The Evolution of the Cell Phone Bill

Just four years ago, only 35% of Americans owned a smartphone. Today, 64% of American adults now own a smartphone of some kind according to Pew Research Center. That’s a whole lot of people with the power to call, text, and surf in their pocket. And, that number is only continuing grow, which we think is pretty friggin’ cool.

However, with so many Americans already using a smartphone, cellular carriers can’t grow the market through smartphone adoption, so they look for other ways to increase profits. Ultimately, there are two ways to grow profits in the cellular industry: poach customers from other carriers, or increase the average revenue per user, known as ARPU.

Angry man screaming at cell phone
Angry man screaming at cell phone

Although there will always be a battle to steal customers, “Big Cell” is focused on growing revenue per user and their main way to increase ARPU is by increasing your monthly bill. Think about it, if you can’t gain more customers, then the only logical way to continue to grow your profit is by getting your current customers to spend more – most of whom are locked into a two year contract anyway – and we think that’s pretty lame. Don’t get us wrong, there’s nothing wrong with profit (we have to keep the lights on too), but when growing profit means hoaxing customers into spending more on something they don’t need, we take issue.

By looking at the historical trends and quarterly results from big cell, it’s clear that tactics have changed and bills have increased. By the end of 2011, AT&T experienced their 12th consecutive quarter with an increase in revenue per user – up to $63.76. It makes sense that ARPU would increase in 2011 as more and more people adopted the smartphone. Three years later, as market saturation set in, ARPU began to decline. This led to a roll out of new plans with higher data packages, and higher cost, to make up for the dip in ARPU, and it worked. “According to management, AT&T’s ARPU increased because customers opted for higher usage data plans. By the end of the quarter, 50% of its customers were using usage plans that were 10 gigabytes (or GB) or higher.” (Market Realist). High gigabyte data plans have now become a norm in the cellular industry. If you watch TV you’ve probably seen the constant message to buy more data to eliminate the risk of going over (“Unleash the data hounds” anyone?).

As more customers adopt a higher data plan, you’ll start to see more plans shift to a bundling package. Essentially all bundling is doing is getting the customer to perceive that they’re getting a deal by adding more things that they might use. One of the “new” deals going in big cell right now is shareable data that allows up to 10 devices on one plan. So, if your smartphone wasn’t using those 10GB of data, you can now add a tablet, laptop or wearable to your cellular plan, did I mention each added device is another $10 per month?

Plain and simple, the cell phone bill continues to change, and not for the better. Disguised behind “more everything” and “data sharing” is a list of fine print that is ultimately designed to make you pay more. We don’t think it should be that complicated. Instead of focusing on ARPU, we focus on fairness for the individual customer. Nearly half of our members have switched to the $10 plan because our phones are smarter right out of the box, engineered to help you save by offloading as much data as possible to cheap, plentiful, WiFi. Instead of pushing people to buy more cell data, we’re building out ways to help members add cell data on-demand when they need it, while also helping our $25 and $40 members offload more cell data to WiFi with our powerful new app and online tools. It’s a win-win that all equals more savings for our members! We say focus on the person, not the profit. We’re here to give you the power to choose what’s best for you – nothing more, nothing less. Pay for exactly what you use, be in control of how you use it, and never worry about hidden fees or overages. #FairIsFair

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One thought on “The Evolution of the Cell Phone Bill”

  1. “Ultimately, there are two ways to grow profits in the cellular industry: poach customers from other carriers, or increase the average revenue per user, known as ARPU.”

    Or simply triple your margins.

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