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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.)
This is what I've always wondered, but learned from Slashdot comments. Why the hell mobile plans are so costly in US? I have the largest plan available from my phone company, 2500 minutes / 2500 sms per month and unlimited 3G internet. And that's still only 29 euro per month. And I did actually use that 3G internet connection for a month while waiting for adsl connection to be set up for my new apartment (hell, even running a server from it). No transfer limits or anything like that.
Yeah, mobile companies have extra costs from providing their infrastructure, but it just seems a lot what they ask in US. Sweden is mostly woods and non-urban areas too, so why is it done better here?
Maybe voice your opinion to the companies so they stop charging so much?
Well, let's imagine that coverage of the country directly affects cost. This might not be so outlandish as cell phone towers need to be erected to cover area. I would venture to say that Americans & Canadians suffer from sprawl much more than Finland and total area of dense population is probably more than five times that of Finland's. So let's assume that those cell phone tower maintenance (more harsh weather conditions across the US than Finland also) and building costs are passed on to the consumer. The United States and Canada are are fourth and second (respectively) by country size. Which could explain their inflated costs.
... or even small rich countries like Morocco or Dubai.
Of course this isn't the only factor, for example: I would assume China's median household income would affect their cell phone charges and cause them to drop despite country size. Wish they had data on China and Russia so this could be analyzed further. I don't see any in the data about these countries
My work here is dung.
So we aim to be number one in everything:
healthcare costs
shortest vacations
.
.
.
Well, that's a first! At last we're cheap in something else than marihuana...
Apparently the privatization of mobile networks worked out really well here!
X.
Although I agree it sucks paying more than other countries, I'd imagine the largest reason wireless providers in the US costs more in comparison to the rest of the world is because of the exponential higher cost associated with deploying the infrastructure due to the physical size of the US. Of course, there's probably other more devious things going on that also attribute to the higher costs, but it's not all attributed to evil wheelings and dealings.
Among the most expensive and not even for a service that is advanced compared to other countries systems. And so called competition between carries is for which carrier can offer you which features for a high price ($55) plan. There is no real competition when it comes lower cost plans. And finally, my opinion for the most expensive, the lack of open systems. Carriers lock people into certain models of phones. Those lock-ins not only keep customers from shopping for the best service/price, but requires the carriers to earn even more profit to subsidize the exclusive contracts with the phone vendors.
I would wager that some government taxes or fees on the infrastructure is what is causing the high prices.
Or at least, that's what the cell companies will claim...
Oh I'm convinced that very large portions of telecom money go to congress... just not in taxes.
I am the richest astronaut ever to win the superbowl.
Take the average cited, multiply by the number of users, DIVIDE BY THE NUMBER OF TOWERS.
You don't realize how low the population density can drop until you ride a 3.3 gallon tank motorcycle through Wyoming. Number of phones per cell tower varies from 10 million to 1, sometimes.
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-$0.03 per minute for their cellular phones.
It doesn't really tell us much to see a per month cost break down without looking at all of these other factors. In any case if you want to copy something from the rest of the world regarding wireless business models I would look at copying the concept of unlocked phones that are separate from contracts long before I'd look at copying their rate plans. I rather like to be able to call my friends who have cell phones without paying a penalty for doing so.
I want peace on earth and goodwill toward man.
We are the United States Government! We don't do that sort of thing.
I have my bill down to 35$ a month though AT&T... but I have found out something quite nasty.. My number is a Michigan one, since I was living there at the time. I have since moved to Pennsylvania but left the number the same since people know the number I have. Since I pay my bills online I never looked that closely at the bill. This last month I did.. and found out I am paying TWO sales taxes, Michigan and Pennsylvania. And when I called about it, it is because the number is a Michigan number.. because it is they can charge a sales tax on it.. as well as tax me because I reside in Pennsylvania. Their solution.. change my number (not a very good solution). I don't see why one should be taxed for where a number resides.
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?
From TFA, 1680 minutes per year is considered high use. Really? Two hours twenty minutes per month.
Also stated is that same-network free calls and such aren't considered in the data, which skews prices higher in the US than is realistic. I pay $67 a month after taxes for unlimited everything but mid-day calls made out of network, with nights and weekends beginning at 7 PM. That's not great from a global perspective, but it's not the worst in the world, either, considering that I get 3-4k minutes of use and a few hundred pictures and videos sent in that interval.
Anyway, my real problem with European cell phones is how much is costs to call them. If I'm in Italy and I use a calling card to call an American land line, I'll pay around $0.02/minute. If I call an American cell, I'll pay exactly the same amount. If instead I'm in America and I call an Italian land line, I'll pay $0.01/minute, while a calling an Italian cell will cost me $0.15/minute on the same calling card.
On another note, I'm glad that my cell plan includes unlimited skype usage.
"I zero-index my hamsters" - Willtor (147206)
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."
