US Has Some Of The Most Expensive Mobile Data Prices In The Developed World

from the pay-more,-get-less dept

While the U.S. wireless industry likes to talk a lot about how ultra-competitive it is, that’s generally not the case. While there’s more competition in wireless than in the fixed-line broadband sector (where there’s virtually no competition at faster speeds due to upgrade-phobic telcos and cable’s growing broadband monopoly), much of the competition in wireless tends to be theatrical in nature. Most of the major four carriers still usually outright refuse to compete on price, something you don’t get to have a choice about in a truly competitive market.

While T-Mobile’s disruption of the market (which has its limits) has certainly helped improve some of the worst aspects of US wireless (like long term contracts and international roaming price gouging), Americans have long paid more money for mobile data than most of the developed world. A new report out of Finland by Rewheel has once again driven that point home. According to the firm’s latest data, U.S consumers pay the fifth-highest rate on average per gigabyte for smartphone plans across OECD and European countries, and the highest prices on average for mobile data services provided via things like mobile hotspots.

All told, U.S. smartphone plans are more than four times higher than in most EU countries, and up to sixteen times higher across much of Europe:

The study comes on the heels of another important study showing that streaming video quality over U.S. networks is some of the worst quality in the developed world — in large part because carriers have begun erecting artificial barriers consumers then have to pay even more to overcome. For example, Verizon now throttles all video by default on its unlimited data plans to 480p (or around 1.5 Mbps), requiring you jump to a more expensive tier if you want streaming to actually work like the originator intended.

The new Rewheel study was quick to point out that whereas the US market should see more serious price competition due to having four major carriers, that’s not the case. US pricing tends to more directly compare to countries where there’s just three major wireless competitors and real price competition is somewhat suppressed. And while the study doesn’t explain why, we’ve noted repeatedly how much of this is thanks to the monopoly companies like AT&T, Verizon, and CenturyLink enjoy over the business data services (BDS) market that feeds everything from ATMs to cell towers.

In other words, even if you’re a scrappy competitor like T-Mobile that somehow manages to beat back the giants at spectrum auction and in DC lobbying, you’ll still need to pay them significant sums just to connect your towers to core networks, tightening your margins and driving up your costs. The FCC’s own data has indicated that roughly 79% of the BDS market is dominated by just one company, usually AT&T, Verizon, or CenturyLink.

Meanwhile, having regulators like Ajit Pai who are now no more than giant rubber stamps for industry interests means none of these underlying problems are going to be fixed any time soon. In fact, Ajit Pai’s “solution” to this problem was to literally redefine the word competition at the FCC to try and hide that the problem exists at all. With that kind of leadership, it shouldn’t be too surprising why US consumer mobile bills are so high compared to their European counterparts.

And researchers at Rewheel were quick to hint that it’s going to get worse with the looming merger between T-Mobile and Sprint, which actually will reduce the sector to three competitors, proportionally reducing any genuine incentive to actually compete on price. The firm was quick to pour a little cold water on the idea that merger mania and fifth generation (5G) upgrades will somehow fix the sector’s deep-rooted issues:

“Judging from the excessive gigabyte prices, US operators are charging today for 4G mobile broadband (see Verizon?s striking $710 100 gigabyte hotspot plan–in Europe 100 gigabyte mobile broadband typically costs between ?10 and ?20) merger promises concerning affordable 5G home broadband should be critically reviewed and if verified must be made binding.”

And this is all before you get to the real cost impact of killing things like the FCC’s broadband privacy rules, net neutrality, and other consumer protections, which were some of the only things standing between US carriers and even more aggressive, creative nickel-and-diming of American consumers. Should ISPs and the FCC win the court challenge to the net neutrality repeal next Spring, you can expect a hell of a lot more “creative” efforts to jack up US consumer bills even higher.

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Companies: at&t, centurylink, t-mobile, verizon

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Comments on “US Has Some Of The Most Expensive Mobile Data Prices In The Developed World”

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42 Comments
rwalle says:

Is there anything wrong about it?

