Why are U.S. mobile phone bills so high? Lack of competition

“Both plans include a new iPhone 5S with 16 gigabytes of memory. Both require a two-year commitment and allow unlimited voice minutes and unlimited texting,” Anna Bernasek reports for The New York Times. “The plan offered by the British provider, Three UK, offers unlimited data and requires no upfront payment. With Britain’s 20 percent tax included, the plan costs 41 pounds a month, or $67.97 at current exchange rates.”

“The plan provided by the American carrier, Verizon Wireless, has an upfront cost of $99.99 and then $90 a month, not including taxes,” Bernasek reports. “Spreading the upfront cost over 24 months and adding 17 percent tax — typical for the United States — comes to $109.47 a month. But while the British plan includes unlimited data, the American plan does not. It includes two gigabytes a month, with an additional gigabyte free during an introductory period.”

“So why the $41.50-a-month difference in price? Several factors are involved, but an important one is regulatory policy,” Bernasek reports. “Britain has forced companies to lease their networks to competitors at cost. The United States has not, allowing a formidable barrier against competitors.”

Read more in the full article here.

[Thanks to MacDailyNews Reader “Lynn Weiler” for the heads up.]

41 Comments

  1. In Israel you can get unlimited voice to all cell numbers and land lines, unlimited text, unlimited internet and unlimited calls to land lines in over 50 countries for $28/month and this INCLUDES the 18% VAT! Israel has 8 million people and FIVE cell phone carriers. Why people in the US should be paying about 5 times what this small country pays is beyond me.

    Guess who’s pocketing the difference?

      1. If the country were uniformly covered with cell towers that would be a valid point. But it’s nowhere near covered. The best estimate I’ve seen is that coverage hovers around 65%. Look at
        the coverage maps online — and remember, the maps provided by the carriers are best-case, not the most accurate.

    1. Exactly, telecoms in US is in terrible state of monopolies not just MNOs.

      In many cities there’s only one choice of fast broadband provider, which is terrible for customers.

    1. So, in a socialist country, the government forces the major carriers to wholesale their bandwidth to competitors AT COST—i.e. at no profit—eliminating the advantages of building a large network for the benefit of their investors, thus giving a differentiating, competitive edge over their competitors. Why would any investor put money into building infrastructure for broadband if profits are NOT permitted and they are allowed to only recoup costs???? There are far more lucrative investments elsewhere. If you look deeper, I think you’ll find that British Telecom rides on the back of the taxpayers. It’s subsidized. In the US, it isn’t, and it’s taxed.

      1. I am sorry, but a socialist country has nothing to do with it. It is the European Union that forced countries to allow competitors to open their systems. And they did it not to please the “investors” but the customers. Just like they are in the process to lessen the charges on calls made in other countries.

        Believe it or not, but the investments going into coverage has not suffered at all. As to taxpayers money going into extending coverage, there is none. Taxes on profits are normal and there is a charge for VAT on all consumer bills going at an average rate of 21%.

  2. While I agree US mobile phone carriers fees are ridiculously high, they do have a much larger land mass to provide coverage over with many areas having a low population density. As a result, they’re maintenance costs per capita I think tend to be higher than other countries, especially in Europe and Israel. I still think, they can bring their costs down and still carry a nice profit if there was better competition in the US market.

    1. Pff. Shitty coverage in sparsely populated areas or areas with difficult terrain, such as deep valleys. If you happen to pass through, no luck. And carriers will still pocket your subscription money.

  3. Just bought a pay-as-you-go account in France from Orange 30 Euros a month for unlimited text, 1GB data, not unlimited calls but I’m a tourist for 6 weeks. I pay 4 times that for my monthly service at home in Canada.

        1. Do a web search for “the most hated company in Canada” and the first bunch of hits are for Rogers. They are nickel and diming Canadians to death and have the worst customer service while charging exorbitant fees.

  4. I think I am the last person without a smart phone. I just can not bring myself to letting the US TelCos rape me for the ridiculous amount of money they have everyone fooled into paying.

  5. Not that US carriers are not greedy, but let’s not forget the difference in land area of UK or Israel vs. USA. It takes substantially more resources to install infrastructure needed to provide cellular coverage over entire continent.

    1. …And if any of the carriers did indeed have coverage over the entire continent – or even just the USA portion of it – you might have a good point here. However, on a driving trip earlier this year between San Diego and a small town in Oklahoma, I had the opportunity to compare service with Verizon and Sprint. Neither carrier had good data coverage outside of populated areas, and sometimes even voice coverage was spotty, especially on Sprint.

      “Coverage” is a term that really needs to be defined before it’s used either to support or denounce rates from US carriers.

    1. That sounds a bit high. On T-Mobile, I have a family of four smartphone plans for $100 (on T-Mobile), and if all of us were paying off iPhone loans, that plan would be $180. The difference is, we have no data limit (and no overages). If anyone goes over 1GB of data in one month, speed is throttled, but data still works. Voice and text is free, as is data roaming overseas.

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