You're comparing small apples to big apples. You can't claim your plan is cheaper (better value) just because it costs less. What would your plan cost if it included roughly 2500 minutes of talk time? What about if you add data? Unlimited data? Personally, I'll be moving back to Australia soon, and the cheapest I can find for data is AUD20 for 1Gb of data (roughly EUR10) per month.
Because the US does NOT have universal GSM coverage. For example, a GSM phone is pretty useless in New Hampshire if you live north of Concord.
There are vast areas of the US with no cell coverage at all.
Several factors to consider:
1. The study is crap. The "high usage" plan is 1600 minutes/YEAR, 660 SMS/YEAR. That's not high usage; it's barely even light usage. The US plan selected has a low number in "fixed" but a high number in "usage"; this would suggest that they calculated what it would cost based on the cheapest-available plan. US overage charges are indeed ridiculous, in the 40c/min range, but nobody ever pays them because adding airtime to a plan costs very little.
2. US plans offer coverage nationwide and with no charges other than airtime for calls from anywhere to anywhere in the country. When there's an EU-wide plan providing the same coverage - no international charges - then we're getting close to an apples-to-apples comparison.
3. Population density is a real problem. I think the person upthread who suggested that the real metric that should be used is total # of subscribers divided by total # of towers is right - average population density is misleading.
The US has such expensive cell phone plans because the government has been protecting Big Telecom and turning a blind eye to exhorbitant pricing. In fact, by keeping prices high and using media spin to say just "how competitive we are" with the world, many US citizens are unware of anything better. It took Boost Mobile and Straight Talk to do something audacious and lower pricing on unlimited service to wake up competition again. Since the George W. Bush administration was pro rich, little was done to curb the excesses of big telecom and if big telecom can make gobs of money on older technology, there is no incentive to upgrade, thereby putting us further behind the technology curve. We all know what George W. Bush did to stifle science. For a while you really had only four choices: Verizon, AT&T, T-Mobile, and Sprint. There isn't a doubt that these telecom giants colluded to keep prices high. I remember the hoopla when Verizon came out with FiOS. Everyone was thinking we had hit a miraculous breakthrough in broadband which is just what Verizon wanted everyone to think. Verizon banked on the ignorance of consumers. In reality, FiOS is behind the 8 ball. Japan has 100MBiT to the home right now. When the Verizon sales rep tried to tell me how great it was, I replied, "Stop. Just please stop the bullshit sales pitch. Japan has had 10MbiT to the home just prior to the turn of the century. This is nothing new or miraculous. Don't bank on consumer ignorance." To which I got a snarled response. Qwest is doing this right now in the Arizona Valley. Oh my god, "12MbIT service," whoop ti dooo!"
I fall in the low usage category in Finland and have paid a total of 8.52eur for all my mobile phone usage since November last year when I switched carriers. I commited to 24 months at 0.66eur/month and I get 50 minutes of normal price calling as bonus. The base cost has thus sofar been 5.94eur and the rest has been mostly international use. Though I went a few minutes over the 50 one month, those calls being billed at 6.9 cents/minute.
Normally one does not commit to any term and can switch carriers in about a week, as I have done couple of times. So the free 50 min/month is an attempt to get some heavy users to get locked into their service.
Seriously, I don't know what he's smoking. I pay roughly the same in income tax here in the US (once you add up federal, state and things like social security tax) as I did in the UK, but also get to pay for medical. Awesome!
---- Den ene knappen er powerknapp, den andre er Bender voice knapp "Bite My Shiny Metal Ass"
But providers often don't cover sparsely populated areas, even when they are licensed to do so. They might cover only the major highways in the area, or provide just enough coverage to meet any licensing requirements.
The carriers with the best rural coverage might cost more - but is this because their costs are actually higher, or because their customers are willing to pay more for better service? Verizon has a distinct advantage over the other carriers in the USA, as they have more 800 MHz licenses than the others - so they can build less towers to provide usable service in rural areas.
In the US, the monthly fee includes:
So we pay more, but we get more. You have to buy your own phone, and you have to pay to call mobile phones. Also, our plans don't have to be so expensive. By way of example, I have a 4 line family plan that costs $31.87 per line. All 4 lines have:
Now I look at what I get for $31.87/mo vs. what you get for 29 Euro/mo, and I am not seeing why I should be so outraged. Which is a shame really, because I do so enjoy getting worked up.
They don't grade fathers, but if your daughter's a stripper, you fucked up. --Chris Rock
Finland (data from https://www.cia.gov/library/publications/the-world-factbook/geos/fi.html):
Total area: 338,145 sq km
Population: 5,250,275 (July 2009 est.)
Urbanization: urban population: 63% of total population (2008)
US (data from https://www.cia.gov/library/publications/the-world-factbook/geos/us.html):
Total area: 9,826,675 sq km
Population: 307,212,123 (July 2009 est.)
Urbanization: urban population: 82% of total population (2008)
To directly compare these two countries first we will determine the population density.
Finland = 5,250,275 people / 338,145 sq km = 15.53 people per sq. km.
US = 307,212,123 people / 9,826,675 sq km = 31.26 people per sq. km.
