#Truth: Major wireless carriers in the US are ripping you off by using smoke and mirrors

It’s no secret that the writers here at AndroidGuys do their best to save you money. Many of us writers are just like you where we have normal jobs and have families, but we happen to write about tech as a hobby. It’s fun for us. Our friends and family regularly turn to us for advice, and rather than repeat ourselves over and over again, we choose to write about it and then we can serve more people at the same time.

I’m here to write about the four major carriers playing games and bending rules to take your money. I’m tired of it. All I want is one honest carrier to step up and explain things up front and honestly so you know how your money is being spent.

Nothing is free in this world

I’ve spent countless hours speaking to friends and family about smartphone plans. Particularly the ones where you get a free or massively “subsidized” smartphone if you sign up for a two year contract.

“Get the latest Samsung Galaxy device or Apple iPhone for the low price of $200! Buy One get One free.”

This is one of the most common deceptive practices you fall for.

There is no cell phone provided by a wireless carrier that actually costs $0. A brand new iPhone and Galaxy S7 or Note 7 are never priced at $200 or $300 without signing a long form contract that hides fees to pay for those devices. Ever hear of a connection fee? On two year contracts that connection fee can cost as high as $45. Over two years, the $45 connection fee will cost $1080 on top of your cell phone plan as well as the $200 you shelled out for the “discounted” device. You would have saved over $400 by paying for the devices in full and up front without signing that two year contract.

The contracts we sign up for are ridiculously expensive. If you’ve travelled overseas to Europe or Asia, you would know you can get an à la carte plan for as low as $10 and you can recharge it at anytime. There are hidden fees all over the place in the fine print.

Nothing is free.

AT&T, Verizon, T-Mobile and even the worst performer of the bunch, Sprint, all sponsor stadiums around the country. The Verizon Center sits in Washington DC and is home to the Wizards, Capitals, Georgetown University men’s basketball, and the WNBA Mystics. Verizon also has an arena in Manchester, NH which is used for concerts, hockey and basketball. AT&T Park in San Fransisco is home to the Giants, while AT&T Stadium is home to the Dallas Cowboys. T-Mobile is the newcomer to the group with a brand new stadium in Las Vegas that will be home to an NHL expansion team come next year. The worst performer of the group, Sprint, has a Center in Kansas City where it has yet to land a full time professional sports team.

The bigger the company, the bigger the stadium naming rights. Naming right fees typically are not disclosed, but if you look at the list of stadiums at sportsvenues.com you will see a wide variety of top performing companies. Big banks, health care providers, big pharma, energy, automobile companies AND wireless providers make up the list of companies with money to burn.

If you think Mylan is bad…

Mylan has been in the news recently for claims that it is taking advantage of a perceived monopoly and making unscrupulous money off its users through the sales of the epipen. The epipen contains Epinephrine, or adrenaline, and is used to save lives. The Epinephrine is not novel or unique, but the injection method is. There are generic forms of it, but Mylan advertised to an extent that made its customers believe there was only one maker. So much so that most doctors prescribe the epipen almost all of the time. The epipen is an eponym, or something for which a product is named. Other examples of eponyms are Kleenex, Xerox, Aspirin; all products based on their brand names versus the product itself.

Technically Mylan isn’t quite a monopoly, but the practices to get there were questionable ethically, even though they stayed within the laws. Just because you have the ability to game the system doesn’t mean that you should.

According to dictionary.com a monopoly is, “exclusive control of a commodity or service in a particular market, or a control that makes possible the manipulation of prices.” In the US our government is supposed to protect us from such cases.

According to Wikipedia:

United States antitrust law is a collection of federal and state government laws that regulates the conduct and organization of business corporations, generally to promote fair competition for the benefit of consumers. (The concept is called competition law in other English-speaking countries.) The main statutes are the Sherman Act 1890, the Clayton Act 1914 and the Federal Trade Commission Act 1914. These Acts, first, restrict the formation of cartels and prohibit other collusive practices regarded as being in restraint of trade. Second, they restrict the mergers and acquisitions of organizations that could substantially lessen competition. Third, they prohibit the creation of a monopoly and the abuse of monopoly power.”

The government is supposed to protect the consumer from monopolies as well as oligopolies. Instead of being a single entity that controls a commodity or service, an oligopoly is similar to a monopoly in that a few companies control said services or commodity instead of one.

That’s what the big four carriers are in the US. They are an oligopoly and control the entire market with tricks, games and outrageous CEOs who distract us from what really matters – the bottom line. And like Mylan, they may not be breaking the laws outright, but they walk a fine line of bending the law that’s so slim even Simone Biles would have a hard time walking it.

