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Remember When the Economy Started to Tank? Part 2

07/29/2010 1 comment

Earlier I discussed the cable companies and some impact they have had on the economy. In this section I want to bring to light another factor…. postpay cellular service providers.

I used to sell cell phone services working for an electronics chain…who knows exactly how many contracts I signed people up for in the 5 years I was with them, but it was easily over a thousand or so. I feel bad now for that, especially if any of them ran into financial problems later down the road while still under contract.

I don’t know how the rest of you feel, but I HATE my cellular company…I would rather have an intestinal virus than sign another agreement with them. I won’t name them, but Rule The Air seems to be their attitude lately. I was with Sprint for 8 years and I loved them. The only reason I had to give them up was because I had moved from the city to the country and they didn’t have coverage out there yet. Now, I’m back in the city, and wish I still had Sprint.

I have been trying to downgrade my plan because I text much more than I talk on the cell phone. Here are the pricing options available to me by my service provider for a single line.

Anytime
Minutes
Voice & Text Minutes Only
450 $59.99 $39.99
900 $79.99 $59.99
Unlimited $89.99 $69.99

Back in the Day, which in the cellular world can mean as far back as 6 weeks ago, they used to have this 200 minute plan for less than $25. This was the plan that we would put Senior Citizens on because they just wanted something for traveling and emergencies. They don’t have that anymore. It turns out, that I am on the lowest voice plan available. This is useless to me. I am being forced to pay too much for services I don’t fully use. They have a system in place if I use too many minutes – overage charges, but I pay the same amount if I use 50 minutes or 400 minutes if I don’t use all of them.

Total Local, State and Federal Effective Telecommunications Taxes Compared with General Business Taxes by State, 2004
State Effective General Business Taxes Effective Telecommunications Taxes
VA 4.50% 33.77%
MD 5.00% 31.31%
TX 8.25% 29.29%
NE 6.50% 29.22%
MO 6.92% 27.79%
WV 6.00% 27.46%
KS 6.75% 26.33%
IL 8.00% 24.95%
MI 6.00% 24.15%
OK 8.45% 23.97%
Tax rates provided by Tax Foundation Blog site at http://www.taxfoundation.org/blog/show/435.html

Extra fees on top of the taxes…I also discovered that the extra fees put in the bill on top of Fed and State taxes are not required. My Agreement says that I:

“agree to pay all access, usage and other charges that you or the user of your wireless device incurred. Our charges include Federal Universal Service, Regulatory and Administrative Charges, and we may also include other charges related to our governmental costs. We set these charges; they aren’t taxes, they aren’t required by law“.

I’m sorry, but in the old days when this nation was building itself, this was called a Cost of Doing Business that you had to absorb. The way around that is to incorporate these expenses into your price that consumers pay, but don’t necessarily tell them about it. The reason cellular companies don’t do this is because its the monthly plan prices that that are advertised and that have to stay competitive. They wouldn’t look competitive if these fees were added into your service, so in a sense, you are entering an agreement without a full disclosure of fees charged that the Service Provider will tack on. There is no way of knowing these fees until you are already involved into an agreement. After all, your first bill is normally pro-rated, so you won’t see a full bill until after 30 days. By then, you’re locked in…or are you?

Here are my charges for the $39.99 Minutes plan from above. Keep in   mind I also receive a 19% discount off my plan because of my employer:

Monthly Access Charges
These are your fixed monthly charges that are based on your Plan and Optional Services. If you change your plans or services during the month, an adjusted charge that includes partial month charges or credits, may appear on your bill.
$45.38
Nationwide Talk 450 07/23 – 08/22
39.99
19% Access Discount 07/23 – 08/22
-7.60
500 MSG Allowance + UNL IN MSG 07/23 – 08/22
10.00
Visual Voice Mail 07/23 – 08/22
2.99

Usage Charges
These are your variable charges that depend on whether you have used any services that are billed on a per-use basis, or have exceeded any monthly allowance included in your Plan or Optional Services.
$1.99

Voice Usage

The “Voice” section of your bill Includes charges for voice calls, including calls that exceed your Plan’s minute allowances, 411 Search, Long Distance and other calls.
Allowance Used Billable Charge
Calling Plan minutes 450 15
Mobile to Mobile minutes unlimited 93
Total Voice Charges $.00
Data Usage

The “Data” section of your bill includes charges for:

