Knee-deep in iPhone 2.0 fever, I’ve been thinking about the annual cost of using not only that device but all our other gadgets that require a subscription service.As you probably have heard, AT&T has raised the price of the data plan for the new iPhone by $10 a month, which more than wipes out the savings you get from the lower initial cost of the hardware. The $199 iPhone is $200 less than its predecessor but the increased cost of the data plan works out to an extra $240 over the life of the two-year contract. IPhones users will be paying at least $70 a month, which adds up to $840 a year, plus taxes and fees.
But it’s not just the iPhone that puts a deep dent in your wallet. Even regular old cell phone service costs about $50 a month per user. When I was growing up, most households had one phone line that cost maybe $8 a month back in 1970. Adjusting for inflation, that would be about $45 today – a bit more than people are spending per cell phone.
But that figure is for one cell phone. My family has four of them with a combined monthly bill of about $250. We still have our old-fashioned AT&T landline ($42 a month) and our Vonage Internet phone ($29 a month). That jacks up our monthly phone costs to about $320 – more than $3,720 a year – and doesn’t even count extras like international calls or when we go over our allotted cell phone minutes.
Admittedly, my parents paid a lot more for long-distance calls. But their total costs weren’t nearly as high.Today’s families get plenty of other bills that our parents never dreamed of. Comcast’s cable TV service can cost as little as $17 a month for basic service, but you can easily spend as much as $120 a month for the “Digital Premier” package – and that doesn’t count the cost of any pay-per-view movies you might want to order.
Then there’s our Internet bill. I love high-speed Internet service, but once the promotion period ends, I’ll be paying $67 a month for my 16-megabit “Blast” service. (To be fair, you can get less expensive, slower-speed cable service and even cheaper DSL from AT&T.)
There are plenty of other ways we can spend money each month. If you want to add a TiVo digital recorder to your TV set, it will cost you $12.95 a month or $129 a year plus the cost of the hardware. A typical three-movie Netflix subscription costs $20 a month. Want to play interactive games on your TV? An Xbox Live subscription costs $60 a year.
When I watch a high-definition movie on Apple TV, it sets me back $5. That’s at least $1 more than what it costs at the video store, though at least I don’t have to burn $4.70-a-gallon gas to fetch the movie.
We are also starting to see software and service fees. Security programs like Norton Internet Security or Trend Micro Internet Security Pro almost always have an annual subscription plan – typically around $69 a year. So far, most people buy their desktop software but there is a trend toward “cloud computing,” in which you access your software online – in some cases for a monthly or annual fee.
Yahoo has a free e-mail service, but if you want to turn on its advanced features and eliminate ads, you need to pay $20 a year.
And then there’s the cost of powering up all your equipment. My father’s energy bill was a fraction of what I pay. Not only has the cost per kilowatt gone up exponentially but so has the amount of power we use. My mom and dad might have had less efficient appliances and light bulbs but they didn’t have to pay for the energy to run a 57-inch LCD TV that uses more than 300 watts when on, or a digital video recorder that uses 47 watts 24 hour a day. And dear old mom and dad didn’t have any devices that used “passive” power when on standby.
I’m not arguing that we don’t get value for what we pay on a monthly or annual basis. But I do think it’s worth keeping an eye on those bills. Moore’s law and competition have drastically cut the purchase cost of hardware, but that’s only the start. If you want to actually use a lot of that hardware, you have to keep on paying.