What A Difference 30 Seconds Makes

What kind of difference does a call-rate's billing increment make? It turns out, quite a lot.

Telstra’s recent decision to increase its billing increment to 'per-minute' has met with widespread condemnation from almost anyone using a telephone. No one seems convinced by Telstra's proffered explanation, which is that in standardising its billing increment it is eradicating confusion, and doing everyone a favour. It was rightly pointed out - by consumer groups, people suffering head trauma, and my two-year-old son - that the same generous concession could be rendered by simply making all the charges per second, leaving users to pay for only what they use.

I thought I’d throw a few numbers at it. Given that Dog and Bone’s analysis software allows me to easily calculate different rates, I ran a range of call rates with varying billing increments across a large set of call data (approximately 28,000 fixed line call records). How much would increasing the billing increments affect overall spends on both STD and Calls to Mobiles. It was a simple enough exercise, and here are the results:

 

STD Calls



Moving from per-second billing to per-30 second billing increases STD call spend by 11.9%, while increasing to a per-minute billing increment produces an overall 23.5% increase in expenditure.
 

Calls to Mobiles



Moving from per-second billing to per-30 second billing increases Fixed to Mobile call spend by 12.2%, while increasing to a per-minute billing increment produces a 25.2% overall increase in expenditure. 

The marginal differences between the call types is attributable to differing behaviour among staff when making those call types. On average, calls made to mobile are slightly longer, while STD calls tend to be either quite short (well under a minute), or very long (people are as a rule more wary of making very long calls to mobiles). The other notable feature is that increasing the billing increment (X-axis) increases the call spend by a uniform amount regardless of the call rate.

Based on a sample size of 28,000 calls, I can with some confidence say that moving from per-second billing to per-minute billing results in an increase of approximately 23-25% to the costs for those fixed line calls. This seems a high premium to pay for a standardised billing increment. We suspect most users would prefer a little confusion, if only they'd been given the choice.

A subsequent article analysing the impact of minimum call charges can be found here.