Cingular: Upgrade or pay

Lisa Napoli Aug 1, 2006

In this story we said 8 percent of Cingular’s customers still use analogue phones.

We were wrong.

Most of the 8 percent use phones that run on a different sort of outdated network, known as TDMA. Cingular’s phasing out both types of service.

KAI RYSSDAL: You love it. And you hate it all at the same time. But you probably have one. The cell phone. It rings at inconvenient times. You really shouldn’t use it while you’re driving. It can be expensive, too. And the nation’s biggest wireless provider could be adding to the cost. Marketplace’s Lisa Napoli explains.

LISA NAPOLI: Hey, all you Luddites. You want to carry that old cell phone?

Around 8 percent of Cingular customers still tote around analog phones. And if you’re one of them, starting in September Cingular’s gonna tack five bucks a month onto your bill for your refusal to upgrade to digital.

Company spokesman Mark Siegel explains it has to do with maintaining an old system being used by fewer people.

MARK SIEGEL: It’s almost a basic law of physics and economics combining. As you have fewer people on the network, and the network remains in place, you still have costs associated with it.

Siegel says the $23 million a month the company will collect in fees will defray operating costs. Although, he says, for competitive reasons he can’t say how much those operating costs are. By law, Cingular has to keep the old analog network running for another two years. Some say there’s a better way for Cingular to get people to upgrade.

Mark Cooper is with the Consumer Federation:

MARK COOPER: If they really want to migrate people off of analog, they would bribe them instead of punishing them.

By giving those with old phones new ones as a thanks for loyalty.

COOPER: Because it’s not a competitive market, they don’t have to treat people well, and they take advantage of their market power.

Cingular became the largest wireless provider in the nation after it acquired AT&T Wireless two years ago.

In Los Angeles, I’m Lisa Napoli for Marketplace.

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