  1. Messages (text, picture and video) sent and received
  2. Downloads (charges related to downloading applications, e.g. games or ringtones)
  3. MB usage (megabytes used for other data services, e.g. web browsing, alerts, emails)
Allowance Used Billable Charge
Unlimited M2M TXT messages unlimited 277
Unlimited M2M PIX-FLIX messages unlimited 2
TXT/PIX-FLIX messages 500 226
Downloads downloads 1 1
Megabyte Usage megabytes 1 1 1.99
Total Data Charges $1.99

X Company Surcharges and Fees, Other Charges and Credits
X Company Surcharges – Includes charges to recover or help defray costs of taxes and of governmental charges and fees imposed on us by the government. Other Charges and Credits – includes charges for products and services, and credits owing.
$4.96
Fed Universal Service Charge
.87
Regulatory Charge
.16
Administrative Charge
.83
Omaha City Occupation Surchg
3.10
Taxes, Surcharges, and other Governmental Fees
Includes sales, excise and other taxes and governmental surcharges and fees that we are required by law to bill customers.
$6.14
Enhance Wireless 911 Surcharge
.50
NE Dual-Party Relay Surcharge
.05
NE Universal Service
2.06
NE State Sales Tax
2.77
Omaha City Sales Tax
.76
Total Charges for (402-XXX-XXXX) $58.47

As you can see by my usage, I am overpaying for voice usage, and have to pay extra for text and M2M unlimited, where my main activity occurs. They do not have any other plan profile to fit what I do. I think that this is unfair, but I’m under contract. when I originally signed up, a plan like this would work, but my usage has decreased considerably from where it was even 2 years ago.

I am going to be contacting my provider soon as I have been trying to calculate the NE state sales tax and Omaha City sales taxes being charged and it appears that they may be overcharging. I will let you know how that goes after I do so. I have a feeling it will be a long phone call when I ask them to tell me what part of my balance is subject to the sales taxes and what rate are they charging.

I have also sent an email to one of our state senators who has been working on a study of cellular taxes and hope to hear back from her soon.

Yesterday, I decided to review the Service Agreement (Contract) I have with them. I realized I never really did read it through when I first signed up. I discovered some interesting things in that agreement.

“If you’re a Prepaid customer, you may replenish your balance at any time before the expiration date by providing us with another payment. Your balance may not exceed $1,000 and you may be prevented from replenishing if your balance reaches $1,000. We will suspend service when your account reaches the expiration date and any unused balance will be forfeited.”

this doesn’t apply to me, I just found it interesting. If you prepay your services and you reach a $1000 credit balance because of what you paid them, they will stop taking your prepayments, shut down your service, and keep the balance?

“If you’re a Postpay customer and a change to your Plan or this agreement has a material adverse effect on you, you can cancel the line of Service that has been affected within 60 days of receiving the notice with no early termination fee.”

This relates to changes made, that my company says will provide a written notice for, but in the almost 4 years, I haven’t seen a written notice. I opt for paperless billing, so I pay my bill over the phone or through email invoice links, so I don’t even see anything that may be written on the website. If I’m late making a payment, I get a text message that tells me to contact them to avoid service interruption, but have never received an email notice or a text message telling me that my Service Agreement has changed. Current online version indicates it was updated May 10, 2010.  I wonder how many updates have been made to this online version since I originally started using their services in 2007? They should be required to send the free text message to users that use online/paperless billing to alert of new changes to Service Agreements. They do it to collect money for late payers, why not for changes to the contract? If they haven’t notified me in writing, does that make me ineligible to cancel anything?

My early termination fee is $175 since I have a standard fancy phone. If i had one of those fancy phones that makes toast and programs nuclear devices in other countries, my ETF would be $350. Something I didn’t know, was that for every month of my agreement that I successfully complete, they deduct $5 off of the ETF…this means I could pay my current bill and give them $85 instead of $175 and be done with them…I never knew this before.

I contacted my cellular company via instant chat online a few weeks ago and verified the end date of my agreement, Feb 2, 2011. I asked if there was anyway they could note the account so that service would shut off without incurring an additional few days or weeks of prorated charges. She said no, that I would have to call and cancel when I was ready. As long as I did that before Feb 2nd, it would be ok. I set an event reminder in my cell phone’s calendar tool to give me an alert alarm reminding me that that was approaching. I’m not going to miss out on this.

In Part 3 I will wrap up the bringing of the two industries together and the impact they have on the family budget during this recession, what changes could be made for better customer experiences and to bring them into a light of being better corporate citizens. I also am going to go back and do this same bill analysis with my cable bill in Part 1 by the end of this week, so keep checking back on it as well to see what happens.