24 March 2011

Cellular carriers are ripping you off.

Yes, it is obvious that cellular carriers are taking as much money from their customers as they possibly can, but most Americans are only marginally aware of the situation. Sure, those tiny packets of information called "text messages" actually cost nothing for the carriers to send so that is just complete profit to them. Yes, the throttling of data means that heavy users are going to either lose service or pay out the nose. Sure, some carriers (looking at you, AT&T) have major problems with dropped calls and metro areas with terrible service. No doubt the two major carriers hold all the best devices for themselves to keep local companies out of the game. Still, the major theft going on is a mystery to most.

Let us put it in a different light and see if you can catch how they are robbing us. Suppose that the only way to buy a computer with an internet connection was through your internet service provider. So, you wanted to sign up with a smaller local carrier but they do not have an agreement with Apple for the devices you want. You admit defeat and sign up with Comcast because you need a MacBook Air. Great news! Comcast sells that Macbook Air to you for only two hundred dollars! All you have to do is sign a contract for your internet service for $150 a month for two years. Everyone wins because you get a fantastic laptop at a low price and Comcast knows they have you as a customer for two years. Sure, if you leave early you will pay a two thousand dollar early termination fee, but you have no plans on moving any day soon.

If you already own a Windows laptop you want to use on Comcast they will let you carry over your device so you do not have to pay for the two hundred dollar laptop. How nice, right? Even better, you will be on a month to month at $150 a month for their service and can leave at any time without an ETF. Sweethearts.

Catch how they are robbing us?

Today to carry a MacBook Air and have a Comcast cable modem service costs $1,400 for the hardware and $40 a month. So the total bill you pay today is around $2,400 for 24 months. However, in the example above where your home internet connection is like your cellular service you are actually paying $3,800 for the two years of service - or around twice as much. But, hey, it a great deal because you only paid $200 for the MacBook Air, right?

It is understandable that someone low on cash might buy into this scenario because they cannot afford a $600 iPhone, but the vast majority of Americans know a bad deal when it is staring at them. That is why the cellular carriers, for the most part, do not allow you to see what your cell plan would cost if you bought the device outright. Yes, your phone bill might be half what it is today because they are collecting a huge premium on that "loan" they gave you for the phone.

Nearly no one knows they are being ripped off. They think the discount on the phone is just a nice freebie for being a customer for two years and are completely unaware they are paying such a high premium monthly on their phone bill for it. Corporate customers should be especially incensed because they have the money to buy devices outright for their employees and would love to have that monthly savings on their bill.

While you are seeing the lowest priced major cellular company being engulfed by one of the most expensive you should take a moment to contemplate how the cellular industry is colluding with each other to make certain we are unaware of how much money they are taking from us every single month.