North Americans pay more for cell phone service
Cell phone users in the U.S., Spain, and Canada pay more for mobile phone service than cell phone users in other parts of the world, according to a survey published by the Organization for Economic Cooperation and Development.
The OECD surveyed mobile carriers in its 30 member countries. The report showed on average how much consumers spend over the course of a year.
For a consumer subscribing to a medium-use package that provides about 780 voice minutes, 600 short text messages, and eight multimedia messages, the survey found that the monthly price of service ranged from $11 a month for service in the Netherlands to $53 a month for service in the U.S. as of August 2008.
On a yearly basis, American cell phone users are spending about $635.85 on cell phone service. Spanish cell phone users pay about $508.26 for the year. And Canadian cell phone subscribers pay about $500.63. By contrast people in the Netherlands and Finland pay the lowest amount for cell phone service, only $131.44 per year. And cell phone users in Sweden only pay $137.94 per year.
Prices for mobile phone service have steadily been decreasing over the years. The survey indicates that between 2006 and 2008 mobile phone voice prices fell on average about 21 percent for low-usage consumers, 28 percent for medium usage, and by about 32 percent for subscribers with the highest consumption patterns. Text messaging continues to be a lucrative business for mobile operators, the report also says.
But the results of this survey also highlight the continued gap between what cell phone users in North America pay versus what they pay in other parts of the world, such as in Scandinavia. This shouldn't come as a huge shock given that Europe has typically offered cheaper domestic plans than American providers. But it's somewhat surprising that Spain ranked as the second most expensive place in the world for mobile service.
It is likely that the U.S. will continue to be the most expensive country in the world to use a cell phone. As carriers build faster 4G networks, they are likely to increase prices on higher-end services. But if the economy continues to get hammered, more consumers might turn to lower-cost prepaid services that offer flat-rate pricing.
These plans have become more popular recently. And there are signs that increased competition may drive down prices on these services. But even though they offer a good value, they are still not used by the mainstream. And most U.S. cell phone users subscribe to a post-paid plan.
Marguerite Reardon has been a CNET News reporter since 2004, covering cell phone services, broadband, citywide Wi-Fi, the Net neutrality debate, as well as the ongoing consolidation of the phone companies. E-mail Maggie. 
What a really stupid study and article...
Your comment is dead on and was my first thought as well. Many Europeans buy the handsets at MSRP and have the freedom to choose carriers thus causing competition for rates. Here in the US the handsets are subsidized by particular carriers locking in price and reducing choice (In other words removing freedom).
So yes, this study ignores that they're paying $500-700 for their smartphone and then having the "freedom" to save $15/month for the next two years. The other major thing they ignore is that Europeans use their phones very differently. Namely, they use them as two way pagers.
They either buy the most barebones minutes package they can with free texts included, and then text everything instead of talking, or they do "pay as you go" plans where they put a bare minimum of minutes on there and then just buy huge data/text cards which get cheap in quantity just like those old 5000 minute phone cards.
If you want real service improvements, get rid of the ridiculous hoops you have to jump through to get FCC permission to offer cell service. Then you'd have companies like Google, Microsoft, and who knows who else jumping in to undercut the traditional "telecom" companies. Instead, politicians treat it like another cash cow to grab their cut of and control, so you have a million layers of licensing and half a dozen idiotic taxes and fees built in.
Or are you saying you should get a $600 smart phone for $49, AND a barebones plan? IE buy cell service with a $2 profit margin after somebody subsidized you $550 on the hardware--how long do you see that business model lasting?
I'd prefer not have the FCC interfere (even further) to dictate how companies can offer their products, and crush innovation in the process. How do you think we got from a $500 impossible-to-get Razr to a $49 commoditized one? Some day iPhones will be $49 apiece and early adopters will be paying $600 for something 10x as powerful--unless you have government thugs break the back of innovation to try to give you something for less than its cost.
US Population est. 307,212,123 land area = 9,826,675 pop/la = .032 3 people per kilometer
Sweden Pop est. 9,059,651 land area = 450,295 pop/la = .050 2 people per kilometer
It may be just a promise but the idea to roam freely is attractive and possible.
I am waiting to see what the w@son will bring to the table when it is launched.
Ive seen your name around and you're the only one i see talking about the W@son phone..
I think the carriers also get more customers to pay for the maintenance of the networks. I'm not sure how the population density of sweden compares with US.
