(NOTE: This is a free excerpt from my new book: Gotcha Capitalism, 10 years later. A lot has happened in the world of cell phones since 2008. It’s fun to look back….)
Remember when you tried really hard not to use your mobile phone until nights and weekends? Those sure weren’t the good old days. In fact, I suspect we are living in the cellphone good old days right now. That’s good.
A lot has happened to mobile phone service and mobile phone bills in 10 years. For starters, the iPhone was introduced in 2007. That changed everything. Pretty quickly, talking on the phone became the least important thing we do with our gadgets, and it shows. In a 2014 review by Consumer Reports of 100-plus smartphones, a whopping zero of them ranked very good in call quality.
When it comes to what our phones can do, however, the complaints should really stop there. In 10 short years, our digital lives have been radically changed. We now summon cars that arrive instantly, while simultaneously watching baseball playoff games, all while walking down the block. We use smartphones to connect our laptop computers to the Internet from almost anywhere. Heck, we use smartphones instead of our laptop computers. Cellphone bills have soared since 2007, with many families paying upward of $300 a month, and that’s an issue. But a single phone bill is about double what it was back then, roughly $100 a month, and it’s hard to disagree that seems fair — given all the new features we enjoy. Particularly when you realize that, beginning in 2008, there were more cellphone-only homes than landline-only homes, and by 2015, most cellphone users had ditched landlines. U.S. Census data tells a very clear story here. While consumers, on average, spent $205 more annually on mobile phones in 2014 than in 2007, landline spending dropped by $149. In other words, total spending on phones has barely risen at all. That’s a net gain for many.
Even better: Mobile carriers have largely abandoned their anti-competitive tactic of locking users into “cellphone jail” by trapping them with unfair early termination fees. Once upon a time, ETFs were vaguely and often unfairly linked to handset subsidies with formulas that didn’t make sense. The ETFs often trapped consumers into contracts with single carriers, preventing genuine competition. Most carriers now let consumers finance phone purchases instead, so when they are paid off, consumers are free agents. In fact, for only the (fair) price of the balance of the loan on the phone, consumers can be free to switch to another carrier at any time. That’s been a huge boon for consumers.
Also a boon: Many now enjoy free calling and texting. No more surprise bust-out cellphone bills because the teenager of the house has a new girlfriend.
While we’re not paying for calls and texts, we are paying for data. For years, this was a sore spot with consumers, because it’s basically impossible for a mere mortal to calculate data usage. Ten years ago, when you talked to grandma on the phone for an hour, you knew roughly how much of your monthly allotment was gone. Today, when you watch a streaming video of a game for five minutes, you have no idea how much of your data is gone.
Here, too, is good news, borne of something that didn’t happen. Back in 2011, AT&T tried to buy T-Mobile. The combo would have been the largest mobile carrier in the nation. But federal regulators stepped in to ask the right questions, fears of monopoly power were raised, and eventually the bid was dropped. Instead of being part of a new behemoth, T-Mobile needed another plan. So it set out on a series of aggressive customer-acquisition campaigns. That is, it lowered prices. Again and again. Other carriers had to follow. Ultimately, that cleared the path for a new era of unlimited data plans and lower prices. Competition had awakened the market. It led to simplified consumer bills, worry-free use of new apps, and an end of data overage fears, at least temporarily. This is what competition is supposed to do. For around $100 a month, a consumer can now use his smartphone to his heart’s delight. Progress.
At the same time, a new crop of discount carriers — known as MVNOs, or mobile virtual network operators, and led by Walmart’s Straight Talk — arose to offer alternatives for those who can’t stomach spending more than $1,000 a year on service. Budget-conscious consumers can get decent smartphone service for around $50 a month if they accept a few compromises, such as inability to access the very latest handsets. More progress.
Mobile phones are not all peaches and cream, however. For starters, carriers have toyed with the English language, as they are wont to do. “Unlimited data” doesn’t actually mean unlimited. Limits come in the form of throttling. After a certain amount of data usage each month, consumers are shoved into the slow lane, perhaps granted only enough bandwidth to read emails and do other simple tasks. Consumers often don’t really know when these caps kick in, and they can change. Verizon, for example, decided it was being too generous with its unlimited plans in 2017 and moved to limit streaming video quality.
There’s also still the problem of slamming and cramming, in which third-party providers find ways to sneak unwanted paid services onto your smartphone bills. A series of high-profile federal cases settled against all the major carriers within the past few years made them get religion on the problem — Verizon, Sprint, T-Mobile, and AT&T have all paid $68 million-$90 million settlements. Still, it’s up to consumers to look at their bills every month to make sure nothing unusual is there. But then, that’s always true.
Today, more than ever, smart cellphone consumers need to keep an open mind and regularly consider if they are using the right phone, the right platform (Apple isn’t always best, really!), and the right plan. With the rapid pace of change and continued competition, you can’t lose — if you put in the time to shop around.