Once last thing, the news is blasting the CEO of Mylan for making almost $19M as her total compensation, take a look at the big four CEO’s packages:

  • John Legere (T-Mobile CEO) – $24,457,987
  • Randal L Stephenson (AT&T CEO – $26M
  • Lowell McAdam (Verizon CEO) – $18.3M
  • Marcelo Claure (Sprint CEO) – $21.8M

It’s ironic that the most hated CEO in the US right now for price inflation makes less than wireless carrier CEOs. I’m not questioning their salaries myself, but if we’re going to make headlines about one drug company, now is the time to bring others into the spotlight for their smoke and mirrors.

When one company makes a change, they all follow:

Many people think of John Legere as the Robin Hood of the cell providers. He claims to shake things up and attacks journalists who question T-Mobile’s motives. I think of him as a mascot of sorts who uses inflammatory comments to scare people away. He also acts this way to draw attention to him rather than T-Mobile.

He’s more like David Copperfield. He plays every trick in the book to “shake things up”, building a persona of the industry bad boy. He claims to drop prices to give unlimited data at “cheap” prices while being 100% transparent all of the time. Just because he says something doesn’t mean it’s the whole truth. The Verge’s Nilay Patel blasted T-Mobile for its questionable practices in this post here about “Unlimited Data”. The Verge also wrote about how its newest plans are even more confusing than before.

While John Legere makes a fool of himself, the rest of the industry quietly makes changes to their plans to maximize profits. Maximizing profits is as American as it gets and I have no problems with Capitalism. But maximizing profits through schemes, confusion, and fine print is anything but American.

Look at these two fine print examples from carrier webpages:

T-Mobile
T-Mobile’s fine print on its front page
AT&T fine print at the bottom of its plan page
AT&T fine print at the bottom of its plan page

The big four employ some of the biggest law firms in the country to draw up this fine print to prevent them from breaking the law. As we all know, just because a law exists, doesn’t mean it’s fool proof.

Here’s an example of how phone companies jack up the prices on family plans

4 Lines. 16GB. Only $150. – Verizon

Screen Shot 2016-08-29 at 8.29.14 PM

Here’s the fine print.

$150/mo plus taxes & fees based on 4 smartphones purchased on device payment on new Verizon Plan L size. 8GB bonus data applied as 2GB bonus data/mo/line as long as line remains active on current new Verizon Plan size L (8GB) or above. 2 GB/line bonus data does not carry over.

In order to qualify for this pricing you need to buy 4 smartphones. I’ll play the game and draw up four phones with this family offer. I’ll buy a cheap smartphone for each member of the imaginary four person family, a certified pre-owned three year old Galaxy S4 for $10 a month.

Screen Shot 2016-08-29 at 8.34.35 PM

Strangely after following the rules and fine print, I had to select four phones, my monthly bill works out to $210 a month.

Screen Shot 2016-08-29 at 8.35.58 PM

Realistically there are very few customers who would sign up for new service on Verizon to buy four three year old phones that don’t get updates and are not secure any longer.

Let’s price out the two best selling smartphones in the US. The Apple iPhone 6s and the Samsung Galaxy S7 edge.

Screen Shot 2016-08-29 at 8.42.14 PM

Three base iPhone 6s smartphones, one Galaxy S7 edge and magically my plan now costs $284.24 without taxes, surcharges or additional fees. Hmm, I wonder what those fees could be.

Also look closely at both screenshots. Remember how the advertisement above said 4 lines, 16GB only $150? Do you see the screenshots where the four lines plus the 16GB plan say $170/mo.? What the heck is up with that? Then the total cost shows a little breakdown in the top right corner of the device fees at $114.24 per month. $170+$114.24 = $284.24 per month WITHOUT taxes, surcharges or additional fees that we have no idea what and why they exist.

Taxes and Surcharges from my AT&T wireless bill. There was no easy way to find these fees on the internet so I had to go to my own bill to find them.
Taxes and Surcharges from my AT&T wireless bill. There was no easy way to find these fees on the internet so I had to go to my own bill to find them.

Rather than bore you with breaking down the hidden fees, I’ll provide a few articles of interest of how carriers went too far over the line.

Every cellular company with class action lawsuits over deceptive practices over the past few years. There’s more too. Look up class action lawsuits against wireless carriers and see for yourself.

When one cellular provider makes a change they all follow suit. Similar plans, similar 0% financing plans with connection fees, similar insurance plans, which all smells like an oligopoly with collusion which is illegal and a strong statement by me.

