Spending More to Stay Connected

The cost of cell phone plans is going up, according to the wireless-industry group CTIA. After reaching a low of $39.43 in 1998, the average monthly cell phone bill has risen steadily, and reached $50.64 in 2004... only a few dollars shy of the average bill a decade earlier!

Why the increase? CTIA points to a number of factors, including increased phone taxes, greater usage overall, more available services (and fees), and the wave of industry mergers that have reduced competition.

One phenomenon possibly contributing to the rise in average fees is that of "cord-cutters" -- customers, usually young people, who abandon their land lines and use their cell phones as their primary phones. Such customers tend to purchase the most expensive plans with lots of minutes. The CTIA survey, however, does not take into account savings from canceled land-line service that often offsets or exceeds cell phone fees.

Source: eMarketer