Savage's $11,000 Phone Bill

By Mike on 11:00 pm

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Are cell phone companies gouging their customers? Myth Confirmed. Adam Savage of Mythbusters fame got a rude awakening after AT&T charged $11,000 in roaming fees for web surfing he did while vacationing in Montreal. The company charges a rate of $0.015/kilobyte for out of country internet usage, which works out to 750 megabytes worth of data. Savage claims he was just using the service to browse a few websites for a couple hours over the entire week long trip and wasn't downloading videos or pictures. Upon getting the shock of his life, the famed special effects artist and TV host posted his complaint on Twitter. It soon became the number two thread following the death of Michael Jackson. After the Twitter complaints stirred up a massive response and his assistant spending hours on the phone with AT&T, the company eventually agreed to drop the charges. “A lot of people on Twitter are saying, ’Well it’s great that it worked for you, because you’ve got 50,000 followers, but what about the rest of us?’ ” Savage said. “And I totally agree with them.”

Adam Savage fights the machine and wins, once again proving his status as the Geek God. In his defence, it is vary hard to use 750mb just surfing web pages. Back when I was in college, we had a 1gb per week allocation for the university wifi. Even listening to internet radio between classes, I never broke 200mb per week. You'd have to be watching a heck of a lot of flash video or downloading vary large files. This whole debacle exposes some major issues with the cell industry and the way it charges customers. For example, I pay $44.95 per month for high speed internet. That gets me 60gb of data transfer, which works out to roughly $0.75 per gigabyte. By contrast, Rogers/Fido's usual 3G data plan costs $30 per month for 1gb. Therefore, using 3G internet costs 40x more than using cable broadband. Furthermore, Cogeco cable also provides me with email service included in the price, something Rogers Wireless does not offer. I admit I do love being able to view web content on the go but I can't help but wonder whether the convenience is worth that much.
I'm not picking on any company in particular here since they all do it. (So Rogers don't sue me.) Savage's dilema shows just how archaic cell companies treat data. While most other service providers charge you by the megabyte or by the gigabyte when you go over your limit, cellular data plans charge per kilobyte. Back in the days of 28kbps dialup internet, this may have been acceptable but to charge per kilobyte in the age of broadband is simply gouging. Roughly speaking, an average five minute song at 256mbps quality off iTunes would cost $0.33 to download over mobile broadband, a third of it's retail value. More shockingly, if you're out of country the same song would cost a whopping $172 under AT&T's roaming fees. By contrast, the same song would cost only $0.008 to download over cable. That gives you something to think about next time you consider downloading songs or apps using 3G on your iPhone.
Phone and text services aren't much better. Fido's cheapest plan costs $0.30/minute ($15 for 50 minutes) while landline local calls are unlimited. Bell Home Phone Lite for example costs $22.95/month for unlimited local calling. Long distance cell rates are $0.35/minute anywhere in Canada. By contrast, $0.15 or less is typical for landlines. VOIP through your cable company usually runs $40 for unlimited local and long distance calling including features such as call display and answering services. For cell phones, these same additional services are usually $5-$10/month extra. Texting is the most costly feature of all, with average price being $0.15 a message with many companies now charging to both send AND receive them. This means you'll also have to pay for any spam received, which is increasingly becoming a problem. A one minute phone conversation costs the same as a single text back and forth. I know I can say a lot more in a minute than I can write in a text. With the average email several paragraphs long being around 20kb, well, you get the idea. It's a heck of a lot cheaper to use conventional services.

So why are mobile services considerably more expensive than their landline counterparts? Cell companies usually try to dodge this question when it is asked. However, there are a couple of legitimate reasons for this. Namely wireless bandwidth is far more limited than wired bandwidth given that cell phones must share the radio spectrum with a gaggle of other devices. Cables using digital transmission don't have this limitation and therefore can accommodate far more people using them at one time. So you pay more for a volatile resource. Cell companies might be able to weakly justify charging double the rate for phone calls but it's vary difficult to do the same thing with text and data services that cost up to fourty times more than vastly superior landlines. The government has already stepped in, threatening to ban receiving charges for texts, and rightly so. Srinivasan Keshav, a leading Canadian based computer scientist estimates that text messages cost cell companies no more than 0.3 cents. That represents a markup of 4,900%. So for every 10,000 texts sent, it costs cell providers $30 but they receive $1,500, equating to $1,470 in pure profit. No other business would get away with that. (Well except maybe a certain company who sells HDMI cables.) Consumers need to start putting the pressure on cell companies to bring their rates down to something that's more comparable with landlines, especially now with so many replacing home phones with their cells. They're gouging, pure and simple. I haven't even begun to rant about the contracts they force you to sign either.


1 comments for this post

Just fell into your blog today. Its very well written and I enjoyed reading many of the articles. Per this particular article, I wish every cell phone user would receive your article (with yellow highlighting comparisons) along with their cell phone bill. Oh yes, lets add the correct addresses to complain to the government and industry. Its now 2010 and this problem is still rearing its ugly head.

Thanks for clearing my head!

Posted on 12 January 2010 at 09:39