The PhoneBoy Blog

Do Americans Pay More For Wireless or Not?

29 Apr 2010

I find it funny that the CTIA folks invoke the famous John Adams quote about facts being “stubborn things” in their latest post, which is a response to a FreePress posting about how the CTIA doesn’t get it in regards to reclassifying broadband as a Title II service (thus giving the FCC regulatory authority over it). While I will not discuss the implications of that particular desire, some of the comments that went back and forth talked about what we pay for wireless service here in the US versus what they pay elsewhere.

Facts are funny because, while facts are facts (or as Ayn Rand wrote in Atlas Shrugged, A is A), how those facts are portrayed are debatable. And while I don’t have any unique facts to contribute to this discussion, I can certainly look at the facts differently:

Heavy Users Pay Less In The US: With the adoption of unlimited voice minute plans by all the major carriers as well as unlimited texting plans, I think it’s safe to say this segment of user is much better served by US carrier plans.

Total Cost of “Ownership”: The various reports that look at what everyone pays for wireless service do not take into account one very important fact: what the phone needed to use that service costs. Unlike a lot of other places, the US operators subsidize phones. A two year contract is part of the deal. What are the upfront costs for establishing service? What are the ongoing costs, and how much does the subsidy factor into those costs?

Cost Of Changing Providers: Related to the above: what happens when you’re unhappy with your current provider? What will it cost you to change? In other countries, the cost is effectively zero. They all use the same technology and getting your existing handset unlocked is generally a trivial exercise. In the US, even if you can unlock your phone, because of the different wireless frequencies and standards, changing providers often means buying a new phone–and agreeing to a new contract.

Voice-Only Customers Well Served: If all you care about is making voice calls, the current providers and plans do a reasonable job, whether you want to go prepaid or on a monthly plan. I’d like to see some monthly plans lower than $40 (which seems to be the floor for these plans), but I spend roughly $100 a year for my wife’s mobile phone usage thanks to prepaid T-Mobile. She is not a heavy talker.

Data-Only Customers Not Well Served: If you are a talker and on a monthly plan, you can typically add a $30 (or less) a month data plan to your service. One could argue with those prices, but at least it’s fairly consistent industry-wide. Data-only is a different story. On a monthly plan, at least $50/mo (if not more). Prepaid? Depending on the operator, it either doesn’t exist or is just as expensive as a monthly plan, and it’s tied to a specific device (e.g. a USB broadband device). In Europe? Prepaid data for short periods of time is easy to get and isn’t terribly expensive.

Texting: Like with voice, higher volume users are better served by US plans, which provide a relatively low cost per-text or are flat-rate unlimited. Low-volume text users in the US are charged an ever-increasing amount per message–sent or received. I remember when it used to be $0.10 to send a text and free to receive. Now its $0.20 a message–sent or received. Picture messages are much more. Europeans have much better pay-per-text rates than Americans do (and don’t have to pay to receive texts to boot).

Conclusion: Voice customers are better served by US operators. However, that is by no means the entire picture. Texting and data prices, as well as device acquisition costs also play a role in the overall total cost of our wireless service. These are facts the CTIA conveniently leaves out of their analysis.