The PhoneBoy Blog

I was thinking more about the difference between buying a bundle of minutes–at a fixed monthly cost–versus paying for minutes as you go. I’m trying to figure out why such a thing caught on here in North America, but doesn’t seem to have caught on so much elsewhere.

The only thing I can think of–speaking from my own experience–is that it brings a certain predictability to the monthly cost. I know that my service is going to cost $X a month. It’s much easier to plan my budget when I know how much something is going to cost per month.

If you never go over your allotment of minutes, and never even get close to that limit, consider this: you’re likely paying for minutes you never use. Even if you take into account the “free” night and weekend minutes or mobile to mobile minutes, the overall number of minutes may, in fact, be lower than the bucket you purchased. For my wife, this was most certainly the case. Before we went prepaid, she was on a 300 minute plan and almost never used that many minutes in a month. The one month she did, overage city!

Anyone who has ever gone over their allotment of minutes knows that those overage minutes add up pretty fast. Many years ago, I was on one of AT&T Wireless’ first nationwide no-roaming/long distance plans. They allowed you to change the minute bucket you were on and would backdate it into the current billing cycle–which was very cool and something they no longer do. I had called in to place myself on the largest bucket of minutes possible. Even doing that, I had gone over my minute allotment by several hundred minutes and thus my phone bill was about double thanks to overage charges.

The question is: why are those extra minutes so much more costly than the minutes I got discounted in a bundle? How come if I go over a 450 minute allotment extra minutes cost $0.45? Do they really cost that much to provide an extra few minutes of service?

I will admit that there are some people who likely do quite well under the current regime of minute bundles along with free night/weekend minutes and free mobile-to-mobile. All of those people who are essentially overpaying for service are subsiding those who are making these “free” calls. Does that seem right to you?

The only reasonable approach here to pay for exactly what you use–no more. I know that when I buy my $100 voucher for T-Mobile Pay As You Go, I will get 1000 anytime minutes that are good for a year. If I spend $40 a month on a post paid plan, I get 450 minutes per month. Do I get to keep them if I don’t use them? No. Even AT&T’s “rollover” gimmick doesn’t let you keep all your unused minutes, though it’s much better than the other carriers.

Whether you are a heavy user or not, it pays to shop around. Prepaid plans may be cheaper than you think. It’s the closest thing we’ve got to “pay per use” pricing here in the U.S. The carriers have these plans, but they are for large businesses only. Why is that? Because businesses–particularly multinational ones–know a better way and have demanded it. Why can’t regular consumers do the same thing? Oh yeah, they simply don’t know better.