Many Toll Service Providers offer what look to be excellent “Capped Rate” calling specials, such as 2 hours for $2.75c.

There’s nothing wrong with that, if you actually use two hours, but do we after the first month or so? The average length of a national call doesn’t fluctuate that much over the longer term and people don’t often talk on the phone for two hours.

We will not go into statistical detail because the source of the statistics we might quote is no doubt different to the source others will quote. The best way to work out whether you would really benefit from a flat rate is to look at your last 2 phone accounts and think about whether a flat rate plan would change your behaviour over the long term.

Do you really use all 120 minutes or have you adjusted back to 30 minute calls, perhaps you are back at 15 minute calls already, perhaps 10. Check your bill and see. You may not even be taking advantage of the capped rate. Few do.

If a call can be sold for $2.75c for 120 minutes then the per minute rate should be 2.3 cents. If this can be the rate sometimes, why can’t it be that rate always? The law of averages applies.

Our statistics show that people don’t really make that many 2 hour long calls. Very few people actually set out to use up the full 120 minutes. Most drop the call before 15 minutes are up. That makes the per minute rate more like 18.3 cents ! 3 cents a minute more than our standard rate.

If you can secure a good rate, with no differentiation of peak or off peak times, where you don’t have to pay more for something else to get the “Better” rate, where you pay by the second after the first minute, where you won’t get charged for mistakes and there is a decent discount for paying on time…. There is a very strong likelihood that you could go on behaving as you normally would and you would pay less overall.

Flat rates can sometimes be a shiny bauble, a lure that leads the customer to overlook the slightly higher overall price structure for a perceived saving on something they will probably not use anywhere as much as they think they might at first glance.

Some organisations are smugly counting on the weight of statistical probability to ensure that regardless of the perceived value of flat rates, they win and the customers lose.

We can’t offer Capped rates. We don’t get the benefit of such things at the wholesale end of the market, so we can’t pass it on.

If we could we probably would, but we’d only be doing it to remove it as a point of differentiation. We still don’t believe flat rates benefit any but the most frugal of customers and they would probably prefer to get the message across quickly and end the call in 3 minutes.