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US Cell Phone Plans Among World's Most Expensive
Albanach writes "An OECD report published today has shown moderate cell phone users in the United States are paying some of the highest rates in the world . Average US plans cost $52.99 per month compared to an average of $10.95 in Finland. The full report is available only to subscribers, however Excel sheets of the raw data are available to download." (You'll find those Excel sheets — which open just fine in OpenOffice — on the summary page linked above.)
In Europe (and most other regions outside of the US and Canada for that matter) the cellular user is not expected to pay the full cost of having wireless service. This is why other users who call your cell phone pay a premium for doing so and why the wireless customers over there often have free incoming calls. This is known as a "caller pays" model.
The US has (for better or worse) adopted a "subscriber pays" model wherein the wireless customer pays a higher price and for incoming minutes but those who call him and do so at the same rate as any other phone call (free in many/most cases). The US also has many perks that aren't part of most calling plans in other countries -- unlimited calling to X numbers, unlimited nights and weekends, unlimited mobile to mobile, etc, etc. Add in all of these perks and break down the monthly rate by the number of minutes used and many Americans wind up paying around $0.02-$0.03 per minute for their cellular phones.
It doesn't really tell us much to see a per month cost break down without looking at all of these other factors. In any case if you want to copy something from the rest of the world regarding wireless business models I would look at copying the concept of unlocked phones that are separate from contracts long before I'd look at copying their rate plans. I rather like to be able to call my friends who have cell phones without paying a penalty for doing so.
I want peace on earth and goodwill toward man.
We are the United States Government! We don't do that sort of thing.
I should probably have added this when I submitted.
In these threads, there are often comments about population density in Europe making coverage more effective. Finland has a population density of 16/km2 - that's lower than Maine and 37 other US states.
Perhaps you think Finland must be tiny, in fact it's land area is 305470 sq km, that's bigger than Arizona. There are only five US states larger than Finland.
Maybe coverage is actually really poor, restricted to big cities? Take a look at this coverage map.
http://www.gsmworld.com/cgi-bin/ni_map.pl?cc=fi&net=te
Do any US states have coverage like that?
True competition? Then why are your prices so high?
In a truly competitive market prices for comparable items converge towards a low price, as long as they aren't luxury items.
Look around in your supermarket. You can probably find ten different brands of bread, all costing roughly the same per unit of weight. The price will be fairly comparative to European prices (should be lower in the US as you have lower taxes and lower wages). That's true competition.
Not so in your cellphone market.
Even if it was granted that cell plans in the US cost twice as much (or more) for worse service was because of the area of the US, that infrastructure has pretty much been in place for the past decade and hasn't changed much. Its been paid for already and maintenance does not cost as much as the initial deployment. So if it actually had anything to do with the cost of infrastructure, plans should have become more affordable, as they have pretty much everywhere except the US and Canada.
"I use a Mac because I'm just better than you are."
A great deal of consumer relations in big business nowadays boils down to this Frederick Douglas quote:
Welcome to the Panopticon. Used to be a prison, now it's your home.
And the finer point.
It costs money to put up these towers.
Europe has a larger population compared to US, yet it has a lesser amount of land to cover with cell sites.
As a result, people/tower ratio is quite good in Europe and partially contributes to better plans.
We have the exact opposite here in Canada, where the population is 10 times lesser than USA and land is larger. You should look at our plans. I am paying 25$/month for 500MB, plus anoter 45$ for voice (I'm rather lucky as I have a grand fathered plan which gives me unlimmited voice).
Today, for the kind of money (about 90$/month). I would get 1000 min and 500 MB and 250 SMS.
Russia: 17,075,400 km^2. Population density: 8.3/km^2
Phone plans: still cheaper than in the US.
News alert... The wealthy in the US already pay a lot of income taxes as the system is highly progressive. [snip] 39% of the ...total personal income taxes came from top 1%
While you are likely technically correct, there's a nuance that needs to stated: Warren Buffett noted that there are significant inequities in this so-called "progressive" tax system:
http://www.timesonline.co.uk/tol/money/tax/article1996735.ece
For those who do not RTFA, Warren notes that it's essentially ridiculous that he pays more as a percentage of his wealth than his secretary (who makes about $60K/year) and who has substantially less disposable income. Roughly summarized, Warren has essentially noted "tax the rich--it's OK, we'll figure out a way to make more."