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Mobile madness By Geoff Elliott 05jan02 HAVE you ever called someone on your mobile phone, while standing near a public pay phone? You chat as you absent-mindedly chink some loose change in your pocket, suddenly realising that a few metres away is a device that would have been at least 50 per cent cheaper to use. Chances are, if you're one of Australia's 11 million mobile phone users, this sort of consumer behaviour is, well, ringing some bells. You're one of the millions of people out there engaged in mobile madness. "I often walk outside at the back of the office to use my mobile because it's a bit quieter there," says Sydney businessman Andrew Long. "I know the office phone is cheaper but I like walking around when I'm talking. "It's not exactly rational." It sure isn't. It's this kind of psychology that is sure to rewrite the textbooks on consumer behaviour, and economists can hardly be happy about their subjects behaving so flippantly when it comes to their purchasing decisions. After all, everyone is meant to be rational. What makes Long's attitude noteworthy is that he is an expert in mobile phone pricing. He is chief executive of OptimiseMe.com, which specialises in saving you money on your mobile phone bill. True, Long says he can engage in a bit of mobile madness but overall he comes out a long way in front. Using his own models, he saves around 20 per cent to 30 per cent a year – more than $300 – on his mobile use. He says that if you follow the same mobile phone habits every month he will save you 20 per cent to 30 per cent a year as well. But it takes a bit of management, and that's where many Australians slip up and become the mobile phone companies' best friend. Just like what happens with credit cards. The Reserve Bank of Australia says there are more than 9.6 million credit cards in Australia and every month $19.2 billion in debt is rolled over. On a simple calculation, assuming an interest rate of about 15 per cent, that's around $240 million a month in interest rate charges – nearly $3 billion a year. With a bit of credit card savvy, people could shrink that figure. The savings in the mobile phone industry could be in the billions, too. Mobile phone companies pull in around $10 billion a year in revenue, and if people like Long could save users 20 per cent to 30 per cent, that points to an extraordinary $2 billion to $3 billion a year in overspend by Australians on mobile phones. Long the businessman spots that as an enormous opportunity for him to make some money. He charges just under $30 to assess two months of your bills and a further 15 per cent of any savings he wins for you – with his take capped at $100. He might be talking his own book, but it's clear that Australians are well behind the eight ball on mobile phone management, and the telecommunication companies have been reaping the rewards. The big communications event in September 2001 was meant to be mobile number portability, allowing users to easily swap carriers without changing their mobile number. Everywhere else in the world prices have plummeted with the introduction of number portability; in Australia they have jumped. The charge was led by Telstra, which in November raised the flagfall on every mobile phone call from 20c to 25c. A couple of days later, Optus increased some charges to a small part of its customer base – but then Long spied something even sneakier. Optus extended the peak period for mobile-to-mobile calls from 7am-7pm Monday to Friday to 7am-8pm. That's an extra five hours a week and potentially a big revenue lifter. Feel like you're being manipulated? You've got every right to. Like this reporter, who took advantage of Telstra's offer to bundle internet, mobile and fixed lines services into one bill – an offer it promoted hard all through 2001. Before then, accounts had been spread far and wide: AAPT for long distance, Optus for internet and Telstra for mobile and fixed lines services. The lure was an overall 10 per cent discount on eligible calls and on the BigPond account. But within a few months of changing accounts over to Telstra, changing e-mails and all that hassle, Telstra then announced its lift in mobile phone charges, which by my reckoning is sure to wipe out any discount. Long says charges have increased, depending on your plan, by between 5 per cent and 20 per cent in the past few months despite the introduction of mobile number portability. For Australia's average mobile phone user that's between $2.50 and $10 a month. And that's on top of the 20 to 30 per cent Long reckons you're overpaying anyway, so the average mobile phone user in Australia is paying about $20 a month too much, or about $240 a year. So the whole thing can be managed better – but many of us don't. Telstra, Optus and Vodafone love that kind of apathy. And calling from your mobile instead of using the public pay phone in front of you - well, they just love that, too. So common now are the tales of mobile madness that they appear