Wednesday, 9 March 2011

Bust a cap in your plan

How does your friendly local telecommunications company jack up their prices without jacking up their prices? This week, Telstra showed us one way.
TELSTRA will start charging all long-distance and mobile calls in one-minute blocks later this month, after moving to 30 second blocks two years ago.
What kind of difference does this make? Let's use maths to work it out. Assume that calls cost one dollar per minute. Each full minute will cost the same regardless of whether you are charged for 30 second blocks, one minute blocks or even one second blocks. That final minute, though, is where the scam kicks in. If you are charged in one second blocks, maths says you will pay an average of 50c for that final minute (or part thereof). If you are charged in 30 second blocks, you will pay 50c if the call finishes in the first 30 sec, and the full dollar if it's more than 30 seconds, for a maths determined average of 75c. If you are charged in one minute blocks, you will obviously pay the full buckaroonie. In short, Telstra now charges an extra 25c per call. All without increasing their prices. Genius.

Telstra's spokesperson tells us that "The reason behind this is about simplification [and] making [bills] clear, simple and easier for customers to understand". To be fair, charging in one minute blocks is stupid*. It makes no sense at all that a 60 second call should cost the same as a one second call, and half as much as a 61 second call. This is an underhanded ploy to earn more money. But wait
Telstra says only 10 per cent of customers will be affected because most are on so-called bucket plans - paying a fixed amount each month and receiving a value of calling credit - and do not exceed their allocated minutes. Customers on bucket plans are usually less worried about the cost of each call because they have already paid.
Really? According to the Australian Communications and Media Authority, 58% of people on capped plans exceed their cap at least once a year. At an extra 25c/call, how many extra people will now exceed their cap? More than none, I expect.

And don't get me started on the word "cap". Cap infers a maximum, but in reality, the mobile phone cap is exactly the opposite. It is the minimum spend. There is no maximum. Dagnammit!

CHOICE and the Australian Communications Consumer Action Network have been campaigning to make mobile phone pricing fairer. I heartily endorse this event or product.

*To clarify, if I didn't want to be fair I'd say "charging in one minute blocks is fucking retarded"

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