As far as I can see, all mobile/cell phone plans are based on the volume of calls and texts made.
Do the calls actually cost money? I would have thought that all the costs relate to creating and maintaining the infrastructure. So, presumably, it wouldn’t affect the companies much just to have a flat monthly rate as the infrastructure is based on coverage, not volume. Apart, of course, from more customers requiring more customer service staff; but, again, it’s the numbers of people, not volume of their calls that is relevant there.
So is it all down to a devious way of incentivising us to pay more each month?
The amount of infrastructure needed is directly related to the number of calls made. The number of calls made also is related to the number of customers. Cell phone traffic is analogous to computer network traffic. A base amount is needed to provide service, but as more people are active, additional ports and bigger pipes are needed.
The pay-per-minute pricing model only exists in the lower tiers of service plans. Heck, my land-line phone company uses the same model. Even in those lower tiers, they frequently offer unlimited minutes during the time when the network has the lightest load: nights and weekends. So basically, your service provider is providing you a discount if you agree to limit your use when the infrastructure is the most stressed. It works out better for everyone.
As for texting prices… to my knowledge they are just trying to make as much money as possible. It does not appear to be related to actual cost.
I rather glibly said infrastructure as if I knew what I what I was talking about. What does running a phone company involve? There’s ‘head office’ costs, obviously, but all I know is that there are transmitting aerials scattered around the country. Do those masts have a maximum capacity? What other equipment is involved?
Oh it is definitely the number of calls AT SAME TIME that sets the cost of the service. You have to add carriers and more transmitters and antennas at cell sites as number of calls at the same time go up. It isn’t the number of calls you made, its the number of other calls at the same time being made, that sets the cost to the carriers, both of radio equipment and also of trunks to the local phone company and long distance company.
Customer service calls go up just based on the number of bills going out each month, a different issue.
How many calls can a transmitter handle before it overloads? Can the capacity of the transmitter be increased, or do they need to erect another one? I haven’t thought about this before, but, as must be becoming apparent, I really don’t know anything about this.
I think it was 92 calls per carrier on a Motorola CDMA system, other kinds will be different. Yes a new carrier is expensive, need additional transmit antenna or a diplexer to use a common antenna, more circuit boards in the cell site at maybe $15,000 a board, and PA amplifiers, and more circuits into the site as well, yes, major expense, then you get 92 more calls at same time. Draws more power too. makes more heat, needs more cooling, yes costs escalate. Can use same tower till all carriers are used up anyway, there are I think 9 of them.
Depending on where the call ends up, there can be additional charges to the carrier beyond their own infrastructure costs. This not applies to the obvious, such as international calls, where your carrier incurs charges, but also to the non-obvious under what’s known as Intercarrier Compensation. Here is some more information from the FCC: http://www.fcc.gov/wcb/ppd/IntercarrierCompensation/
Electric power costs would be a significant expense. Also many cell towers have a generator for back up power and maintenance costs for those are not exactly cheap. Before the towers even go up I’d guess there are large real estate and siting costs. With hardware spread out over a large geographic area, fleet and fuel costs are going to be big, along with unproductive travel time for technicians.
These seem to be costs that are not tied to call volume.
Dag, Those are costs to set up a system to begin with. But you do get 92 calls at same time now to start, in the old analog days you got 22 calls with that first T-span and 2 more channels used for the data, like to tell what number you dialed and who you are. Even worse, each channel needed its own separate PA RF amplifier and a plug in channel unit, at over 10-15 grand for each channel. Now it is so much better with just one amp for every 92 channels! Now you know why the number of cell sites grew so much.
Also, keep in mind that the actual frequency/spectrum costs a lot of money. It costs billions of dollars for carriers to buy the rights to use specific wireless frequencies. IIRC, for GSM, one cell radio can carry about 8 voice channels for one frequency, and radios in adjacent cells cannot use the same frequency due to interference issues.
Before our local carrier went digital in our town,it was not unusual to get the “cell busy” message for several minutes just after 5PM.
As for cost of texting - in a recent discussion somewhere it was mentioned - cost - zero. There’s a blank field in the “hello, I’m here” packet that your phone exchanges with the nearest cell every second. Conveiently, that blank field is what gets filled with text messages. So up to 1 text per second per phone, the only cost is the infrastructure to distribute those text messages to the appropriate destination.
There’s a lot of basic structure that needs to be in place - cell towers, switching computers, billing tracking, etc. Some is necessary regardless, some volume dependent.
It’s still all a rip-off. Most companies are trying as hard as they can not to overcompete, because it’s a zero sum game. If we offer free texting, they do too. All we’ve done is reduce our revenue (and theirs) with no market advantage.
To a certain extent. My Verizon plan, for instance, has unlimited free calls to other Verizon customers, which are almost all the people we call. Night and weekend, when volumes are down, are free also. And there are lots of unlimited plans.
Yes. People will overbuy capacity just to be sure, so someone who almost always calls little enough for a cheaper plan will buy an unlimited one, just in case. We have the plan with the fewest minutes, and it has always been plenty for us - on the other hand, we had to go to a texting plan for my wife when my daughter, who already had one, started texting her. But I suspect very few people look at their bill over a year and try to figure out if they are buying too much. A surprise charge for going over hurts more than a regular charge to get more capacity.
There is a competition factor also. Once you have your infrastructure built-out, I really think there is relatively little cost involved relative to volume so long as you don’t exceed your capacity. The last thing you want to do is to lose people by charging too much, since then you have the same depreciation with a smaller revenue stream. To a certain extent capacity issues are self-correcting, since people who don’t get service will likely put off a call, but then you get a bad reputation and lose customers. I also expect that the cellphone companies like big, expensive plans since very few people make full use of it, and their revenue is more stable than if they charged by the minute.