Collusion is an agreement between two or more parties, sometimes illegal and therefore secretive, to limit open competition by deceiving, misleading, or defrauding others of their legal rights, or to obtain an objective forbidden by law typically by defrauding or gaining an unfair market advantage. It is an agreement among firms or individuals to divide a market, set prices, limit production or limit opportunities. It can involve “wage fixing, kickbacks, or misrepresenting the independence of the relationship between the colluding parties”. In legal terms, all acts effected by collusion are considered void. – Wikipedia

If it smells like a skunk, looks like a skunk and sounds like a skunk, it’s probably a skunk. Sometimes we are so deep in the mess that we fail to see the big picture. We see reports here and there about class action lawsuits, or multiple reports from the Verge about the confusion caused by T-Mobile, only to be distracted the next day with John Legere asking, ” Who the fuck is this writer stirring up trouble?” Or we are distracted by the next release of the latest Samsung Galaxy smartphone. We are all missing the big picture here that these four wireless providers are ripping us off with confusion and games.

Remember how I said if one does it, they all follow suit?

Screen Shot 2016-08-29 at 10.07.54 PM

$90 for 16GB of data at AT&T. Three iPhone 6s smartphones, one Galaxy S7 edge and the total bill works out to $284.40 a month. Funny how that works.

Screen Shot 2016-08-29 at 10.11.44 PM

Don’t let confusion scare you off

I’ve spent countless hours explaining this to many of my friends and family who ask me to break things down for them. And I do. The problem is when I explain the issues, they seem so absurd that they choose to stick with what they have for fear of the unknown. That’s what these companies want – they want you to give into your confusion and pay what they tell you to pay.

Do your homework. Take one weekend and look over your bill closely. Do you really need unlimited data? Or is it just for peace of mind? Do you really need expensive phone insurance when you buy an Otterbox or Lifeproof case? Lastly, do you really need to buy the latest and greatest when it is most expensive? Or can you wait six to 12 months when the phone will drop in price.

That two year commitment on Verizon with four devices doesn’t cost $150 per month. It costs $283.24 a month without additional fees. Over the course of two years it works out to $6821.76. There are alternative MVNOs out there like TextNow, Cricket Wireless, Boost Mobile, Project Fi, and plenty of others that offer competitive plans worth considering. These MVNOs do use the same networks as the big four, they lease the cell towers to provide service. You can also buy unlocked smartphones that do not lock you into two year commitments at half the price of the iPhone and Galaxy S7.

The point is, carriers are not necessarily breaking the law outright, but the practices they use to take your money is wrong. I’m mad and you should be too. It’s all smoke and mirrors and there is a high probability you’re being charged for things you do not need. The median income for a family in the US is just over $53k a year. Do you really want to spend $3k a year on smartphones that you most likely barely use for anything more than movies, calls, texts, pictures and GPS? There are multiple alternatives to the big four that are worth doing research on.

Do your homework and question the fees you are paying for. If you’re happy with your service and the price you pay, by all means stick with it. Just make sure it’s an educated decision you’re making with your hard earned cash. The carriers are doing their best to take your money and you should do your best to protect it.

  • TheDrizzle

    Good write up. I hate cell carriers. Education is a good way to fight back.

  • You missed TING “the mobile that make sense” The article seems an ad for them

  • jeux999

    “Maximizing profits is as American as it gets and I have no problems with Capitalism.”
    You essentially undermined your entire article’s premise with that one sentence. The cognitive dissonance in American capitalism is astounding.

  • Chad Jones

    Probably the main reason why I joined Google Fi, you pay for what you use, no crazy fees and the service is pretty good, a few hiccups now and then but when you look at the price compared to what I was paying at AT&T or Verizon, you can live with a few hiccups.

  • v1_rotate

    No, there’s no smoke and mirrors. Big Red is rather forward about taking every dollar they can from me. They have no qualms about holding out their hands for more, and yet I’ll continue to pay it. In the beginning, it was just a phone. It replaced my pager and made life a little easier. Then a little easier again. Now I’m walking around with a tiny computer in my pocket, I consume media like it’s a designer drug, can’t remember anyone’s phone number, and am not even sure where to purchase a road atlas. It’s my own fault for becoming so dependent on the tech. So Sure thing Verizon, here’s another pound of flesh.

  • Fred m

    I believe you’ve just made the case for Republic Wireless. No contracts (therefore no subsidized phones sans the occasional promotion when they are trying to sell through inventory before a new phone launch), no ETFs, no craziness – just nice people, a very good deal, and a premise that many of us are within range of WiFi most of our day so why not use this network when you can to greatly reduce costs. Google’s Project Fi, TextNow all followed. T-Mobile was first carrier to figure out the landscape was about to shift, although CEO is about as obnoxious as a CEO can get. Check Consumer Reports for the past two years- Republic Wireless, Consumer Wireless a better deal over all the Big 4 carriers.