Cellphone bills average $3.02 per minute, study says

How much are you paying for your cellphone?

In San Diego, mobile users pay more than $3 per minute on average. That's according to a new consumer-advocacy study featured in the LA Times yesterday.

The Utility Consumers' Action Network surveyed 700 cellphone users and found that the average cellphone bill went down since 2004, falling from $57.92 for a single-line account to $37.15 today.

However, "cost per minute can be outrageous," says the report. "Doing the simplest of calculations – dividing the total cost by the number of minutes – we find that the average ‘account’ is paying $3.02 a minute."

This average is driven up by a small slice of consumers who buy large plans but rarely use them. If you cut out these big-spenders, the average falls somewhere between 50 cents and $1 per minute – far more than the "10 cents a minute" claim made in many ads.

The problem stems from three stumbling blocks:

1) Phone companies impose two or three plans, each with a set number of minutes per month. This is not so bad, until you consider the next issue.

2) Consumers are bad at guessing how many minutes they will really use each month. When forced to choose 450-, 900-, or unlimited-minute plans, they may overestimate or think they're playing it safe by avoiding overage fees with bigger plans. The study found that "customers are only utilizing 32 percent of their plan allowance." Rollover deals ease this issue, allowing users to stockpile unused minutes, but this horde often goes untouched.

3) After signing up, mobile users rarely think to adjust their plans to fit their habits. Among the study's 700 participants, many never reviewed their bills closely enough to see their folly. Most phone companies are very amenable to consumers changing plans midway through their contract – especially if the tweak comes in the first few months.