Mobile Rate plans - Emergency plan

Mobile Rate plans
In order to balance their customers’ needs with their own need to be profitable, wireless carriers have designed numerous rate plans for light users, heavy users, and corporate users. Neglecting to fine-tune their rate plans may make the difference between a slim profit margin and no profit at all. For these reasons, wireless phone rate plans change many times each year.

For consumer and corporate users alike, it is difficult to keep up with the plans and ensure each phone is on the most cost-effective rate plan. A business that diligently manages its wireless billing each month will regularly pay 20% less than a similar company that rarely examines its cellular billing.

Although wireless telephone rate plans regularly change, the plans’ designs remain consistent. The following section explains the most common rate plans. Table 1 shows the four basic types: emergency plans, individual plans, small group plans, and corporate plans. These plans are billed monthly, but many of them are available as prepaid wireless plans.


Table 1: Typical Rate Plans Offered in the Chicago Market

Emergency plan
A typical emergency plan costs $15 to $20 per month for access, includes only 10 minutes of free calling, and has a high per-minute rate for additional minutes. Additional minutes may cost as much as $0.95 each. This plan is designed for people who will only use the phone in the event of an emergency. It is ideal for workers who will only use the phone for one or two calls a month, such as security guards.

Many emergency-rate-plan customers put the phone in the trunk of their cars to be used only in case of a flat tire or other emergency. They can save money by canceling the monthly service, but keeping the phone. Any mobile phone will dial 911, even if the phone is not activated with a carrier.

If a caller uses the phone more than 10 to 30 minutes each month, he should change to an individual rate plan to avoid the high per-minute rates of the emergency plans. It is not unusual for an employee to grab a back-up cellular phone without changing the rate plan. In auditing the bills of large companies, I have seen employees grab a back-up phone and use it without changing the rate plan. All the minutes are then billed at very high rates. The company could have saved more than $100 per month by upgrading to a better rate plan.

Mobile phone rate plans : Free wireless phones

Mobile phone rate plans
Wireless telephone service expenses include monthly recurring charges and the initial start-up costs. Start-up costs may include the cost of a new phone, the first month’s access, and a one-time enrollment fee. Access is charged one month in advance, so this is always paid at the time of activation. Enrollment fees are designed to cover the carrier’s initial administrative expenses. But in today’s competitive marketplace, customers should insist that carriers waive this expense.

In the best-case scenario, the customer gets a free phone, pays no enrollment fee, and only pays for the first month’s access. Prepaid cellular, on the other hand, normally has a high initial cost and the user must purchase a phone. Prepaid cellular does not include a monthly bill, however.

Free wireless phones
Carriers will normally give the phone for free if the user signs a term agreement. New customers should always ask the carrier for a free phone. The carrier will require at least a 12-month term agreement, which is negligible because most people will use the phone for at least 12 months. This is a win-win situation because the user gets a free phone, and the carrier can count on 12 months of revenue from the customer.

Besides term agreements, new users can cut their start-up costs by purchasing a phone apart from their carrier. Phones can be purchased over the Internet or at electronics shops, and, in many cases, a second-hand phone may be sufficient. In a corporate setting, employees regularly relocate or resign but company-owned cell phones are rarely recycled. A company can save $250 by recycling a phone instead of purchasing a new one for each new employee. Prior to purchasing the phone, be sure your carrier will program your phone and allow it to be used on its network.

Monthly billing for wireless telephone service
The typical cellular phone bill contains three charges:

Access: A monthly recurring fee the user pays to use, or “access,” the carrier’s wireless network. Access is charged one month in advance.

Airtime: Charges for the calls made over the past month. Airtime is billed after the calls are made.

Taxes and Fees: Fees charged in advance for extra features, such as caller ID and voice mail.

A user who receives the bill on May 1 might be billed $35 for access in the month of May and $50 airtime for calls made in April. To use the carrier’s network, you must pay for access in advance. Once you have made the calls, you are billed for the usage.

When users cancel wireless service, they are issued a small refund. Since they have paid for future access, but will not use it, the carrier refunds the money.

Sample mobile telephone bill

Sample mobile telephone bill
Figure 1 is an example of a typical wireless telephone bill. The fictional user has a Telephone Company D phone in the St. Louis market. Mobile phone bills have three sections: cover page with payment coupon, account summary, and the call detail. In this particular bill, the customer pays $50 per month for access and gets 500 minutes of free airtime. Additional airtime costs $0.10 per minute. The plan also includes “first incoming minutes free.” This customer is paying $3.25 for “handset replacement insurance.” If the customer damages the phone, Telephone Company D will replace it. The replacement plan may carry a deductible.


Figure 1(a): Sample mobile telephone bill: page 1.


Figure 1(b): Sample mobile telephone bill: page 2, account summary.


Figure 1(c): Sample mobile telephone bill: page 3, phone charges.

This customer has a couple of options to reduce this monthly bill. First, the customer is paying for the 500-minute plan but only used 291 minutes. If Telephone Company D has a 250-minute plan for $25, the bill could be reduced by about $20. Another way to reduce the bill is to cancel the $3.25 monthly fee for “insurance.” Mobile phones rarely need repairs; so as long as the customer is not tough on the phone, this plan is a waste of money. The customer also had 60 minutes of calling to an 800 number. This airtime could be eliminated altogether if the user would use a landline phone, such as a payphone. If the calls were made while driving, this option is not feasible.