Shopping Cell Phone Plans - Part Deux

Cell phones are a nice toy to have, and to some extent, necessary in today's society since the demise of the pay phone. But how much is too much to spend on cell phones?

Cell phone plans vary all over the map. No two carriers have the same exact plans, which makes it nearly impossible to cross-shop these plans. Worse yet, carriers have all sorts of different pricing schemes and often offer hidden deals to some customers, so you cannot figure out what is the "correct" amount to pay for cell service.

As I have noted in the past, the more complicated you can make any financial deal, the easier it is to rip off the customer. And the cell phone companies know that by making their billing as opaque as possible, they can tack on all sorts of charges and confuse the customer as much as possible.

So the "$49.95 plan" ends up costing you $69.99 a month, once fees and taxes are added in. For some reason, their billing software can easily calculate the monthly charges when you pay, but when you want a price quote, they can't tell you this.

And if you look online, you can see that you can spend upwards of $100 a month or more for a "family plan" with texting and other services. This is a staggering amount of money to spend - $1200 a year - but many people consider it worthwhile, as it allows them to communicate on a regular basis.

(Again, if you are making $100,000 a year, chances are, only about $10,000 of this is "disposable income", so $1200 represents a huge chunk of your disposable income).

So which plan is right for you - and what are the best deals? I wish I had a simple answer for this, as everyone's needs are different, different carriers have different signal strength in different areas, and there are all sorts of ancillary issues to consider.

Cramming down your cell carrier is never a bad idea. Like with credit card providers, when you threaten to leave, they suddenly want to be your friend and offer discounts. Last year, I moved from a nearly $100 a month plan to a $68 a month plan (taxes included) just by forcing the issue. Having been with AT&T for over a decade (I'm lazy) since before they were AT&T, before they were Cingular - back when they were AT&T (oddly enough), they wanted to keep my business. And I wanted to keep my phone number. So I switched to a 450 minute plan, with rollover minutes, and kept 2500 rollover minutes AND got a bonus 2500 rollover minutes as a loyalty incentive. Yes, they wanted to keep me that bad.

(And don't bother looking for that plan on their website, because it isn't there. It is a holdover from the Cingular days and only offered to former Cingular customers. Go figure).

But you can only go to the well so many times. I called today and they were like "Kindly please go fuck yourself" as they were not about to offer any more discounts, loyalty or not. I'm still racking up rollover minutes every month, but they are not about to offer me a 250 minute per month plan anytime soon.

My needs are unique - most everyone's are. I use my cell phone for business (yes, that is deductible, but you can't deduct your way to wealth) and they are also my main phone number, particularly in the summer. We have a local land-line on the island in the winter, so we use that more for calling then. Plus, we travel all over, so we need a plan with no roaming charges. I don't text, however, so I don't need a text plan (I have disabled this on my phones so I don't get charged for it). We need two phones, as one sits at home on a docking station, connected to our "land-line" phones. Make a call on my 1960's vintage desk phone at my house, and you are making a cell phone call. Ain't technology great?

So my plan, which provides more than enough minutes, no roaming charges, and also allows overseas calls at reasonable rates, seems to fit well. If only it were a little cheaper!

Other folks, with families, need phones for every member of the house. Yea, kids today need a cell phone. Heck, even the homeless need to have them (how else can you get a call-back on a job offer?). And the kids like to text, too, so you probably need that as well. Some carriers have "family plans" that provide four phones or more, and unlimited calling between family members. These are not cheap plans, to be sure, but they do provide a lot of services.

Of course many more folks want to make use of all these high tech data features of the 3G and 4G wireless systems and these fancy new phones - iPhone, Blackberry, Android, etc. If that is your bag, be prepared to pay for these services. Downloading data from the Internet to your phone may be the wave of the future, but already, the network is seeing stress from such usage and there is talk of limiting access or increasing rates for heavy users.

Others use phones less often and use e-mail more. They want a phone just for emergencies or the occasional connection with a friend. Pay-as-you-go plans work well for them, as there is no contract, monthly charge, and if you don't use the phone, there is no cost. These are good plans, in that they train you not to use the phone.

There are as many pay-as-you go plans as there are stars in the sky. Almost every convenience store or office supply store has the "tossable" phones for a few dollars, which are recharged with a "card". These can work great if you are travelling overseas, for example, and want to make calls. You put money on the card and pay by the minute. If you don't use your minutes, however, they "go away" after 30, 60, 90 or 120 days.

