Why The U.S. Has More Minutes Of Use Than Others
It boils down to a simple equation: minutes are cheaper here. Not just on mobile phones, but on landlines, too.
One of the holdovers from the days of Ma Bell in both the U.S. and Canada was the concept of free “local” calling. I have to suspect that automated switching made local calls, in effect, free. Billing long distance calls in the early days of the Bell System required a human operator to even connect the call, much less log it for billing. Local calls required no such effort.
This custom has survived even to present-day. When mobile phones entered the scene, the FCC basically said that mobile phones had to exist within the same numbering space as landline phones. Various attempts by implementing such a system in the U.S. have been struck down by the courts. Conversely, it does not cost the caller any extra money to call a mobile phone.
While some people view the wireless-subscriber-pays model as unfair and ridiculous, it does have some interesting side effects:
- Telemarketing to a mobile phone is illegal, much like sending junk faxes are illegal. The recipient bares a cost to receive those calls, which is the reasoning for making these calls illegal.
- Market pressures have forced the cost-per-minute for wireless calls–both inbound and outbound–down. It’s now possible to get flat-rate nationwide service through all of the major carriers in the U.S. for around $100 a month, or you can get a ridiculous amount of minutes in bundles for less per month.
- People use mobiles and landlines interchangeably in North America. Because there is no cost differential, people don’t even think twice about calling a mobile phone! This lack of cost-differential between landline and mobile phones delayed the desire for SMS in North America–calling was easier and just as cheap!
In almost all European countries, it costs more to call a mobile phone from a landline–substantially more! In fact, just looking at the rate sheet for voip.com for the UK, the cost of a call to a UK mobile can vary from 5.6 cents a minute to 33.5 cents a minute! Your carrier may charge you a different rate, but when you compare this to calling a UK landline, which can cost between 1.2 and 1.6 cents a minute, there’s clearly a substantial difference in cost–one that is not entirely justified!
What the European mobile network operators have done is essentially balkanized the mobile part of the telephony system with a higher cost structure. As a result, people don’t make calls nearly as much in Europe. Text messages are far cheaper.
Here’s a novel concept, European mobile operators. Lower your inbound call rate if you want to increase mobile usage. Bring your charges down to the same level as the landline!
Am I right? Which do you think is better, calling party pays or wireless subscriber pays? Leave your thoughts in the comments.
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Comment by spg
in most european countries telemarketing is illegal to all phones. it happens to be a very American phenomenon. we are actually subjected to all sorts of marketing and advertises at many times the quantiity of our friends in other parts of the world.
as for the paying model. 10 years ago a was a major fan of the european model. in particular i really liked the prepaid phones than after the initial expense you never had to pay anymore money to keep active. at the time there were people at all levels of society in europe who had cell phones; the sdame was not the case in north america. this was being driven largely by prepaid phones that were only used for incoming calls. 10 years later i see that the price has dropped far more dramatically in countries with called party billing. this has made me re think a little.
if the european operators lowered there inbound rates would they still be able to offer accounts that do not require any recurring payments from the SIM card holder?
Comment by radical24
It’s kind of nice to have no incurring charges when someone else calls your mobile. Such is the way of life in Europe. It is also a fact that their packets are much more expensive than here in the U.S. We get ‘charged’ for incoming and outgoing mintues here in the U.S. the mobile markets continue to grow perhaps at a slower rate but non the less it is still a moving forward model. In Europe you pay for everything, in some restaurants even for piece of bread. It’s a different culture and one that takes for granted that you pay for all kinds of at times ridiculous services. Demand of consumer and the market as it continues to grow will no doubt introduce novel, more cost efficient and more consumer appealing ideas. Time will tell when.
Comment by PhoneBoy
They’re able to do it here in North America, why wouldn’t they be able to do it in Europe as well? Buy $100 worth of minutes on T-Mobile or AT&T, don’t give them anything for a year.
There’s nothing wrong with calling party pays per-se. What is wrong with it is the usurious rates the mobile operators are charging for no good reason other than they can. Make the pricing far more competitive, and voice usage in CPP countries will improve.
Comment by PhoneBoy
@radical24 As you say, it’s a different model. The usurious call charges drove SMS adoption in Europe. Without that pressure, and the lack of interoperability between carriers until several years ago, there wasn’t as much motivation for SMS.
Comment by spg
i am not so sure about the usage growth you speak of. i lived in several different european countries. the telephone culture is very different. even with super cheap local landline calls a call that lasts more than 3 minutes is considered very unusual. people simply do not have conversation on the phone. phones a to get across a quick point. for example a typical call i would have had in europe to meet at a pub or cafe to talk about a certain topic. here in the US the whole conversation may take place on the phone without the meeting ever happing. the reports that i have seen covering the prior rate drops in europe suggest a combination of calls moving from landlines to mobiles and of lower total monthly expense for users; but not a large increase in total phone calls(landline and mobile combined)
Comment by PhoneBoy
@spg the big difference in North America is that local calls have ALWAYS been cheap. In Europe, you have decades of getting ripped off by the incumbent telcos and mobile network operators working against you. Even if calls suddenly become cheaper, you have years and years of ingrained behavior to MINIMIZE the use of the phone.
Comment by Andrew3000
Are you looking at actual usage, or the size of the bundles on offer in each market? I have lived in Canada and Europe, and have experienced both environments. Personally I think the calling-party-pays system has its advantages, but I also get annoyed with it because incoming international calls are costly for those who need to reach me. But at the same time, my mobile number does not need to change when I move cities, and you always know when you’re dialling a mobile number because of the dedicated numbering ranges.
On the other hand (historically), I think North American users had fewer incoming minutes than those in the EU, because they had to pay for them. This led to a culture of leaving the mobile at home unless you were expecting a call. I get annoyed when I’m trying to reach North Americans and it takes them 3 days to respond to an SMS because they “left the cell in the car”. Keep in mind that the super-sized US bundles need to have all those minutes to take away the sting of paying for an incoming call - something which is an alien concept to a European user.
In-country mobile-to-mobile calls are not that expensive in Europe (even though there have never never been domestic “long distance” charges), since the high interoperator termination charges tend to net out in the long run. A lot of users don’t even bother to call landlines any more, so the usage is all within the mobile numbering plan.
To look at this from another angle, you could try comparing penetration rates, contract durations, and the state of the handset market on both sides of the Atlantic.
Comment by PhoneBoy
@andrew3000 The dirty secret is that, technically, you don’t need to change your mobile number when you move in the U.S. either. I maintain a number in a different geographic area from where I live because of the number of people that have my mobile phone number. The only time you might have a problem is if you change carriers and use local number portability.
I think for the older generation, your observation is correct: people tend to leave their phone someplace else because of the historical costs. For the younger generation, the cost is not an issue. I take my phone everywhere and feel naked without it.
Penetration is certainly one valid statistic. Laws either forbid or severely restrict contract length in some EU countries, so that’s not really a valid comparison.
Comment by spg
i had not thought about it in a while. but it was very true 5 to 10 years ago that in north america lots of people head cell phones for ‘outbound calls only’ and never gave out the numbers. on the other hand in europe lots of people had cell phones only ‘to be reachable’ and would never use them for outbound calling. this was particularly true in both places for prepaid.
Comment by PhoneBoy
Exactly, the problem of asymmetric communication mechanisms.