AT&T Inc. (T), Verizon Communications Inc. (VZ): The Tangled Web of Mobile Pricing Plans

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Hey, Fools, have you been watching your smartphone bills growing faster than kudzu and wondering if changing plans could slow down the money hemorrhaging?

Of course you have. So why haven’t you done it?

AT&T Inc.Because trying to figure out what the best plan would be out of the hundreds of confusing plan permutations from the major mobile carriers is enough to make your head explode.

And that’s the way those carriers want it. The less information you, as a consumer, have, the better the likelihood you’ll stick with your current cellular provider.

If you could simply plug in your voice, text, and data needs to come up with the best cost per service plan from each carrier, then comparison-shopping would be so much easier.

Boston College economics professor Michael Grubb told The Wall Street Journal: “If it really was just one number for consumers to compare, no one would ever voluntarily pay the higher price. But when there is a number of gigabytes, the overage charge, the monthly fee, and a little bit of math to do, suddenly it is not so easy to pick the contract that is a better value.”

Though you still would have to factor in each network’s coverage area, data speed, and voice quality, removing that Rubik’s Cube of plan choices would, at least, reveal the best plan you think you need at the best price.

I say “think you need” because, as an MIT paper on cell phone usage written by Grubb, along with co-author Matthew Osborne, states that “consumers are uncertain about their own average taste for usage when first choosing a calling plan, which leads to frequent ex post plan choice mistakes.”

In other words, consumers use more minutes than they originally bargained for and incur overage charges. And then, the paper continues, “… consumers learn about their own tastes over time and switch plans in response,” but they will again err in choosing a good plan because of “information held by a carrier.”

That is, the carriers will be one step ahead of the consumer and will change the plans parameters, negating any real cost savings.

AT&T Inc. (NYSE:T) and Verizon Communications Inc. (NYSE:VZ), the two largest U.S. wireless carriers, are also the most expensive, though they do offer the broadest national coverage and have the largest 4G networks. They’re also the most competitive, so their rates — for shared data rate plans, at least – are neck and neck.

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