

On Vodaphone, the phone is free and a comparable 750 minute plan is $55 a month with no activation fee.

Vodafone offers a better plan, no upfront cost, and is still $20 less a month than Verizon. Perhaps the most infuriating part of all is that Vodafone operates in America as Verizon Wireless (they own a controlling share). We are paying higher rates simply because we do not have the fortitude to demand lower ones.

Shouldn’t we demand better phones, cheaper rates, and up-front pricing? There are an estimated 270 million cell phones operating in the United States and according to Forbes magazine the average monthly single –line service plan hovers around $50. This means that we as consumers control 13 billion in monthly revenues for service providers, and yet I cannot even get someone to explain to me how a “Federal Universal Service Charge” can be different every single month. It is time for us to demand a change in the way our wireless service is provided, and I plan to start the revolution as soon as I charge my overpriced Blackberry…

1 comment:

  1. Hey man,

    I can actually help you out on the Federal Universal Service Charge (FUSC). That is a topic I am sad to say I am intimately familiar with....

    Check these guys out as they're the "evil" behind the charge and calculation methodology:

    http://www.usac.org/fund-administration/

    The actual contribution is based on a quarterly rate that no joke...true's up depending on how much money they need to operate the fund. It also fluxuates based on where you're calling to, how much your carrier charges you, etc...

    But I digress, they just make me their b*tch for about a week every 3 months with their obscure questions and archane data collection requests.

    ReplyDelete