Dear Editor:
This is in response to an article on call rounding (“NYC legislators work to combat rounding up,” RCR, April 10, page 34).
While I’m sure the citizens of New York will be suitably impressed by their officials’ implementation of the impressive- sounding “Wireless Consumer Protection Act of 2000,” I would submit their facts and figures leave a bit to be desired as they relate to carrier call rounding practices.
It is obviously true that rounding to the second is more consumer-friendly than rounding to the minute. However, the chart that accompanied the article implies that Nextel’s plans capture the full benefit of these economics. This is not true, as the per-second rounding only kicks in after the first minute. This is not a subtle point, as I would guess that more than 30 percent of wireless calls are a minute or less. (Only Aerial Communications rounds to the second beginning in the first minute).
Ignoring this item, though, the real issue is the survey’s claims of customers being cheated out of large sums each month. Let’s assume that, on average, a call lasts 30 seconds into its last minute. Most carriers will round this up to 60 seconds (i.e., the next minute). Therefore, there are 30 seconds per call that are being “overcharged.” Let’s further assume that the charge per minute (after package minutes are used) is 30 cents, although this will vary by plan and carrier. Therefore, for each call, the subscriber is being overcharged by 15 cents. So, to actually get cheated out of $81.48 each month, (as an example in the article mentioned), a subscriber would have to work through the packaged minutes in their plan, and then make or receive well over 500 additional phone calls in that billing period!
The other way to look at the economic cost is that plan minutes are eaten up more quickly when carriers round up. However, this only translates into a “loss” for the consumer if these minutes cause the customer to repeatedly exceed their monthly bundle. At most, the impact directly attributable to this issue would be a few dollars. It is a real cost, but only a fraction of those claimed in the study.
In the current highly competitive environment, airtime is cheap, and carriers offer plans to fit just about every conceivable usage pattern. That in mind, I would argue that the vast majority of the “loss” suffered by the customers mentioned in the article is due to being on the wrong rate plan and has little to do with carrier rounding policies.
Ultimately, the legislation being proposed is mostly irrelevant. If it is implemented, prices and promotions will adjust fairly quickly to reflect the new rules. The real issue raised by this survey is that carriers need to proactively educate both prospects and their existing base of the value in their current offerings, and help these groups locate or switch to the best-fitting plan. In doing so, churn will stay manageable, and the politicians can look elsewhere to score a “victory” for the little guy.
Allan Keiter
President
MyRatePlan.com, L.L.C.
