Approximately half the readers of this story are likely to be signed up to a “capped” mobile phone plan. The hook is an expectation that you’ll limit your monthly expenditure and have certainty around your bills. In reality, capped plans create anything but certainty. They’re simply a marketing trick, described by Australian Communications Consumer Action Network (ACCAN), the peak consumer body for telecommunication issues, as a scam consciously perpetrated by companies to exploit consumers and extract more money.
CHOICE asked staff and members for examples of how these tariff plans work in practice:
“I'm on a $19 cap and one month the bill was $130,” said one consumer. “At least Optus asked if I wanted to change to a more suitable plan.”
“Capped plans are a rort,” said another. “To allow easy comparison between telcos and plans, caps should be offered by airtime minutes and not dollar value.”
And this comment really hit the nail on the head: “The cap means nothing – it’s just a minimum fee. ‘$19 Minimum Plan’ would be a much more accurate description.
Exposing the ruse
These supposed limits are known in the industry as “soft caps”, because they’re limits that can be exceeded – and research shows this happens very easily and frequently. A 2010 study by the Australian Communications and Media Authority (ACMA) found that more than half of those on a capped plan paid a bill that was higher than their cap in the previous 12 months.
According to the report, “despite 59% of mobile capped plans users reporting cost-related factors as their main reason for that choice, 58% of users in Australia aged 15 years and over reported that they had exceeded their capped expenditure limit at least once in the last year.”
Doug Purdie of the comparison website Phonechoice says the way companies structure their phone plans is unhelpful to consumers. “You might be offered $300 of ‘value’, but they crank up the call rates so that you reach that cap quicker. And most major providers have switched to 60 second billing, so a 61 second call costs the same as a two minute call.”
CHOICE has previously reported on this widespread reliance on “confusopoly”, where incomparable and complicated tariff structures are intentionally designed to bamboozle consumers. Famously, Teresa Gattung, former CEO of NZ Telecom, once referred to the use of confusion as the telecoms industry’s “chief marketing tool”.
Image source: ACMA-commissioned consumer survey, April 2009