If the cell carriers deploy towers which cover the same area then each tower will serve almost twice as many potential US customers as Finnish customers. This is discounting that a larger percentage of the US population lives in an urban environment. It is true that a rural infrastructure build out would be more expensive per potential customer; Finland would have the higher cost to bear in this case (63% vs. the US 82% of the population).
If we use a cell tower that will cover 1 sq. km of area that would be placed in an urban zone of each country it would cover:
Finland = (63% x 5,250,275 people) / 338,145 sq km = 9.78 urban people per sq. km.
US = (82% x 307,212,123 people) / 9,826,675 sq km = 25.64 urban people per sq. km.
I don't see how the argument of infrastructure build out is the defining factor in the order of magnitude in plan pricing seen between Finland and the US.
I don't mean to sound cold and cynical - but I am, so that's the way it comes out.
Fuel taxes are dramatically higher in Europe. For example, in Norway, 63% of the price you pay at the pump is made up of taxes. In the Netherlands it's 68%. Those numbers seem pretty typical, according to Wikipedia at least.
-William Brendel
Did anyone look at the spreadsheets? What the hell are the numbers in them even supposed to be? It says "tax included" thereby implying that they are monetary amounts, but they don't say what unit, and the total for the US in the low usage one for August 2008 is 279.52. 279.52 of what units for what? For one month? Beats me.
Does anyone know what the numbers actually are?
Russia: 17,075,400 km^2. Population density: 8.3/km^2
Phone plans: still cheaper than in the US.
First off, incoming calls are not free, well it depends on the carrier, but ATT, Tmobile, Verizon and Sprint, you pay for both incoming and outgoing.
I clearly wrote "free to the caller". In Europe (and much of the rest of the world), the caller pays a fee to call a mobile phone. In the US, it costs the same as an ordinary call (typically free).
Your free calling statements, are not really free, they are built into the pricing structure of the plan, another reason why the plans are more costly.
Of course they are built in. That was the whole point of my post was to point out all the extras that are included in the cost of the line.
Unlimited SMS is not free, its a addon that you pay for, ATT for example is $20 for unlimited, $5 for 200
With Sprint, it is not an add-on and is included in the cost of the plan. The $31.87 figure I quoted was the cost of my plan per line.
Data is not unlimited, it is capped at 5G a month for nearly all of the cellular providers in the US (Soft cap for now)
It's not like OP's plan is "unlimited" in the strictest sense. Every data plan on the planet is limited by the throughput limit of the device itself. With Sprint, the soft limit is pretty soft. If you use over 5GB/mo for three months straight, you'll get a politely-worded letter to please get a data card. Ooooooh. Scary!
Also, the price point does not change if you bring your own phone to the table rather then paying for the subsidized one.
This is true. But if you're bringing your own device, why not activate it on a prepaid plan and get unmetered (there, I didn't use the "unlimited" word. Happy now, Herr Pedant?) voice/data/SMS for $45/mo or metered airtime @ $0.10/min?
They don't grade fathers, but if your daughter's a stripper, you fucked up. --Chris Rock
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. ...and Texas is two of them.
A Texan, an Arizonan, and an Alaskan were sitting around the campfire talking about how tough their respective citizens were. The The Arizonan says "boy, the average guy in my state sits in the 120 degree sun on a roof putting shingles on."
The Texan says "In Texas we're bull riding at age ten!"
The Alaskan didn't say anything, he just stood there stirring the fire with his dick.
Free Martian Whores!
I am not a heavy phone user. I never bothered with a data plan. I pay $40 per month for a minimal voice plan. Most of the time I'm with my laptop, so I don't pay extra for those features. It's also the most important reason I never bothered with an iphone.
But it could change. I'd be interested in getting all those if the fee is reasonable. But it is not. So I don't use those features. I think I am not alone. On the other hand the mobile market needs more people to use these features, which would boom related technology (software/hardware) innovations. In the end, the country loses.
Swedish heavy metal: Lots of excellent black metal, power metal, symphonic metal, death metal and Opeth (whatever they fall in)
U.S. heavy metal: Thrash and some of everything else, for about the same total good quality output. But we have 30 times the population.
Now, Finland has at least as much good heavy metal production as Sweden (no Opeth, but Sonata Arctica is almost as good), and they have a little more than half Sweden's population.
The companies bought bandwidth from the government with borrowed money. They now have to pay back. Just consider it another tax. Also the government refused to standardize. We are now stuck with a bunch of incompatible networks which prevents real competition between service providers. The cheaper countries did not do this. They lease the bandwidth for reasonable sums and set standards so that providers really compete. Hence lower prices.
In India, cell phone rates are the lowest in the world. I spend around 200 Rupees (47.97 Rupees=$1) per month for my cell phone service. I get unlimited free SMS to local cell phone numbers. Incoming calls are free. There are no such things like contact and disconnection fees. There are rate cutter options. If I recharge with 49 Rupees card, I can call any same service number at 10 paisa (100 paisa=1 Rupee) per minute.
Love me or leave me. Hey, where's everybody going?