A quick lookup in wikipedia shows
US population - 300 million
Sweden population - 9 million
Actually, the population density of Sweden and the United States are comparable, which is why I like mentioning Sweden when we talk about HOW SUCKY U.S. BROADBAND INTERNET IS.
Broadband Internet service in much of the world is pretty inexpensive. The Swedes basically get something like ten times the speed at a lower price than Americans do.
American cellular carriers suck. American broadband providers suck. The only place that has reliably superior Internet connectivity are major American universities.
Why are we still paying for incoming calls in the US?
And why is there not (much) more competition here?
Europe: Don't pay for incoming calls, but if you are the one making the call it can get expensive quick.
US: Pay for incoming, but many many "all you can eat" plans, such as MyFav 5 or unlimited calls from your land line to mobile phones.
Being in both places, I can tell you Americans talk much longer and more often on their mobiles.
First, quote from the article:
"For a consumer subscribing to a medium-use package that provides about 780 voice minutes, 600 short text messages, and eight multimedia messages, the survey found that the monthly price of service ranged from $11 a month for service in the Netherlands to $53 a month for service in the U.S. as of August 2008."
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Marguerite, this is misleading the reader (who is likely from the US) to think that this is 780 minutes per month, which it is not, it is PER YEAR.
Second, quote from study's website:
"Comparing prices on a medium-use basis for a package of 780 voice calls, 600 short texts (SMS), and eight multimedia (MMS) messages, the survey found monthly prices ranged from 11 to 53 US dollars across countries as of August 2008.
The Communications Outlook compares domestic prices across countries for low-, medium- and high-use mobile phone users. The following tables show annual prices in US dollars broken down by fixed subscription costs, calls and messages:
? Low use (360 minutes per year of voice calls, 396 SMS; eight MMS):
http://dx.doi.org/10.1787/622303805401
? Medium use: http://dx.doi.org/10.1787/622318882036
? High use (1680 minutes per year of voice calls: 660 SMS; 12 MMS):
http://dx.doi.org/10.1787/622320081807
"
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Low use is 360 minutes PER YEAR? less than one minute per day. That is not low usage, that is NON USAGE in the US.
And I should note that the price for high usage and medium usage in the US does not change. So why in the world would someone in the US pay for medium usage when they could just pay for high usage instead and get almost twice as much bang for the buck? Latching on to the medium usage comparison also sensationalizes this result. the US is not the most expensive for high usage.
Third, I have a plan with ATT in the US and one with AU in Japan, and I can personally confirm that low usage in Japan does NOT cost $168.41/year. AU is the cheapest provider in Japan IFAIK. Their cheapest plan is 1961 yen/MONTH or about $235/Year (I just used $1 = 100 yen for simplicity). For this you get 25 minutes/MONTH (300 minutes/YEAR).
While this is in the ball park of the 360 minutes for $168.41 per year figure presented in the study, it is significantly more money for significantly less minutes.
And in Japan, like Europe, you do not pay for incoming calls.
Let's get a real study on cell phone usage - oh yeah, one that is actually available to read even if you are not a journalist - though I wonder how many journalists actually read the study (hint hint)
- by PeteyBrian August 12, 2009 10:03 AM PDT
- It was funny to view telecommunication industry executives telling Congress under oath that phone exclusive carriers under "subsidized" plans are better for the consumer. The consumer doesn't have many options other than to go to subsidized plan pricing.
- Like this Reply to this comment
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- by brian.lee August 12, 2009 1:35 PM PDT
- "it makes no sense to buy an unlocked iPhone at market price, then go to another carrier with the similar costing plans as a subsidized plan without a phone."
- Like this
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Showing 1 of 2 pages (41 Comments)You can go to the Apple store, but cannot just buy the iPhone - you must buy the AT&T plan as well. As bonesbautista stated, it makes no sense to buy an unlocked iPhone at market price, then go to another carrier with the similar costing plans as a subsidized plan without a phone.
In many parts of Asia, you buy your own phone using standard SIMM technology and the carriers compete for your business. No contracts. You can buy minutes and hours of data very inexpensively. Service is just fine.
The only time it would make sense if you travel alot and stay in different countries for long periods say months... I carry 2 iPhone one is unlocked... and the second is from my home country. I may be the rare exception but I don't have any other options really also ATT doesn't offer data with unlocked iPhones just so they can get you on contract.