I don’t see a reason this is worth an article. This is just a matter of the use of infrastructure and competition (ok, plus some dirty politics, but that is a small factor). Continental US as a country/territory ranks 179th in terms of population density, which is lower than many European countries, and people have known for a long time that the denser the population is, the more infrastructure can be shared and the lower communication costs. Also, in a country as large as the US, only the biggest companies can afford to build infrastructures in very low-density areas, thus less competition. This also applies to broadband Internet. Hong Kong, for example, is famous for their low Internet prices.

I think the discussion would be more meaningful if there were a graph for mobile data price vs population density.

I mean, this is just a natural result, and people have accepted it for years. There is hardly anything you can do about it.

football says:

Re: Is there anything wrong about it?

lower than many European
Excuses excuses. Those same countries still manage to have cheaper broadband, so your argument is really pointless.
If you were right it would be much cheaper in cities, where most people live anyway, but guess what, it’s still fucking expensive.

Anonymous Coward says:

Re: Re: Re: Is there anything wrong about it?

Except they can? Fedex/UPS do it regularly, and before walmart and amazon became so dominant even basic consumer goods changed in price depending on where you lived. They still do to a certain extent, though it’s rather less common. Even Walmart still does it in some areas (though with them increasing e-commerce sales that may go away).

Still, many other industries still do so widely.

ECA (profile) says:

Re: Re: Re: Is there anything wrong about it?

DEAR AC..
I was amazed at the prices and service in the metro and internet system..
Matching prices??

How cheap do you want..RURAL areas are CHEAP.. $35 for a 90 day plan..Internet 150mbps(SOLID, it dont change) $80..

There are 3 things that these folks control..and 2 of them a necessity.. Phone and internet, you have to have 1 of them, both is better.(and cheaper with the phone)

See you are missing something here..
These services pay by the county, and that makes them responsible for all the connections there.. If you have 1 big and 2-3 small companies…WHO FIXES THE LINES??
And thats the Bitch of the whole problem..
How do you work together or Place your OWN lines??

The funny part, is the ones that Own the services NOW, are not the ones that installed the service in the beginning, NOR the ones that fixed/adjusted/maintained it from the past. These are bill collectors. the customers are there and connected, they did little to nothing. all they need to, is maintain it…and it works.

Amos says:

Re: Re: anything wrong about it?

well, how does one determine what the price of anything “should” be ?

Prices are determined by Supply & Demand, in a market economy.

Prices are determined by Supply & Demand & Politicians, in a regulated-market economy.

U.S. and Europe have highly regulated Broadband markets with many many complex variables — so it is very easy to calculate what Mobile Data prices SHOULD be generally in any geographic area of U.S. or Europe (NOT!)

(If prices on anything are lower in Europe — then the U.S. prices on that stuff are obviously too high ??)

Anonymous Coward says:

Re: Re: Re: anything wrong about it?

Sure it’s not that the UK has multiple carriers (AKA competition) that makes their prices lower and the US (and Canada) prices are higher due to what is practically monopolies…. it’s government interference vs free market.

The whole lower prices where the competition is and higher prices where there is no competition .. that’s just a coincidence not to mention inconvenient for the US companies. Guess they will just have to bribe some more politicians to do their bidding again.

Anonymous Coward says:

Re: Re: Re:2 anything wrong about it?

…’highly regulated’ in controlling who may provide internet services and how they must do it (thru licensing, taxation, content controls and vast amounts of written regulations).
European governments are not champions of free-market economics; quite the opposite.

Check out the UK “Office of Communications” (ofCom) — its massive regulatory powers make the American FCC look like a junior high school student council. There’s also an intrusive “Department for Digital, Culture, Media & Sport” to directly regulate internet content. UK government proudly pursues web censorship, including political speech and social media. Last year that government pompously declared that all British citizens are born with a political “right” to high-speed internet service… and is officially forcing UK ISP’s to make that happen.

