[Editorial] The Responsibility For Overages and Usage

I’ve been in the sales portion of this business for a long time.  I’ve worked with irate customers.  I’ve gone through bills with a microscope.  I’ve seen computer glitches, and I’ve seen user errors.  I’ve seen irresponsible parents, and I’ve seen irresponsible spouses.   I’ve experienced a multitude of different scenarios, most of them not very pretty.

It doesn’t have to be this way.

...

I hold on to a belief that drastic change is needed in the wireless business.  I think phone subsidies should be banned, contracts should be signed for discounted rates rather than discounted phones.  Plans should be based around a connection rather than a prediction of what I’ll be using.  Overages shouldn’t be punitive - my plan works out to about $0.08 per minute, but if I go over even one minute, I pay more than five times the original rate, per minute.

In my experience, carriers see overages the same way a logging company probably sees a national forest: untapped income.  Asking the carrier to credit even a bit of that income is like asking a logger to cut off their own arms.

Overage isn’t about the penalty for going beyond the allotment a customer paid for.  It’s about making some nice cash at five times the standard rate, when your cost is in the realm of fractions of fractions of pennies.  It’s almost pure profit.  And it’s been a system in place since the dawn of cellular time.

And, in my opinion, it’s fundamentally wrong.  It’s the wrong way to do business.  It’s the wrong way to view customers.  Maybe a decade or two back, the system of minute allotments and overages for exceeding them made sense.  Today, it does not.

What’s the State of Price Plans Today?

To understand the plans of the present, you have to briefly visit the plans of the past.

When I got into the business, we had two plan programs at Verizon Wireless: local coverage and national coverage.

If someone needed extensive local coverage, they didn’t bother with the national plan.  The opposite was true to those traveling or calling outside the local area, as they wouldn’t want to be on a local or even regional coverage plan.

Also, minute plans were fairly evenly placed.  On national plans, there were plans in 400, 500, 800, 1000, 1200 and more increments, all the way to 4000 minutes.  Plans started at $40, and didn’t necessarily have to be $20 higher for each minute increment.  On local plans, they started at 500 for $40 and went up from there.

Family shares were as simple as taking any single line, and adding $20/line for each additional line.

Over the years, minute increments increased slightly.  400 became 450.  800 became 900.  1000 became 1200.  500 went away.  Plans started to follow a 450-factor schedule.  The first plan was 450 minutes.  The second plan was 450 more, and the third another 450 higher.  Family shares eventually split from single lines, having different minute increments, and not long after, secondary lines became $9.99.  Material changed to reflect the price of TWO phones, rather than taking one and adding $20 to it.

In 2008, Verizon introduced unlimited minute plans at $100.  We still had access to the 2000 minute plan, which was also $100, but it was no longer printed in brochures.  In most cases, unlimited was better than 2000, 3000, 4000 or more minutes.

Today, the plans we had several years ago have morphed into two minute plans with unlimited at the third tier.  As the cost of unlimited has gone down, there was little need for a 4000 minute plan, let alone a 1350 one.

Currently, you’ve got a small gap of $30 between the bottom minute plan and straight unlimited.  So, I could have 450 minutes for $40, 900 minutes for $60, or unlimited for $70.  It takes all of 67 overage  minutes on the 450 minute plan (for a total of 517 minutes used) to be paying the same (or more) as the unlimited plan.  If you’re on the 900 minute plan and use 925 minutes, you’re paying as much as unlimited.

The same is true for family share plans, though the numbers themselves are slightly different.  I won’t go into the details of each plan, but I will point out that the unlimited family share is $50 more than the lowest minute plan for two lines.  The big difference is, each secondary line is another $50.

For single lines, the difference between lowest plan and highest plan is very little.  But the difference in minute usage is phenomenal.  I could do 400 minutes for $40, or 4000 minutes (or more) for $70, and I would never have to worry about overage fees.  However, if I did 4000 minutes on the 450 minute plan, I’d pay $1600 in overage fees alone.  That’s $1530 more than someone with the same usage on an unlimited plan.  The difference is disgusting.

What would make more sense?

Plain and simple, if nothing else, the overage rates should be nominal.  Five times the original rate makes no sense.  Ideally, if I had control over minute plans, unlimited would be a flat, low rate for everyone.  But seeing as how I am definitely not in charge, I have to settle for a few points of interest.

If nothing else, overage rates should be nominal.  Five times the original per minute rate makes no sense.  It’s practically raping the customer of their money.

Ten cents per minute, maybe even fifteen cents a minute, would be more responsible and credible overage rate from the carriers.  Better still would be a system that only charges you the difference between your plan and unlimited, and then temporarily keep you on unlimited for the remainder of that bill cycle.  There should be no reason why someone would be forced to pay $1000 when they could have been charged $30 for the right plan.

What Can Be Done Now?

Given the state of the cost of going over your minute allowance, I think it would be socially responsible of carriers to offer usage control at no extra charge.

Usage control gives an account owner the ability to stop a line from using minutes after a specific point.  If you want to limit a line to no more than 500 minutes, you can with usage controls.  The same is true for other overages, too.  With usage controls, you can even set the time of day a phone is used.  You are in control of a phone’s usage.

Currently, carriers charge at least $5 a month, per line, for this service.  The cost of throttling a line is very small, so $5 is quite a bit of profit.  Even still, if you have someone on your account who often costs you more due to overages, $5 is definitely worth what you’ll save by not going over minutes, text, or anything else.

In addition to usage controls, a mandatory alert system would be very beneficial.  Basically, if you’re trending to go over your minutes, you get a text or email on it.  Then, it becomes the responsibility of the account owner to adjust their plan or limit usage on a line.  Some carriers have implemented or considered such a system, but not because they feel the need for respectable and responsible business practices, but because the FCC is pressuring them to do so.

The Other Side of the Issue: Customers

Don’t think for a moment that I would let customers off the hook.

I honestly believe that it is my own responsibility to monitor my own minute plan, and the same is true for customers.  An unexpected month of overage is one thing, but multiple months is not the responsibility of the service provider.  Contacting your carrier after three months of overage billing is more irresponsible than going over minutes in the first place.

Ultimately, you use what you use on your phones.  Since you’re the one using your phone, you are the one responsible for it’s usage.  I believe that carriers can be more responsible with different plans or overage rates.  But in sight of no change, the customer MUST be on top of things.

Tying it All Together

First and foremost, you need to know what you have and what you’re using each month.  You need to look at your bills, and you need to look at your mid-month usage.  It’s that simple.

Second, carriers need to change the way they do business.  As a business, there should be no need to penalize someone at five times the normal rate.  Double or less makes more sense.

Plans need to change.  Unlimited minutes across the board would be best, but short of that, different overage rates or overage buckets would be better for business.  An option to have your minutes temporarily increased would be another possibility.  At this point, anything is better than five times normal rates.

Carriers would do well to offer usage controls for free.  I know that they often see overages as revenue, but the cost of throttling minutes must be less than losing a customer over overages.

We’re at a point now in this business where it doesn’t make sense to charge out the nose for going over your allotted minutes.  It’s time for change.