A good part of this past Saturday was spent at a local Verizon Cell Phone store. I felt it was about time that I upgraded to a more modern cell phone. Also, since I was beginning to use my cell phone with increasing frequency, my pre-paid plan with Virgin Mobile (where I paid twenty-five cents a minute to make and receive calls) was beginning to get more expensive. I used to get away with paying $20 every three months which kept the service active and still left me with about $6 worth of unused calls that were just rolled forward with the new deposit. However, in recent months my cell phone use has been increasing and my average use has increased from about $4 per month to just under $10 per month.

When my oldest son approached me suggesting that he give me his relatively new Razar phone and that I join him on a family plan, I gave it serious consideration. I had been very impressed with his Razar - it was compact, had a camera and the screen was not only in color but also large and very sharp . But the cost of the phone, let alone the plans that were required, was more than I could justify. In the past I never would have considered to sharing a phone service with my son. He was a high volume user with monthly cell phone bills in the same neighborhood as my car payment. However, now that he is living on his own and a good chunk of his pay check has to go for things like rent, car payment, food, etc. his priorities are changing.

So, on Saturday it was off to the Verizon Store to change the plan. In addition to the savings from splitting the cost of a family plan, we also received an additional 18% discount which they extend to employees of the college I work for as the college has a major account with them. With the plan our new monthly bill worked out to about $41 each which was a nice drop from the $75 a month my son had previously been paying. Of course, it was a four fold increase for me but, in addition to a greater level of service, I am also in the process of switching my regular house service from the local phone company to an Internet service using VOIP (Voice Over Internet Protocol) that is provided by a buying club I just joined. With that bill being reduced by more than half, the total cost of house and cell service will be about the same as it was before. So I am not complaining.

Having given me his Razar, my son, of course needed another phone, and a major incentive, in addition to reducing his monthly bill, for this deal was the opportunity for him to get a new phone at a discount in mid-plan. He had his eye on an oval shaped phone that retailed for over $250. It looks like a small hot dog bun, has two screens, a full typewriter keyboard, a telephone number pad, can access the Internet, do email, store and play music, videos, display TV shows, etc. Basically you can do almost anything with it except insert a hot dog and eat it. With the conversion to the family plan plus the discount from my employer, he ended up paying a little under $100 for the phone.

After getting home I spoke with my daughter and learned that her Virgin Mobile costs were beginning to exceed $30 per month and that she was forcing herself to limit her calls and texting to keep the expense from going higher. Having already discussed with the sales clerk the possibility of increasing the minutes to a higher plan and adding my daughter, I did a quick calculation and figured that each of us could not only get more minutes but, dividing the bill by three, would bring us down to about $31 each plus the Clinton era Gore tax and other taxes charged by various levels of government which, to the chagrin of the politicians, the phone companies itemize on each month's bill (unlike gasoline where the pump price includes taxes leaving buyers in Tucson, Arizona to think they are paying $2.61 per gallon for gasoline when they are really paying $2.25 per gallon for gas with the remainder being taken by the politicians to waste).

My daughter liked the idea, so it was back to the Verizon store for another phone. It took a while for my daughter to look through and choose from the almost two full walls of phones. As my daughter, with the help of her brother and my wife, shopped I had time to consider the immense changes in telephone technology in my lifetime alone. Of course the changes in technology took place long before I was born, it just took a few generations to get the government out of the way so that the technology could be implemented.

I remember reading an article in the Wall Street Journal back in the early 1990s about a speech given at a conference of communications professionals in Colorado. That was the era when cell phones were coming into the mainstream, computer and telecommunication technologies were converging and people were all excited about the great new world about to come. Among the speakers was a well known expert in the field and his talk was eagerly anticipated. He got up and gave a great speech about all the wonderful things that were about to emerge. He was given a rousing ovation at its conclusion. When the clapping and cheering died down he confessed that the speech had been given previously and this was followed by more clapping and cheering. When that died down, he elaborated by giving credit to the original speaker, the original event and the year of the event - 1914. He was promptly booed off the stage.

