The Fine Print behind Unlimited Calling Plans

By: Alon Cohen – EVP/CTO at Phone.com

Few of what seem to be smart consumers that I encountered asked me how any limited phone plan competes with other unlimited calling plans from so and so. I admit I thought I was smart when I got my first unlimited plan.

The truth is that at first glance it seems reasonable, unlimited means I don’t care how much I speak, but the real story is that when you check each case you see that the unlimited plan has marginal value if any at all to you the consumer. In fact you may end up paying more because of that.

I had my own unlimited cellular plan since AT&T wireless started their GSM service in the 200X, I was a heavy cell phone user, but soon realized why they offered that plan. AT&T at the time had very low coverage of GSM and had to come up with some enticing plan to get people to join.

The fact is I kept the plan until Cingular bought them and decided to cancel it. I then moved to what seemed to me a reasonable equal plan of about 1000 minutes a month. Few months later as prices went up I decided to re-visit my plan again.

It turns out I had about 5000 unused roll over minutes, which I will never be able to re-use. I over paid for quite some time. I instantly reduced my plan to my own realistic usage levels and started saving about $50 per month.

The first thing you should do when comparing phone plans is to actually check how much you really use the phone and to what major international destinations. Then check available plan pricings.

The way unlimited plans are structured is that they are overpriced and are based on the notion that most people will over pay significantly. Over 90% of the customers end up paying more per minute than they would otherwise.

With limited plans you pay an overage when you exceed the initial allocation of minutes, but this is not a major issue if you match your plan to your average usage. On top of that consumer friendly companies offer the overage minutes at low enough per minute rates which is not much more than you pay anyway.

The other myth about unlimited calling is that it is in fact unlimited; the truth is it is practically not! If you keep your line open for a day or even few hours you might notice that your service is going to be disconnected (don’t do that…).

For instance, if you read the terms of service of some providers you will see the following restrictions:

“You shall not use our service or your device for auto-dialing continuous or extensive call forwarding, telemarketing (including charitable or political solicitation or polling) fax or voicemail broadcasting, or fax or voicemail blasting.” Or another vendor that has “SERVICE LIMITATION” which is “the right to limit the plan service to reasonable quantities of minutes and messages used or consumed by the subscriber to prevent abuse from excessive usage and to maintain a high level of service for other subscribers. The service may only be used by individuals or small businesses who will use the service as deemed “reasonable” by the sole discretion of the company. Commercial enterprises that incur heavy usage of communication services including but not limited to Call Centers and Call Stations are prohibited from availing the Unlimited plan… Any breach of this condition will lead to immediate termination of the service..”

Obviously if you comply with all that – which I am sure most people do – there is no way an unlimited plan can benefit you in any way.

Even our own Home Phone unlimited plan ($16.88/Month annually or $18.88/Month to month) which is a lower cost than most other plans in the market if not the lowest, is limited for home use only, where we assume that a reasonable user is less than likely to abuse the plan.

Our recommendation is always check your usage first, then compare plans, compare both local and international. Do not buy into the unlimited marketing slogans unless it makes sense for you or you will end up paying more than you should.

I have yet to see a Phone.com customer, who actually compared plans and selected another vendor because the other guys saved him/her more money with an unlimited plan.