Verizon has a plan where you pay by the day - $1.99 per day, for example, with unlimited minutes, for that day. If you don't call for that day, you don't pay. Again, you "recharge" an account with money, and if you don't use that money during a certain period, you lose it. So if you pay $100 on such a phone, and don't use it, it goes away at the end of the year.

Straight Talk is getting a lot of talk as well. The AT&T "customer retention specialist" made it a point to run down this plan, which tells me it is scaring the pants off of them. You pay $39.99 a month for 1000 minutes, or $49.99 a month for unlimited minutes. No contract or commitment, and those prices are the total - no added hidden fees or taxes or whatever are added in later on.

One problem with all these "pay as you go" plans is that if you let the "gas tank" of minutes or dollars run out (In the industry, this is called a "gas tank" model of billing, BTW) you may lose your phone number. If the phone goes "dead" and you have not pre-paid for time or days or whatever, they reassign the number to someone else. For an emergency phone this is no big deal. For someone who needs to stay in contact with people or use a phone for business, it could be catastrophic.

One way around this is to setup automatic billing, so your phone is "recharged" automatically and the number does not go away. This requires a credit card number or an ACH debit to your checking account.

I think a disposable or pay-as-you-go plan makes sense for many people who don't use phones a lot. I hope to be one of these people someday! When I am retired, you can bet I won't be paying $68 a month for phone service (or its inflation adjusted equivalent).

Bundling is the new big thing, of course - AT&T would like me to have my landline, my Internet access, my cell phone and my cable TV (or satellite dish) all on one bill. The problem with this approach is that I don't watch television, so that part of the deal is out. Also, since I have a (703) area code on my phone (Northern Virginia) I would have to change my phone number to a Georgia exchange if I wanted to "bundle".

Many of the "bundling" offers are really conquest attempts. The offerors want you to change wireless services, go from cable to satellite (or vice-versa) or go from twisted pair copper POTS (Plain Old Telephone Service, another industry term) to Cable Telephone. So they offer bundled package deals to get you to switch.

But be careful, some of these bundled deals disappear after a year or so, and your ultimate bill may be higher - particularly if you end up signing up for extra services you don't need. Plus, the idea of one-stop shopping is kind of a fraud, as some of these "bundles" only bundle the billing, not the services, which may be offered by different branches of the company (that hate each other) or by 3rd party services.

For example, with AT&T, there is little or no continuity between the landline business (BellSouth) the Internet Service people, and AT&T wireless. They might as well be on separate planets. And they all say disparaging things about one another. Separate customer service numbers, separate repair crews, separate everything. It is not integrated. And since they don't offer cable, the best they can do in that regard is an affiliation with satellite dish company, that is just a come-on price and a combined bill.

If you really WANT all those services, then such a "bundle" might save a small bundle. But over time, the price may creep back up, once the introductory "teaser" rates go away.

Getting rid of services is one approach to saving money. Landlines are largely obsolete, unless you are using DSL, in which case you have to have one. But for others, an all-wireless solution saves a lot of money. A simple landline contract with unlimited long distance is about $50-$60 a month in most places (with all those mysterious taxes and fees added in). This is as much as a typical cell phone plan. Why pay for both, particularly if you have good cell service at your home?

Most young people today have only a cell phone, and when they get their first apartment, they don't even think to call the phone company. As a result, the disconnect rate in the landline business is on the rise, and for the first time in our history, the population of landline phones is actually decreasing.

A simple $79 docking station can recharge your cell phone AND connect it to your house phones (plug it into a wall jack and just make sure to disconnect from the network at the outside box). Now you can answer calls at home, without having to run for the cell phone. Cell phone amplifiers and antennas (about $100 to $300) can boost signal strength to a full five bars, even in poor reception areas.

So there are options for communications and ways to save money.

I'll keep researching this cell phone thing until I find the holy grail - the $29.99 per month plan that really costs $29.99 per month and doesn't zing you with overage charges or roaming fees or whatever.

Until then, I guess I'll stay put with the plan I have....

Note: Thanks to all who responded to my e-mail and explained their plans and terms to me. Turned out to be the best way to research this issue!