The author of the article then explained that while the speech was being given the first time, the then President of AT&T was in Washington cutting a deal behind closed doors, with the government. In exchange for a near monopoly on telephone service, especially long distance, AT&T agreed to provide affordable universal telephone service, a deal that Congressmen and Senators from rural areas loved because it provided cheap telephone service to their constituents (which they promptly took credit for). The problem with rural telephone service was the cost of running wires. In urban areas a mile of wire could reach hundreds of subscribers due to the population density. While in rural areas many miles of cable had to be strung to service a dozen or fewer subscribers. AT&T was able to deliver low cost rural service in part by averaging the cost of relatively inexpensive urban service with the very expensive rural service and mostly by charging high fees for business service and long distance service (which, due to its cost, was utilized mostly by business). Of course, businesses simply passed most of the extra cost of phone service on to consumers in the form of higher prices. The result was that the government took credit for cheap rural phone service while dumping the cost on American consumers. T

With both their profits and their market guaranteed by the government, AT&T had no incentive to improve technology or find ways to cut costs. Yes, there were some small improvements like the introduction of direct dial, but that is nothing compared to the massive changes that have occurred since deregulation. The technology for many of the services my children now take for granted like video phone service, cell phones (whose technology was developed during World War II), cheap long distance, etc. were available in the early years of the last century. True, more work needed to be done before they were ready for commercial use but AT&T had no incentive to do this. If you wanted telephone service you either took it from one of AT&T's local operating companies (or in some areas from one of the few other non-AT&T companies that had the monopoly in your area) or you went without. Since buyers had no choice but to buy from them, AT&T had no reason to offer incentives, such as lower prices or better technology, to attract consumers. For the government, AT&T employees and stockholders this cozy little back room deal was great, but for the vast consuming public it was a complete rip-off.

Take long distance. As a child in the 1960s one of the things we did on Christmas was call my grandmother in Florida (we lived in upstate New York). My father would stand by the single telephone in the house looking at his watch as my mother placed the call. My mother and my aunt would each talk with my grandmother for a little under a minute. Then my father, uncle and each of us children would wish her a quick Merry Christmas and end the call before three minutes had elapsed. The first three minutes, or fraction thereof, was billed at one rate and then a higher rate applied to each additional minute or fraction thereof. The Christmas call to Florida cost my father about $10. Come forward to 2001 where my wife to be was in Ryazan, Russia and I was in Tucson. Thanks to the deregulation of telephone services during the Regan Administration in the 1980s, competition in the telephone industry was fierce. As a result, I was able to buy a phone card for $20 and use it to call my then fiancée in Russia every weekend and talk for almost an hour and a half while only using about $10 of the $20 on the card. Despite almost 40 years of inflation (including the double digit inflation of the Carter Administration in the 1970s) a 90 minute call half way around the world in 2001 cost about the same as a three minute call down the East Coast in the 1960s. This is a perfect example of how consumers benefit from the free market and suffer financially when the government meddles in the economy.

Back to my daughter's cell phone. She finally decided on one, a nice LG Chocolate model. In addition to all the great features - built in camera, light and compact, etc. - one of the colors offered was a rich cherry which matched her favorite purse and shoes. Cell phones these days, for women, at least, are really accessory items that happen to have calling capabilities. The only problem I can see is, that if my daughter gets a new purse or shoes that are a different color, her phone will no longer match. But I am sure there are companies working on that problem as I write this.

Contrast this with the 1950s and 1960s. Phones in that era were black and, while there were a few different models one pretty much had to take what the phone company gave them. By the mid-1960s the phone company did discover that by offering a couple of additional models they could charge more if the consumer choose one of them over the assigned model. They then came out with white versions of these models and charged even more. And by charge I mean the installation charge plus the monthly lease charge. It was actually illegal for a person to own a telephone as only the telephone company could provide telephones and the phone company's policy was lease only. I don't know what the prices were in the 1950's and 1960's but when I moved out on my own in the days before deregulation, what I used to for installation and monthly lease charges for basic service (with a plain black phone) came to about the same as my daughter just paid for the brand new LG Chocolate phone that she not only owns outright but also matches her purse and shoes.