Cellphone Economics

I’m relatively new to Skype. I’ve known about it for quite some time, but never really used it until recently. Sadie moved into a dorm at school for a few months to save herself the headache of driving 2 hours in the snow every day. Since she would get lonely by herself sometimes, we started finally using the video camera set we bought a few months back on a regular basis. We had tried it originally in Ekiga, a FOSS video conferencing application. Things were kind of buggy, but looking back, I think it’s because we were both trying to send video over Wifi connections, which also fails a lot on Skype. Regardless, we decided to try out Skype, and it works pretty well. They even have a Linux client available, although it’s 2 entire versions behind the latest Windows client (2.0 vs 4.0). In the end, Skype offers a pretty good service. I think the newest Ekiga would be just as good, if not better, but Skype is what we’re using for now.

If you’ve talked with me about cell phones recently, you know I’ve been pretty torn. I’m not very happy with my current plan (AT&T), which runs me $48-50 a month after taxes, and all I get is mediocre reception phone service. No texting. No Internet. I’m torn between wanting to embrace my inner geek and buy one of the new-fangled smartphones like the T-mobile G1 or iPhone and wanting to save myself a big expense that I don’t really need. The problem is that they each have a mandatory data plan that costs an extra $25-30 a month. We’d be talking $80 a month (minimum) for a cell phone, and that doesn’t even include text messaging. On the flip side, I like how inexpensive Sadie’s prepaid phone from T-mobile is. She pays $100 for 1000 minutes, which don’t expire for a year. I thought about just getting one, but since my cell is my only phone, those minutes would go awfully fast. We usually talk on the phone 30-60 minutes a day.

Also, I’m much more keen on the idea of spending my $200-300 on a netbook instead of a smartphone to use in my hospital clerkships next year simply because I won’t have to pay $30/month for data. Both my apartment and the hospital (and a lot of other places) have Wifi available. It may seem like I’m just being cheap or trying to save money. While that’s partially true, the bigger reason that I’d rather get a netbook is that I don’t feel like the current smartphone plans offer particularly good value for their money. I’d be much more willing to pay the $80/month if I was getting an exceptional service. Unfortunately despite the “awesomeness” of 3G, the Internet connection is still pretty slow. I already feel like my cell phone plan is not worth the money, so adding $30 a month for a crappy Internet connection that I’ll probably only use occasionally just exacerbates the problem.

Once we started using Skype, I considered getting a prepaid phone and just using Skype-to-Skype voice-chat with Sadie every night, but she doesn’t normally like to be tied to her computer while we talk. I had heard that Skype offered the ability to call landline phones for a fee, but I assumed it would end up costing just as much as my cell. Well, you know what they say about assumptions, right? I was talking with my friend Jimmy the other day, and it turns out that a Skype subscription only costs $30/year for “unlimited”1 calling! Jimmy even connects his bluetooth headset to his laptop, making it very similar to a phone. For an additional $30/year, you can purchase an “online number”, which is a regular phone number that will ring on your computer when people call it. I’m not sure I’d need this, but it’s a good option to have.

This made me start crunching some numbers, and here’s what I came up with. My current cell plan gives me 400 daytime minutes and unlimited nights/weekends for ~$48/month (probably an underestimate). That comes out to $576/year. Ouch! If I were to buy a prepaid phone ($30) with two 1000 minute refills ($200) and a Skype subscription ($30) with an online number ($30) it would cost me $290/year. That’s half the price. It also assumes that I burn through 2000 minutes on my cell and that I buy the online number, neither of which I think will happen. Subtracting those things would make my total $160/year!

Of course, there are some disadvantages to Skype. I can’t use it without an Internet connection. I could use it without a computer by purchasing a Skype phone ($65), which is a definite plus for my apartment. That said, I can’t use it like a cell phone, so if I’m away from my apartment, I’ll have to rely on my prepaid cellphone, landlines, or someone else’s wireless and my laptop with Skype. Like I said, I will probably be getting a netbook soon, which should ease some of the portability issues. Also, if my mother ever gets the Internet at her house, there will be very few places I go without an Internet connection. (Update: It turns out, with a Skype subscription, you also get a free “Skype To Go” number, which is a local number that works like a calling card but uses your “unlimited” Skype minutes. Awesome!)

