Phone companies jack up rates for basic phone service

David Lazarus of the L.A. Times:
AT&T customers saw their monthly rate for basic residential phone service jump 22% this month to $16.45. The increase followed a 23% rate hike last year.

And you know what? That’s the good news.

The bad news is that, beginning in January 2011, AT&T and other phone companies will be permitted to jack up basic rates as much as they want — no regulatory limits will apply.

Meanwhile, Verizon raised the price it charges for basic residential service last year to $19.91 monthly from $17.66, Lazarus reports.

Cell phone, cell phone plan prices are dropping

Here at Inflation Watch, we spend most of our time talking about rising prices, but there are some sectors of the economy in which prices are falling. Historically, one of those sectors has been technology (e.g. computers).  Thus, it is not surprising that cell phones and cell phone plans are becoming more affordable.  Wal-Mart now offers a plan with unlimited minutes for just $45 per month. Larger carriers are lowering their prices.

This device is not a phone, but offers free e-mail service for life for less than $300. This is a pretty amazing deal, especially if (like me) you prefer e-mail to talking on the phone.

24/7 Wall Street says cell phone prices may drop much further:

Imagine if Google wanted the mobile web ad market so much that it just gave the phones away for ad-maximization.  Or imagine if things got so tight that Steve Jobs started giving away iPhones for free, if you buy a Mac.  Those are far from likely, but something in the middle might not be.  That is why they call price wars a race to zero.

Verizon Wireless doubles early termination fee, says its high-end phones are “getting more expensive”


With a whole new line of smart phones coming onto the market, Verizon Wireless said that starting November 15 it is doubling to $350 the penalty fees for subscribers who leave their contracts early.

James Gerace, a spokesman for Verizon Wireless, the nation’s largest cell phone service, said the fees are for subscribers in one- and two-year contracts on an “advanced device” and that those fees will be pro-rated $10 a month. That means, if you’ve made it halfway through your two-year contract, the $350 penalty will be reduced $120 to $230.

Gerace said the company decided to raise fees because its highest-end phones and small wireless laptops are getting more expensive.

AT&T to increase landline rates by more than 20 percent

San Jose Mercury News:

For the second time in two years, AT&T is raising local landline phone rates by more than 20 percent. The phone giant plans to start informing customers next week that charges for basic phone service will jump from $13.50 a month to $16.45 on Jan. 2. AT&T also plans to raise the rate for its LifeLine service for low-income customers, by 73 cents to $6.84 a month. The moves will affect half of the company’s 6.5 million phone customers in the state. Those who subscribe to newer, bundled service packages generally won’t be affected.