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How Can Cell Phone Service Be So Expensive?

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How Can Cell Phone Service Be So Expensive?

Old 06-05-06, 11:08 AM
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How Can Cell Phone Service Be So Expensive?

I was looking at getting a cell phone over the weekend and couldn't believe the prices.

I can have a land line with unlimited local calls and including all taxes and surcharges for $30 a month. This service includes repair if the telephone polls outside go down or any other problems including diagnosing the cable that runs right into my home.

I go to check out a cell phone. Sprint has $30 a month for 400 minutes and that doesn't include the extra taxes and fees (like roaming charges, etc.) that could be tacked onto my bill!!! It also doesn't cover anything else like if my phone quits working due to a defect. Why? Why is this so expensive? No telephone polls to maintain, everything pretty much digital with software probably developed in India at the cheapest cost.

Are phone companies just gouging people because cell phones are the in thing now? I think they may be as my uncle has a plan from Cingular for $19.99 which nobody offers anything even remotely close to that price. Of course, he got his phone some years ago and the price has remained low. It would seem a landline would require much more resources and be much more costly to maintain than a few towers dispersed throughout a region. It seems like a racket and I didn't sign up for one.

Last edited by shifrbv; 06-05-06 at 11:10 AM.
Old 06-05-06, 11:10 AM
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Can you take your house phone out to the park with you and make calls? Conveneince and most people will pay for it.
Old 06-05-06, 11:11 AM
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Conveneince and most people will pay for it

ie, most people are idiotic consumers??
Old 06-05-06, 11:12 AM
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Originally Posted by VinVega
Can you take your house phone out to the park with you and make calls? Conveneince and most people will pay for it.

Yep, plus all those sattelites and technology don't come for free. $29.99 or so is the lowest plan and that seems to be based on market demand.
Old 06-05-06, 11:13 AM
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Originally Posted by j123vt_99
Yep, plus all those sattelites and technology don't come for free.
It's not like this stuff was just installed yesterday. Most of the technology has been around for a good 10 years but prices are higher now than ever. I think it more attributable to gouging. Do cell phones have any regulatory commissions like other utilities do? I think that may be where the problem lies.
Old 06-05-06, 11:15 AM
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Are you really comparing cell phones to analog phones and expecting cell phones to be cheaper? Plus, you didn't factor in the long distance calling cost to the analog phones, a feature that is usually free (well, besides the cost of using minutes) for cell phones.
Old 06-05-06, 11:16 AM
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Originally Posted by shifrbv
Conveneince and most people will pay for it

ie, most people are idiotic consumers??
It all depends on what's important to you.
Old 06-05-06, 11:17 AM
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Originally Posted by shifrbv
prices are higher now than ever.
actually, prices are if anything lower than ever.
Old 06-05-06, 11:18 AM
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Originally Posted by shifrbv
It's not like this stuff was just installed yesterday. Most of the technology has been around for a good 10 years
and the line to your house has been around for just a smidge longer.
Old 06-05-06, 11:21 AM
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Originally Posted by LurkerDan
and the line to your house has been around for just a smidge longer.
correct.. a lot of houses are using lines that have been in place for 30-40 years. plus when something goes wrong with a sattellite, you can't just have a repairman in a truck go over and fix it
Old 06-05-06, 11:30 AM
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Originally Posted by shifrbv
It's not like this stuff was just installed yesterday. Most of the technology has been around for a good 10 years but prices are higher now than ever. I think it more attributable to gouging. Do cell phones have any regulatory commissions like other utilities do? I think that may be where the problem lies.
Prices are lower. In the 80s when cell phones were introduced, calls were $10/minute.
Old 06-05-06, 11:43 AM
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Originally Posted by j123vt_99
correct.. a lot of houses are using lines that have been in place for 30-40 years. plus when something goes wrong with a sattellite, you can't just have a repairman in a truck go over and fix it
Unless you're using a satellite phone (you're not), then there is no satellite involvedi n the equation. Cell towers are just connected to the land line system.
Old 06-05-06, 11:46 AM
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I think his real complaint is why don't cellphone service providers offer lower price plans. Most of the advertised plans start out at $40. My beef is that I don't need that many minutes and would like a lower price plan also.

I'm currently on a $25/month plan but just received notification that they're switching me to $30/month plan. I think I'm going to give them a call to complain and maybe I'll get a free phone upgrade out of it.
Old 06-05-06, 11:54 AM
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Cell phones don't use satellites. If they did there would be a 3 seconds delay during yor conversation on a cell phone. No landline phones use them either unless you are talking to someone on the other side of the world. Then it depends on the situation.

Cell phone companies own the equipment in the towers but then your call goes from the nearest tower to a T1 or fiber connection to the phone company that the tower is is the area of. The cell companies then lease the line to the phone company's nearest CO. Then it goes out on the PSTN just like a normal phone call. So all the cell phone company owns is the antenna on the tower. But they still have to pay for the long distance calls that you make from your cell phone. It's not long distance to you because you pay a monthly fee but it is still a long distance call for your cell phone provider. Plus the caller ID and other features cost them money because that info comes from the SS7 network just like it does on your landline phone. Those are features that the cell phone pays a fee to use. If you knew all the cell phone providers costs per month you would realize that you aren't getting screwed as much as you think you are.
Old 06-05-06, 12:05 PM
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Originally Posted by Mopower
Cell phones don't use satellites. If they did there would be a 3 seconds delay during yor conversation on a cell phone. No landline phones use them either unless you are talking to someone on the other side of the world. Then it depends on the situation.

