15 May 2014 etbe   » (Master)

Mobile Phones and Cognitive Costs

I previously wrote about the case for a Basic Income in Australia [1]. Since then I read an interesting article by Rutger Bregman in the Dutch site The Correspondent discussing the benefit that such Basic Income schemes have given in various places [2], he makes a great case for giving a Basic Income to poor people. However I believe that it should be provided to everyone. I believe that government payments shouldn’t be “means tested” because the proportion of the population who earn more than the cutoff is usually very small (IE it doesn’t save much money), because the money will be recovered from wealthy people in tax, and because the bureaucracy involved in determining who is eligible involves spending tax money to pay bureaucrats and costing everyone time in dealing with the process.

The concept of an Attention Economy has been getting some interest recently. But discussions of it seem to be mostly concerned with the needs of fairly wealthy people, how to advertise to them, how to filter out unwanted ads for them, etc. But the costs in attention can be even worse for people on low incomes or social security because they have many attention costs that could be solved by money. Many common essential purchases (EG soap, basic foods, and purely functional clothes) can become difficult decisions if saving a few dollars is important. The amount of thought involved in buying such items can result in someone who’s not well off having little energy to concentrate on other things. I think that to have an effective social security system we need to consider how much cognitive effort is being required of people who are receiving benefits.

Last month I wrote yet another review of mobile phone plans in Australia [3]. Every time I do this it takes a significant amount of time because the Telcos devise overly complex plans to make it difficult to compare their offerings. It seems that they aim to make their offerings somewhat competitive if you can interpret them but confusing enough to allow many (most?) of their customers to pay needlessly high bills. I could just pick a random telco and pay whatever it takes, spending an extra $10 or $20 per month isn’t such a big deal for me. Even though I advise a number of my relatives on the cheapest phone plan it’s probably only barely saving enough money to be worth the effort, a major motivation for me is being stubborn and not wanting telcos to rip people off.

The Importance of Mobile Phones

A mobile phone seems to be essential for most people. Mobile phones are used for making medical appointments and for applying for work, so in almost every case some of the financial assistance paid to a job seeker or person on a disability pension will go towards mobile phone costs. The aims of the social security benefits seem to clearly involve a phone service. Given that most people who receive social security payments spend some of that money on mobile phone bills the government has a direct financial interest in not having such money wasted on needlessly expensive phone plans. As we also don’t want to have people on social security spending time and attention trying to find the best phone plan it makes sense to have the government help manage this process.

Good communications is regarded as essential to education and economic development. A huge amount of taxpayer money was spent on the NBN (and then wasted by Tony Abbott when he cancelled the original plans) for these benefits.

Good phone access is also an issue of personal safety. While it is possible to call emergency services from a mobile phone that doesn’t have a valid SIM there are probably few people who keep a spare phone charged for that purpose. Also there are a variety of issues that can impact life or health which can best be resolved by calling friends or relatives.

Free Phones

I think that the best solution to these problems is for the government to directly pay mobile phone bills. If we are going to have a Basic Income then the government should make the base payment for mobile phone calls for every resident, if not then the government should make the base payment for everyone who receives any form of social security payment. Obviously the amount of data that could be transferred over a 3G network is greatly in excess of the amount that any plans allow and offering true “unlimited” calling leads to people using mobile phones as baby-monitors, so some limits are necessary. But the government could cheaply pay for a phone plan that exceeds the requirements of most people and then allow anyone who wants more data or calls to pay extra.

Which Plan?

The cheapest all-inclusive mobile phone plan in recent times was Kogan who charged $299 per annum for 6G of data per month and “unlimited” calls. The cheapest current offer for “unlimited” calls seems to be Lebara’s $30 per month offer which includes 2G of data.

My observation is that people who use 3G Internet just for phone use (as opposed to tethering a laptop or providing home Internet), who use a home Wifi network for installing Android programs and don’t play Ingress tend to use a lot less than 1G of data per month. I would use between 400M and 700M per month if I wasn’t playing Ingress and didn’t use my phone as a Wifi access point.

In terms of call volume, 600 minutes a month should be enough to cover the basic needs of most people judging by the number of plans on offer with limits smaller than that.

As a current Lebara offer is $30 per month for “unlimited” calls and 2G of data (and there are similar offers from other telcos), it should be possible for a telco to offer 600 minutes of calls and 1G of data for less than $15 per month. When the government is paying (no bad debts) and many of the users will use much less than the quota such a plan should be profitable at $10 per month or less.

Implementation

The way to implement this would be to start with a tender that has a hard requirement for the minimum amount of service provided. This would include the number of minutes per month for calls, the number of SMS sent, and the amount of data transfer. To avoid excessive billing (a standard telco scam) there should be a requirement that fees for extra use not exceed some small multiple of the base rate, for example if the government was paying $10 for 600 minutes of calls and 1G of data the excess usage charges could be capped at 3 cents per meg and 5 cents per minute (3* the base rate) which would be profitable for the telco but not a scam.

If the telcos act in a market driven competitive manner they will compete to provide the most attractive offerings for $10 per month.

If the build cost of the NBN had been invested at government bond rates (for any of the rates used for current bonds) then it would pay for the mobile phone bills for every resident forever, so the cost of providing phones for everyone is in the range of government telecommunications programs. If people who are working were to pay an extra $10 in tax and people who are on social security had their benefits reduced by $10 then that would be a great deal if it saved them the $20 or more that most people spend on a basic phone plan.

Government Phone Delays

A friend who’s a single mother pays for an “unlimited” mobile phone plan because calls to the social security office are usually kept on hold for more than an hour. It’s likely that she could save money over the course of a year by paying for a cheaper plan and just dealing with the occasional big bill, but she needs to budget carefully and feels that she can’t take that risk. It seems stupid that government phone delays (partly caused by cutting funds for staff) cause increased expenses for people who are receiving social security payments. If the government implemented a smart queuing system that allowed them to call people back instead of making them wait on hold then it would save money overall.

So there are obviously other ways that the government can save money on phone calls and time for everyone.

Related posts:

  1. Dual SIM Phones vs Amaysim vs Contract for Mobile Phones Currently Dick Smith is offering two dual-SIM mobile phones for...
  2. Australian Mobile Phone Costs I previously wrote about the changes to bundling prices by...
  3. Old Mobile Phones as Toys In the past I have had parents ask for advice...

Syndicated 2014-05-15 07:53:52 from etbe - Russell Coker

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