What a difference a Cap makes

The issue of Billshock! is again in the news. Dog and Bone has covered this issue before, with some handy tips on how to avoid big blowouts. Today I'd like to expand on one of the points in the original post, namely, understanding how Cap plans work. Knowledge is power, and power is good.

Cap plans represent great value, so long as they are chosen with care and diligently adhered to. If they are used carelessly, then they are one of the primary factors in billshock. So firstly, what is a Cap plan?

A Cap is a postpaid (contracted) mobile plan that charges an upfront monthly access fee, for which you are provided with a reasonably large amount of monthly credit with which to make calls. For example, a $49 Cap costs a minimum of $49 per month (access fee), but includes, say, $400 of call credit and 200Mb of data. The most important thing to realise is that Cap plan call rates are basically the worst in the universe. The standard rate is somewhere between 80c and $1 per minute, usually with a hefty flag fall (call connection fee). This means that the seemingly generous included call credit gets used up much faster than you think. And once you’ve used up your included credit, the costs start to really add up.

Here is a breakdown of what is included on the most common $49 Caps, from the major Australian telcos:

Call Credit 

  • Telstra         - $400
  • Vodafone    - $450
  • Optus          - $500
  • 3 Mobile      - $450
  • Virgin           - $450

Bear in mind that unused credit expires at the end of each month.

Eligible Call Types
The following call categories are included as standard in all mobile caps offered by Telstra, Optus, Vodafone, 3 and Virgin:

  • Standard calls to fixed lines or mobiles within Australia
  • SMS to mobiles within Australia
  • Voicemail retrieval and deposit within Australia

These are the standard call types that every Australian carrier includes. Brand differentiation lies with the non-standard call types, including things such as International Calls and SMS, calls to 1800 numbers, and Premium SMS services (such as MMS). 

It pays to check your fine print to find out exactly what your Cap includes. Vodafone and 3, for example, include International Calls under their Caps, while Optus and Telstra do not. Telstra does not include calls to 1800 numbers, while the other carriers do. Call types that are not included in you cap are charged extra, even when you have call credit remaining.

Mobile Data Inclusions 
Most caps now include a mobile data allowance. It's often smaller than you realise. Here is the monthly data allowance included in the standard caps for the main telcos (excess charges are in brackets, per Mb):

  • Telstra         - 200Mb ($0.25)
  • Vodafone    - 1500Mb ($0.50)
  • Optus          - 1500Mb ($0.25)
  • 3 Mobile      - 1500Mb ($0.50)
  • Virgin           - 500Mb ($2.00)

Given that Telstra's Next G is considerably faster than rival networks, most smartphone users will burn through their paltry 200Mb of included data quicker than they realise. The 1500Mb offered by Vodafone, Optus and 3 is considerably more than most users require on a smartphone, although those that tether their devices to laptops should still be very mindful. Virgin also offers a $49 Cap with a  larger data allowance, but less call credit.

As an overall rule, Telstra represents the worst value, and includes the least non-standard calls, yet boasts the fastest network (by a fair margin) with the best coverage. Stay tuned, since I will be posting more on this issue in the coming weeks, providing a bit more detail on precisely what each carrier does and does not include.