There are also some advantages to this plan. Obviously, it’s much cheaper than my current situation. Since I’m no longer under contract with AT&T, it won’t cost me anything to cancel my cell phone, and I can transfer my number to the prepaid phone. (I only wish I could transfer my actual phone, since I really like my W810i.) I dig the ultra-portability of a netbook compared to a laptop, and I can use Skype on a netbook anywhere with Wifi, which is nearly everywhere these days. Not to mention, with an actual computer I’ll have applications at my disposal not available on a smartphone. I will still have a cell phone for when I’m traveling. Plus, if I decide to purchase a Skype phone and an online number, it will be just like I’ve got a landline phone in my apartment without that $35/month fee.

Of course, I’m also looking into other MIDs that aren’t phones. I’ve thought about the iPod Touch, which Usama got for similar reasons. The nice thing about the iTouch is that you get access to most of the fun apps from the App Store and the sleek design. There are 2 major downsides I see to it (personally). First, I want something with a physical keyboard. Since I’m going to have it with me in the hospital next year, I plan on using it for some actual hardcore typing. The touchscreen keyboard on the iTouch works really well, but it’s not practical for extended typing. This is also why I’m being picky about the keyboard on netbooks. Secondly, the iTouch only works with iTunes. There are currently people hacking solutions together to get it to work with Linux, but if Apple doesn’t want my business, I see no point in giving it to them.

I’ve got a big decision to make over Spring Break, but it seems like I’ve already kind of made it. I’ll probably be making the Skype/cell phone switch. I won’t be buying a netbook until June or July. There’s no hurry for me to get one, and newer models might bring a killer new feature. Plus, I’m hoping that good netbook deals will start popping up in the next few months.

If you’ve read this far, I’ve got a couple of questions for you. Do you think your wireless bill is too high? Are you satisfied with the service and features that you get for the price? If you have a smartphone, do you think the applications and constant Internet connection is worth the fee for the data plan? Any thoughts on my post? I feel like more people probably could be taking this route, so I’m curious as to why people haven’t. Or am I the only one who feels like my cell phone plan is overpriced for what I get?

1 – Unlimited = 10,000 minutes/month or 6 hours/day

10 thoughts on “Cellphone Economics

  1. Not that I’m proud to admit it – but my wireless bill is sky high. I fall into the iPhone category and definitely end up paying for it. What strikes me about the cell phone/land line/internet etc. plans is that there is no full connectivity package that is simple and affordable. I decided on the iPhone intrigued by the possibilities that ‘open’ development and innovation could bring to the powerful new 2.0 platform. Instead Apple and especially AT&T left me with unreliable/sub-par connectivity (especially in the locations I frequent most) and a phone platform with too many restraints and unfilled promises (still waiting on push for…everything!). The kicker is the price for all this underwhelming tech – even with _all_ of my connectivity services through AT&T I get no discount or package rates (currently I have 2 iPhones, 1 basic cell line, 1 home phone line and DSL). In short – the service does not match the price…period.

    Enough with the rant – on to the rest of the questions:

    The smartphone applications and service plan might be worth the data plan if they finally implemented a few features/applications that people (read: I) really wanted from the outset: background running apps, push/instant notification and turn-by-turn navigation. This also would require that the infrastructure get a boost to actually provide coverage _everywhere_. I think the main reason people go this route is the ‘ease’ of use – things just work. You set up one device, it does the rest – poorly, and at a cost – but the job gets done.

  2. I went the ipod touch route and I have to say it beats a netbook for sure. Most of the netbook keyboards are too cramped anyway and in my opinion, having an itouch in your pocket is definitely more portable.

    • I’m looking at the HP Mini 1000 and the Asus 1000HE, both of which have a 92% keyboard and 10″ screen. Agreed that the iTouch is more portable, but I’m still trying to decide how practical it would be for me. It’s definitely my second choice behind a netbook as of now.

  3. Hey, I wanted to add one more option for calling if you happen to get an iPod Touch 2nd gen (mine) as opposed to first gen (Jaimin or Janelle’s): like the iPhone the iPod Touch 2nd gen allows you to use a mic/headphone combination in the headphone jack .. and this allows you to use whatever VOIP applications there are for the iPhone on the iPod Touch.

    I haven’t tried one myself yet, but I did download Fring. And here’s a page listing others…

    As for cell phone plans: I think they’re all expensive, and that AT&T is miserly with texting. It really can’t cost the network that much for texts can it? Oh yeah I have AT&T. Anyway the reason I like AT&T is because I haven’t had a problem with signal quality, for the most part, and the roll over minutes is awesome. Nevertheless I think prices still need to come down.

  4. Pingback: Encephalosponge » Cellphone Economics Revisited: One Year In

  5. Pingback: Encephalosponge » Cellphone Economics Revisited: Two Years In

Leave a Reply

Your email address will not be published. Required fields are marked *