The cost of using a cell phone dips--again
The cost of using a cell phone continued its downward spiral in 2000, dropping another 7 percent on average across the United States, a new survey shows.
The biggest decreases were for the heaviest users of mobile phones, the survey by Econ One found. Costs of a 10 hours per month plan dropped an average of 10.1 percent, from $66.64 to $59.91, according to Econ One.
The cost of a typical 150 minute plan dropped 6.3 percent, while the lower tier 30-minute-a-month packages dropped just 1.9 percent, according to Econ One senior economist Charles Mahla.
This is the second straight year that Econ One saw an average decrease in the cost of cell phone usage. But Mahla says don't shed any tears for the carriers.
Carriers don't typically disclose their operating costs, but "once money has been spent on infrastructure, additional costs to provide service is very, very low," Mahla said.
Mobile phone service providers also have room to make up any losses, Mahla said. About 50 percent of American adults use cell phones. Penetration in Asian countries is the highest, with about 70-75 percent of adults using cell phones.
"There's so much room for increased penetration," Mahla said.
The heaviest users of cell phones saw the largest decreases because the industry is consolidating, leading to more national plans without long-distance or roaming charges. Those plans typically come with the highest number of minutes, Mahla said.
Of the 25 cities surveyed, the largest decline was in St. Louis, which registered an 18.2 percent drop in price. Dallas and its 15.6 percent decrease and Kansas City, Mo.'s 14.4 percent drop rounded out the top three. Kansas City also had the lowest average monthly cost in the nation, at $36.89.
These cities tend to have a larger number of carriers, which increases competition and drops the price, Mahla said.
But not all cities surveyed showed decreases. Six of the 25 cities registered increases in the year 2000, including San Francisco, considered the most wired city in the nation. It's also where cell phones cost an average of $47.55 a month to use, the highest in the nation in December, the survey found.
In fact, four of the top five most expensive cities for cell phones were in California--San Francisco, Los Angeles, San Diego and Sacramento. The string is broken by Cincinnati, which saw a nearly 10 percent decrease in price from 1999 but still managed to be fifth most expensive of the 25 surveyed.
"The tech boom has been in California," Mahla said. "It's a state of early adopters. Carriers recognize the demand is high, so they charge more."