Atkray (profile) says:

Re: Is there anything wrong about it?

“Also, in a country as large as the US, only the biggest companies can afford to build infrastructures in very low-density areas, thus less competition.

No.

If this were true then the companies involved would welcome smaller companies and communities taking this on themselves instead of actively doing all they can to make sure they can’t.

Scary Devil Monastery (profile) says:

Re: Is there anything wrong about it?

I mean, this is just a natural result, and people have accepted it for years. There is hardly anything you can do about it.

That’s actually a long-disproven fallacy. It’s a lie which certainly helps US broadband/mobile providers with excuses as to why their service is shitty, but there’s no reason why consumers should accept that crap.

http://www.circleid.com/posts/20130201_myth_of_population_density_and_the_high_cost_of_broadband/

The key reason is that service costs are high because many providers have a monopoly situation and with the current lack of net neutrality standards, as the OP states, consumers are often forced into higher-paid tiers to obtain unthrottled services which should have run just fine on a lower-paid plan.

The US legal climate incentivizes ISP monopoly, not a free market. And that’s why the service is shitty and overly expensive compared to the EU.

rwalle says:

Re: Re: Is there anything wrong about it?

That link looks like some short blog post with just few counterexamples, rather than a careful systematic study. I am not sure I would buy that.

(I mean, of course there will be counterexamples. This is not a scientific argument, and I did not mean it in any absolute sense)

Anonymous Coward says:

Re: Is there anything wrong about it?

Something constantly being forgotten to be mentioned is that these same major telcos have time and again received federal funding to do just what they have not done, expand their services to outlaying regions. This is not to mention all the tax breaks that so many states, counties, and cities have also provided to increase capability as well as increase infrastructure. This argument fails on that point as well.

Just in the past year, major telcos have been sued over failing to provide expanded services they agreed to inside cities where these population densities are higher. Where the higher profits would be by this argument.

Anonymous Coward says:

Re: Is there anything wrong about it?

“…and people have known for a long time that the denser the population is, the more infrastructure can be shared and the lower communication costs.”

Which is why we find the lowest costs of any and all data services inside of Manhattan, Long Island, and the especially cheap San Francisco Bay areas.

Not to be confused with that overpriced data that you find in Chattanooga, Tennessee.

tracyanne (profile) says:

Re: Is there anything wrong about it?

“Continental US as a country/territory ranks 179th in terms of population density, which is lower than many European countries, and people have known for a long time that the denser the population is, the more infrastructure can be shared and the lower communication costs. “

Interesting, because both Australia and New Zealand have lower population Densities than The US, and lower population. Yet both countries have lower costs. While New Zealand is only slightly lower, Australia is considerably lower.

Anonymous Coward says:

"must be made binding"

merger promises concerning affordable 5G home broadband should be critically reviewed and if verified must be made binding.

They should add "for more than a few years". We’ve often seen the pattern that they promise to not screw people in the first 5 years after a merger, but then the condition expires and they’re still merged…

unregistered says:

Here in the UK i’ve got fttc unlimited for £46.99. ($60 approx). This includes the phoneline and value added tax. The fibre standalone price, without phoneline is £25.00.
The linespeed is rated up to 60mb/s, but in over 2 years of having it, the speed has never dropped below 53mb/s.
Your Government and regulators should be swamped with emails/snailmail decrying the state of what undoubably collusion in this state of affairs!
I truly feel sad that no-ones voice ever seems to be heard.

Gary (profile) says:

Love!!

Gotta love the astro-turfers shouting “Nothing wrong with this!” and “I love paying higher prices!”
Because nothing says “Paid post” like “Nothing to see here, move along!!”

Correction: Not all of them are astroturfing, some of the posters really believe that higher prices will free them from nasty government regulations so it’s all Ok. (Tinfoil hats for sale cheap!)

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