If you haven’t been in the market for a cell phone recently, perhaps you missed it: AT&T’s Unlimited Talk, Text & Web GoPhone Plan, ushered in by a June 21, 2011 press release.
The FCC, FTC or state attorneys general really ought to look into AT&T for the marketing of their “unlimited web” mobile phone services. Without the benefit of a clear-and-obvious disclosure, AT&T’s prepaid smartphone customers, like their contract-bound counterparts, need to sign up for a separate data package, otherwise there is virtually no web to speak of under so-called unlimited talk, text and web GoPhone plans. A data plan will set consumers back $10 to $45 or $5 to $25 per month in additional fees depending on whether or not the service is under contract (postpaid) or prepaid (with prices subject to change, of course).
For consumers trying to keep their costs down in a tough economy, every dime counts. AT&T and its largest competitor, Verizon, would like us to think they are competitive in the prepaid market so they’ve crafted their own definition of the word “unlimited”. Verizon stipulates parenthetically that their unlimited prepaid option applies only to “basic phones”. By contrast, AT&T makes an implicit suggestion that web access is unlimited to any prepaid handset owner. The reality that it does not comes on top of the industry’s controversial practice of capping or throttling data access on the part of its heaviest “unlimited data” users. It is, in a nutshell, a case of what Sir Richard Branson calls “confusion marketing“.
AT&T titled their press release this past summer “Prepaid Calling Just Got Better: Nationwide Unlimited Talk, Text & Web Plan Now Available for $50”.
Two things stand out: 1) The news organizations and blogs that covered this new plan largely parroted the headline to perpetuate a patently false notion of the true cost of owning a modern prepaid phone, and 2) AT&T and its competitors need to abide by standard English usage in the use of the word “unlimited” when paired to “talk, text & web”. In fact, they have a legal obligation to abide by truth-in-advertising laws.
To the best of my knowledge, no action has been taken to reign in AT&T’s misleading verbiage even as progress on a similar front are on the rise outside the US. When the smaller prepaid providers offer a $45 or $50 “unlimited” pay-as-you-go service they typically mean everything for that price. At present, AT&T, like Verizon, is not competitive in the emerging prepaid smartphone market. Only by engaging in false advertising do they give the appearance of something they do not, in fact, offer at a $50 price point.
AT&T isn’t just throwing curve balls at prospective prepaid customers. The company brochure depicts a la carte data plan “options” that are, in fact, mandatory for any smartphone user — even those who talk or text exclusively. While this practice may be prevalent in the postpaid marketplace, it is not widely anticipated in the prepaid market and, as such, is not adequately disclosed. In looking at Walmart and Best Buy’s selection of AT&T prepaid products — online or off — a disclaimer does not appear indicating that actual costs may be higher, nor is a “smartphone disclosure” printed prominently on the bright orange GoPhone prepaid card packages or online descriptions.
In the interest of full disclosure, I have been an AT&T-exclusive customer since the days of PacBell and Cingular. As a loyal customer, I have an expectation some 20 years after the debut of this technology to enter the market to find that it has become more transparent and competitive. Instead, smartphones and their data-driven 3G/4G service plans have given license to wireless providers to start a whole new round of gimmicks, games and hoop-jumping. There’s a reason I run my phones into the ground and don’t upgrade all that often: the mobile service providers make it too much of a Gotcha! hassle. And therein lies the lesson the cellular services industry ought to catch on to sooner, not later: keep it simple. Kiss and make up with your market by streamlining consumers’ cell phone purchasing experience and mobile phone providers might just see a revenue boost.
When we, the consumer, demand a straightforward buying experience we will get one.
While every other business in the difficult economy of recent years is selling their goods and services on razor-thin margins driven by inflated fuel, commodity and energy prices, the cellular industry hasn’t even stopped the practice of charging tax rates that don’t match the cost anyone actually pays for a handset! Still at play, too, are the perennial “line activation” fees. It’s not that the mobile phone providers don’t have the right to recoup expenses. They just need to stop announcing them in an endless onslaught of fine print. Here’s an idea: Include the usual tack-on fees in the cost of the handset. Consumers don’t care for line-itemized, nickle-and-dime exchanges. Take a cue from Amazon: bundle these charges in such a way that they are accounted for by the set price. When customers believe they are getting more for less — or for free, in the case of “free” Amazon shipping — they will be inclined to express greater satisfaction with the goods or services in question.
Long ago, the wireless industry devised a lucrative if not fatiguing strategy for luring consumers in at one cost, only to tack on innumerable fees at checkout. A straightforward and transparent transaction at the consumer level will not happen until consumer protection agencies at the state and federal level do what they’re paid by taxpayers to do: regulate. Mind you, not like they regulated Enron while the lights were going out on the West Coast (following energy deregulation). And not like they regulated BP, the foreign-owned company that killed US oil rig workers and filled the Gulf with sludge in 2010. And not like the US government regulated the mortgage-backed securities that ultimately toppled markets, taking down entire banks — nations, even — and retirement pension funds as blow-back for the deregulatory binge Republicans and Democrats engaged in during the Clinton Administration.
I am not a member of the Occupy Wall Street Movement. Yet when people talk about corporate malfeasance it’s all too obvious that the lack of law enforcement at the state and federal level is spurred on by the fact that bending and breaking laws in the name of “crony capitalism” are the national norm. Our eagle-eyed regulators look the other way because corporate lobbying firms and hefty campaign donations keep on flowing to the higher-ups in DC.
Consumer mobile phone contracts and services are needlessly complicated by corporate doublespeak. When a mobile phone service provider enters the market that will allow us to buy any carrier’s phone and use it on their service, we will see the democratization — true free market competition — the wireless market has lacked from the outset.
Change is inevitable. It’s only a question of “What direction?” and “When?”. Let’s begin with a demand for truth-in-advertising laws in the cellular industry. AT&T’s GoPhone prepaid cards and product descriptions should strike the word “web” from so-called unlimited plans or instead stipulate “Unlimited Talk, Text & Feature Phone Web; smartphone data access sold separately”. If this sounds too clunky to print on a slick brochure or a small prepaid card package, perhaps AT&T should say what they mean and mean what they say. The current verbiage misleads consumers into believing that that their monthly bills will be lower or at least commiserate with the competition regardless of what type of handset they purchase. It simply isn’t so. Verizon is the most costly overall, while Sprint does not offer a significant month-to-month cost savings over AT&T. T-Mobile is only marginally more competitive. On the whole, however, the cellular industry would appear to be engaged in collusion by proxy — if not out-and-out collusion — the latter of which is noncompetitive and therefore illegal.
In the spirit of the muckraking tradition, I urge consumers who are frustrated by misleading practices to mail company headquarters paperback dictionaries with the word “unlimited” and “web” written on the inside front and back cover respectively. The industry’s marketing practices solicit interest in their products and services with a bait-and-switch gimmick waiting in the wings. As consumers, we can make our position known too.
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