Glass 1% empty: mobile phone costs

Glass 1% empty Glass 1% empty is what I’m going to brand posts which look at the media’s habit of taking what to my mind is clearly a good-news story, then somehow finding the grain of bad news in it and focusing on that. This happens rather often, so I won’t be covering them all.

Friday’s Guardian reported that the EU is soon to enforce a reduction in mobile phone call charges across Europe. Brilliant, I hear millions of mobile phone users cry.

But wait, cry the newspaper editors. It can’t be good news, it has to be bad somehow. Oh yes, here we go, this’ll do for the headline:

Forced price cuts would end free handsets, phone firms tell Brussels

So the story proceeds with the principle established that the call cost-cutting is OK but the “end” of free handsets is very bad news.

But just think about this for a minute. In the environmentally conscious world in which we sometimes like to imagine we now live, shouldn’t cost be related to consumption and waste? How does the mobile phone industry’s current business model shape up then?
 

Activity Consumption and wastefulness Cost to consumer
Making calls Negligible High
Replacing your phone at least once a year to stay fashionable and cutting-edge High Negligible

It’s not a great match, is it?

I don’t think I need to redraw my table to represent the model to be “forced” upon us by the EU, do I?

I suppose this comes back to the same principle as my thoughts on car running costs last week. In a capitalist system, to tackle environmental problems, the costs of polluting/ wasting/ damaging the environment need to be incurred in proportion to the pollution emitted/ waste generated/ damage inflicted.

What’s more, the table above is a completely artificial construct of the mobile phone industry. If we change the heading of the right-hand column to “Cost to mobile phone company”, “High” and “Negligible” swap places. It costs the companies little to connect and sustain calls, but of course phones are worth far more than they’re ever sold for.

If we’re to stand a chance of tackling global warming, companies simply can’t continue to be allowed to subsidise – often heavily – environmental damage and waste, getting consumers to pay through the nose for relatively non-damaging activities instead.

And that’s why, unlike the mainstream media, I think this story is, let’s say, 99% good news.

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One rev forward, one screech back

Today’s Guardian G2 supplement asks: is the fuel crisis a blessing in disguise?

As with most questions posed by newspapers, or indeed in life generally, there’s no one simple answer; in some ways, it is a blessing, but in others the disguise is perhaps rather too good.

I can recall reading not that long ago – but certainly before such a prospect looked remotely feasible – that the price of petrol would have to reach £2 per litre before the UK would start to see the sort of modal shift away from cars and onto public transport which London has bucked the trend with over the past few years.

Now prices are about 20% closer to that than they were when I read it, is this an unalloyed good thing?

There’s little doubt from an environmental point of view that there is almost no such thing as too high a price for oil. It’s going to run out, and until it does it’s going to cause dangerous damage to the environment, so the sooner we can cut down on its use, the better.

From a social justice point of view, though, high petrol prices hit poorer people harder, as do most environmental taxes, which makes things that bit more awkward.

The well known difficulty with making the transition from cars to public transport is that public transport needs to be good to encourage people to leave their cars at home. More ideally, public transport needs to be so good that people don’t have a car in the first place.

The problem with the costs of running a car is that so many of them are one-off, up-front, ‘sunk’ costs: the moment you opt to own a car, you effectively commit to throwing hundreds of pounds at it each year in maintenance, insurance, road taxes and loss of value. The incremental costs which actually vary with the car’s use make up a relatively small (but increasing) proportion of the cost of owning a car.

The result of all this is that for anyone who owns a car, public transport simply can’t compete on a fair basis when deciding how to embark on a particular journey. Sure, the overall cost of taking a car on each trip to the supermarket over a year may be similar to the cost of hopping on the bus instead, but that’s not how decisions are made. Sunk costs are irrelevant to any individual decision, so you’re comparing – in the case of our small, fuel-efficient car – an incremental cost of about 15p a mile with a return bus fare, even in the cheap bus paradise of Greater London, of £1.80 per person.

It’s clear that to enable fair competition between private and public transport, as many of those sunk costs need to be removed and replaced by incremental costs which vary with distance travelled instead. So, for instance, the government’s much-maligned (and even now, I understand, not expected by anyone in the Department for Transport to be implemented for at least a decade) national Road Pricing Scheme would be an ideal replacement for road tax, arguably fuel duty (although this is of course already incremental), and perhaps more radically some sort of MOT system funded from the scheme, if they really wanted to try to win over the usually unappeasable motorists. The more sunk costs they can apportion per mile in this way, the fairer the comparison can be between taking public transport and taking the car.

As things stand, too much of Britain is too difficult to navigate by public transport, so many of us – even those of us who write blog posts like this and wish they didn’t feel the need to own a car – find ourselves reluctantly purchasing a car to get around.

Living 150 metres inside Greater London, with parents living a few miles outside London, I know I could very easily and happily go without a car if I only ever travelled in the 180° zone on one side of my home, but since I often need to travel to the other side, going without would be impractical, inconvenient and expensive.

This is why so many people, even those with decent transport links in their immediate vicinity, have cars, and as soon as they own the car, it’s a financial no-brainer to use it as much as possible.

So as the fuel prices begin to rise, and people are looking for ways to change to public transport, what progress is being made toward replacing one-off costs with incremental costs?

Sadly, very little. In addition to the aforementioned shelved National Road Pricing scheme, I arrived home (by sleeper train, not car!) last week to find a letter from my car insurance company, Norwich Union, telling me that the innovative product I signed up for last summer, Pay As You Drive, was being axed.

Apparently take-up was poor – poor to the point where they refused to say quite how poor but insisted it was “not less than” 10% of what they were hoping for!

I’d signed up for this as a first optimistic step towards enabling myself to compare public transport and car use fairly, and while I was pleased by how well it worked and did feel somewhat additionally rewarded each time I left my car at home and walked or cycled somewhere, the per-mile rates, even in rush hour, were minimal, and as nothing compared with all the sunk costs of owning the car. Nevertheless, it was a good start, but now even this small step towards a fairer transport market has been withdrawn.

Perhaps it will make a comeback, but in the mean time, is £2-a-litre petrol still our best hope for achieving modal shift? If there’s not a marked improvement in (and reduction in the cost of) public transport outside London, for the sake of the less well off, I rather hope not.