regularly on current affairs shows on commercial television, sandwiched between the inevitable stories on the new miracle cure for wrinkles and the builder who ripped off some pensioners. The kid who racked up $2000 worth of mobile phone bills under a contract guaranteed by his grandfather who was then forced to foot the bill; the family that has six mobile phones; or the attempt to work out which is the cheapest mobile phone company out there. But if you think you can go it alone and reduce your mobile phone bill ... well, good luck. There are more than 700 mobile phone plans in Australia, despite there being only four suppliers of mobile networks: Telstra, Optus, Vodafone and Hutchison Telecommunications, which trades under the brand name Orange. Then there are service providers who buy airtime off these players - like Virgin Mobile, which leases airtime on Optus's network, and Cellular One piggybacking on both Vodafone and Optus. Aussie Phones sells through Optus, as do Dingo Blue and New Tel. Why so many plans? To confuse the market, blinding you with numbers, and so, amid all the confusion, you become more prone to savvy marketing. ``Carriers and service providers have made it deliberately confusing to keep consumers in the dark,'' says Andrew Long. He has plenty of anecdotes about people spending far too much money, lured by sexy gadgets and hip advertising. Like the customer who wanted to sign up to a 24-month contract offering a ``free phone'', a new Siemens ME45 worth about $800. But, over the 24-month contract period, the fixed charges amounted to $1200, meaning the customer was paying $400 in finance. In other words, the telco company was lending the customer $800 to buy the phone and charging him $200 a year for the privilege. That equates to an interest rate of around 25 per cent a year, which makes the credit card merchants look like charitable organisations. To try to come up with an answer on who is the cheapest mobile phone company, The Australian commissioned both Long's OptimiseMe.com and another research house, InfoChoice.com, to come up with the cheapest plans based on four types of mobile phone users. The survey's results were dramatic, since on only one scenario did both houses agree. The difference highlights the extra costs of voicemail and text messages, since InfoChoice's survey does not take those charges into account while Long's OptimiseMe.com does. ``I am not surprised that InfoChoice has provided differing recommendations,'' says Long. ``Plan recommendations are dependent on not just when you make calls and what type of calls you make but also how many paging messages you receive, how many text messages you send, when you pay your bill and even how you pay your bill. ``There are over 700 different plans out there in the market today so there is often not just one plan that would suit.'' Still, there's hope. While assessing all those plans might be the stuff of quantum physics, the basic principles of reducing your mobile phone isn't. InfoChoice.com.au content manager Ian Hamilton says that if you put in the hard graft you'll save big money. ``If you're prepared to put the time in, there are savings to be made.'' He suggests knowing your use pattern in fine detail before you compare carriers. This includes whether you make most calls at peak or off-peak times, the length of your calls and where you call. ``Once you have this established you need to compare more than just the call rate, as most people do,'' he says. ``The flag fall and the billing increment need to be considered too.'' Hamilton says the difference between the billing increment being charged per 30 seconds and per second can add as much as 20 per cent to your bill. It means you might be billed for a two-minute call (120 seconds) although you only spoke for just over 90 seconds. When you consider there are 11 million mobile phone users, those extra seconds are precious to mobile phone carriers, just as the fees are to banks. ``Simply put, there are two ways of reducing your mobile phone bill,'' says Long. ``The first way is what we provide to customers which is when customers keep using the phone the way they do and we find them the best plan. ``The second way is to change the way you use your phone so that your cost goes down. The detailed analysis of an individual's current usage shows how they are currently using the phone, and this can be used as a basis to modify behaviour.'' Hamilton adds that flag fall charges are something to watch, particularly if you tend to make lots of short calls. And just comparing call rates is not necessarily the answer, as in the case of some of Virgin Mobile plans where the more calls you make the lower the call rate. So if you can manage to plan it a bit better the savings are there. And remember it's always wise to carry some loose change in your pocket and use the public pay phone _ if it works. But then, that's another story. elliottg@theaustralian.com.au Additional reporting Helen Matterson
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