Cellphones are expensive! Not just the phone itself, which can be priced anywhere from $0 to $600 depending on the phone, but the monthly service charge is outrageous as well! Consumers sign up for a plan, usually requiring at least a two-year contract duration locking them in to the company and rate, and are stuck with the provider no matter how the industry changes. And if a consumer needs a new phone – watch out! We can pay hundreds of additional dollars, beyond the initial purchase price, over the length of the contract!
Why do consumers put up with this? Mostly because there are no other options – all the cellphone service providers use the same model – there are no alternatives. But this is finally starting to change.
T-Mobile has launched a new plan that eliminates the yearly contract; if a customer doesn’t like the service, cancel the contract without any penalty. The company also lets consumers buy any phone they like, and pay only for the phone, without interest or monthly fees that exceed the phone price. It’s about time!
Group Activities and Discussion Questions:
- Start with a discussion about pricing. What are various price models that can be used for cellphone plans?
- Poll students about the cellphone plans they have: company, monthly price, services, phone costs, etc. Write the results on the board so that the students can clearly see the variations in service and prices.
- Ask students – why so many different plans for a utility service?
- Show the video – “60 seconds with Pogue: Cellphone billing” – http://www.nytimes.com/video/2013/04/03/technology/personaltech/100000002152558/60-seconds-with-pogue-cellphone-billing.html?smid=pl-share
- How will the new pricing change the cellphone industry?
- Divide students into teams. Have each team build a table that compares the pricing offered by cellphone companies.
- Debrief by discussing various pricing models.
Source: New York Times, other media sources