Cell phone companies own the equipment in the towers but then your call goes from the nearest tower to a T1 or fiber connection to the phone company that the tower is is the area of. The cell companies then lease the line to the phone company's nearest CO. Then it goes out on the PSTN just like a normal phone call. So all the cell phone company owns is the antenna on the tower. But they still have to pay for the long distance calls that you make from your cell phone. It's not long distance to you because you pay a monthly fee but it is still a long distance call for your cell phone provider. Plus the caller ID and other features cost them money because that info comes from the SS7 network just like it does on your landline phone. Those are features that the cell phone pays a fee to use. If you knew all the cell phone providers costs per month you would realize that you aren't getting screwed as much as you think you are.
Thanks for the insight Mo. Why do the cell phone companies like to charge a package rate, rather than a general rate and then a per call rate like a land line?
Old 06-05-06, 12:09 PM
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There is a finite amount of bandwith space. If prices were too low, there would be a shortage of bandwith space.

And yes, all those cellphone towers, etc., cost money.

And yes, calls did cost many dollars per minute fairly recently.
Old 06-05-06, 12:12 PM
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Originally Posted by VinVega
Why do the cell phone companies like to charge a package rate, rather than a general rate and then a per call rate like a land line?
They make more money that way.
Old 06-05-06, 12:17 PM
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Go with TracFone if you don't use the phone that often......
Old 06-05-06, 12:23 PM
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But they still have to pay for the long distance calls that you make from your cell phone. It's not long distance to you because you pay a monthly fee but it is still a long distance call for your cell phone provider.

This part has me confused. Does that mean if I am sitting outside in my driveway and I call my landline inside, it is the same as making a long distance call?

Plus, the person who said the landlines have been in place for 30-40 years and that is why the costs can be so low isn't correct. My area was just developed in the last 2 years and Sprint had to run a bunch of cable out here to hook all the new subdivisions which I'm sure was not cheap. Plus, I bet the cable is more expensive than ever now because of the cost of copper. But I can still get my home phone for $30 with unlimited local calls.

I guess all the cell phone people are paying for that.
Old 06-05-06, 12:24 PM
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Originally Posted by VinVega
Thanks for the insight Mo. Why do the cell phone companies like to charge a package rate, rather than a general rate and then a per call rate like a land line?

I would say that they make more money that way. Qwest is starting to charge package rates as well for their landline service. But on your cell phone package rate you may pay $40 a month for 1000 min but it doesn't matter if you use 100 min or all the min you still pay $40. But I don't know why for sure. I work for a landline phone company but we have 4 cell tower sites that we have to maintain connections to.
Old 06-05-06, 12:27 PM
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I'm paying for the convenience of not looking for payphones when I need to call someone from outside my home.
Old 06-05-06, 12:28 PM
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Originally Posted by shifrbv
But I can still get my home phone for $30 with unlimited local calls.
and your long distance is billed at a seperate/higher rate.. where there is no such thing as long distance with the majority of the cellphone plans.

not to mention.. free mobile to mobile is standard with most services
free nights and free weekends are also pretty standard.

and you dont think there should be any charge for convenience?
Old 06-05-06, 12:33 PM
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and you dont think there should be any charge for convenience?

This is where I have a problem with the whole thing. Landlines are regulated by state utility commissions. The rates are set so that people can have affordable phone service as the state and federal government deems that to be important. There are programs in place to subsidize poor and rural areas so those people can have phones.

Why should cell phones be treated differently? Why should only the wealthy have the right to call 911 out on the road? I don't see why a cell phone should be treated differently. If a phone is important, which the government seems to think it is, then it should be regulated whether it's a landline or a cell phone so that people can afford it.

For me to replace my landline and get a comparable plan with a cell phone, I would probably have to spend 5-6 times the cost per month. That seems ridiculous.

Last edited by shifrbv; 06-05-06 at 12:36 PM.
Old 06-05-06, 12:38 PM
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Originally Posted by shifrbv
[I]
Plus, the person who said the landlines have been in place for 30-40 years and that is why the costs can be so low isn't correct. My area was just developed in the last 2 years and Sprint had to run a bunch of cable out here to hook all the new subdivisions which I'm sure was not cheap. Plus, I bet the cable is more expensive than ever now because of the cost of copper. But I can still get my home phone for $30 with unlimited local calls.

I guess all the cell phone people are paying for that.
The cost of copper doesn't come into play here. Over the last few years telcos have been laying glass; fiber optics. Glass is cheap. The cost is the manpower used to string/lay it. Splicing fiber is a specialized skill. The reason that cell services costs so much ,comparatively speaking, is because that is what the market will bear. It has not been commoditized or over regulated like plain old telephone service.
Old 06-05-06, 12:40 PM
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Originally Posted by shifrbv
This part has me confused. Does that mean if I am sitting outside in my driveway and I call my landline inside, it is the same as making a long distance call?
It depends on the deal the cell phone provider has with the telco that services them. In my companies case we get 2 cents per min for any call placed from a US Cellular phone. Cingular and T-Mobile we get 8 cents per min for any call placed from one of their subscribers that as to go thru our switch. So yes in your case your cell phone provider is getting charged per min for any call you make. Even if you are calling someone in your telco's exchange (your own landline number). I know that is probably confusing.


Originally Posted by shifrbv
Plus, the person who said the landlines have been in place for 30-40 years and that is why the costs can be so low isn't correct. My area was just developed in the last 2 years and Sprint had to run a bunch of cable out here to hook all the new subdivisions which I'm sure was not cheap. Plus, I bet the cable is more expensive than ever now because of the cost of copper. But I can still get my home phone for $30 with unlimited local calls.

I guess all the cell phone people are paying for that.
Also regular gell core copper cable has a life of around 30 years. But most cable laid 30 years ago was air core which is even less. So that old cable is pretty shitty nowadays and has to be constantly repaired or replaced. So yes someone is getting charged that cost and I'd say it's all worked into the fees that the telco's get paid from their customers.

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