Every once in a while an article on Yahoo! Tech catches my attention. This time, it’s an article about a cellular customer who incurred a $62,000 cell phone bill. Now we’ve heard of cell phone bills in the past reaching into the thousands of dollars – typically because of texting plans where usage ended up being much, much higher than the allotment. A father in Cheyenne, WY, smashed his daughter’s cell phone after she incurred a huge bill for texting her friends like mad.

But the case of the $62,000 cell phone is one of entertainment and international roaming. According to Yahoo! Tech, quoting a CNN report, the customer downloaded a copy of the movie Wall-E, about a 1 GB download, across his wireless data card while in Mexico. Having a wireless data card is nice, but one thing most don’t realize (because they don’t read the fine print) is that you are capped at a maximum download usage of 5 GB for each billable month.

Plus use your cell phone for anything internationally and you will incur additional fees. Why is this? It’s the same concept as roaming: you are using someone else’s network and not the network of your cellular provider. When you do this, your provider incurs charges from the network you “borrowed”, along with expenses for patching through the call you made. When you borrow a cellular network in another country, let alone another continent, things can get expensive fast, for you and your provider.

And one concept that should be very familiar to everyone is that all costs incurred by a business are eventually passed on to their customers.

Now in today’s world where you can get an unlimited family text plan for a reasonable price (I’m paying $25/month through AT&T) and unlimited data plans as well, with unlimited call plans coming down the pipe (they’re still prohibitively expensive, in my opinion), many of the commenters to the Yahoo! Tech post were complaining about corporate greed. One commenter mentioned that because most do not use a majority of their talk time, something that, arguably, cell phone providers bank on, that there is no reason for cell phone providers to not lower their prices.

An argument similar to this has been used in regard to the oil and pharmaceutical industries without regard to what those companies do with that money (hint: they don’t line their pockets with it). So what do these companies do with their profits? Simple, they invest it.

In the case of cellular companies, the investment has allowed for significant upgrades to cellular systems throughout the United States and abroad. While there have been significant advances in wireless phone technologies, the cellular systems providers are responsible for actually providing the ability for those phones to work, and that requires periodic technology upgrades, which requires capital, which tends to come from previous years’ profits that have been sitting in a bank somewhere.

One commenter called for the Federal government to institute caps to overage charges. The reasoning behind this is that the cellular providers, who are still subordinate to the FCC in the United States, must license bandwidth from the Federal government, so the FCC should institute a rule providing caps on overage charges. Ah, just what we need, more government intervention…

The cellular plans existing today are proof positive of the effectiveness of free markets. Now I’m not talking your standard contracts where you walk into an AT&T store, pick up an iPhone, and set up your plan. Actually what helped bring cellular plan rates under control was the introduction of pre-paid plans.

The first pre-paid plans I recall seeing were offered by MCI in 1998 or 1999. The phones were older model phones, but they still did the job, and you paid for the time you used – but you still had to purchase a certain minimum over a certain period to maintain the phone number, much like every other pre-paid plan today. Stop using the phone and you lose the number, and the minutes you’ve bought.

Today, arguably, the most prominent cellular pre-paid service is Tracfone. But did you know that Tracfone piggy-backs on the other cellular networks? My mother has Tracfone and her phone number is provided by US Cellular. AT&T offers a couple options, and there’s also Net10, among others. When pre-paid plans started becoming more popular, the major providers started offering more to bring back customers they lost, including reducing prices.

The problem with the plans, though, is that they are inconvenient. You have to remember to buy a card, then you have to go through the steps of redeeming the card with your provider, then (depending on the provider) you enter codes into the phone to actually have the minutes available. If this is no longer the case (I know it once was with Tracfone), I’d like to hear some feedback as to how it is now.

Tracfone, several years ago, offered a monthly automatic payment plan, which took away the need to remember to buy a card, but you still had codes to enter into the phone. And it only gave you so many minutes as well, so you were still limited or you still had to buy more, which meant buying a card.

But given all the complaints about the big providers, few seem to remember what cellular plans used to be like. The inadequate supply of plan minutes, meaning the constant risk of overages, especially once texting and mobile web were first introduced and started gaining popularity. Complain all you want, but things are improving. And while it seems that all of these companies are taking in excessive profits, it is what they do with the money that is more important, but most don’t look beyond the numbers.

And it is only through reinvestment of profits that allows things to improve. Price caps will reduce profits, which will in turn reduce the amount of investment can be made. Reduce the investment and you won’t see expansions or improvements to existing cellular networks as quickly.

Plus bear in mind that it is due to new innovations that what was previously expensive no longer is, and what is expensive now may not be in the future. And don’t expect anything regarding that to change at Internet-pace.