Canada, the U.S., consistently among the top in cell phone service pricing

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News Posted: Sun, Oct 17 2010 2:36 PM
We frequently hear from our Canadian friends about how much they are reamed for their cell phone plans. The New American Foundation's Open Technology Initiative (OTI) has done a study and confirmed that. The U.S. is second most expensive, but trails by quite a bit. The report's conclusion, unsurprisingly, is that those countries with the most regulation and the most competition have the lowest rates.

A cell phone package that includes text, data, and voice would cost users in Canada $67.50 (in USD), the study showed. The U.S. was second, with users paying at least $59.99. On the low end, India and Hong Kong came in with the cheapest complete plans, at $12.90 and $13.50 respectively.

In terms of voice minutes, Canada was the highest, with $0.31 per minute. The U.S. was second with $0.18 per minute, and the U.K. had $0.17 per minute. It should be noted that the U.S. and Canada's per-minute rate was doubled in the report because customers pay for both incoming and outgoing calls, unlike every other country. On the low end, India and Hong Kong came in with the lowest per-minute rates, at only $0.01 per minute, postpaid. The full study also covers prepaid plans, by the way.

For postpaid text plans, the U.K. moves to the top, with $7.70 for 75 texts per month (or $0.10 per SMS) with the U.S. a close second at $5.00 for 200 SMS messages per month (or $5.00 for 100 texts sent, since U.S. customers have to pay for sent and received texts). On the low end is Sweden at $17.80 for 5500 SMSes ($0.003 per SMS). Some other countries charge consumers are only by usage, yet don't give them exorbitant pricing (as a per-text plan in the U.S. would be). For example, both India and South Korea charge $0.01 per SMS sent, while Japan charges only $0.003 per SMS sent.

In terms of unlimited data plans, the U.S. is finally in the middle. The U.S. offers an average of $29.99 per month, cheaper than Canada ($72.90/month), Japan ($52.60/month) and Hong Kong ($38.00/month). However, Sweden offers much better unlimited data plan rates at $13.80 per month, followed by India ($19.00/month), and Taiwan ($26.60/month).

Tiered pricing is only just beginning in the U.S. (AT&T, ahem) and as such the U.S. offers a rate of $15.00 for 200 MB ($0.08/MB). Japan is at $4.70 for 0.5MB ($9.40/MB), much more expensive. However, compare the U.S. rate to India's, which is $2.10 for 5120MB ($0.0004/MB), Sweden at $9.50 for 1024MB ($0.01/MB), U.K. at $7.70 for 5120MB ($0.002/MB), South Korea and Taiwan at $12.00 for 500MB ($0.02/MB), Denmark at $17.00 for 500MB ($0.03/MB) and Finland at $8.90 for 300MB ($0.03/MB). You will blanch.

The report concludes as follows:
It is clear that some countries offer service at consistently lower prices than others. The United States tends to fall in a band of countries that charge higher prices to individual wireless consumers for everything except pure voice service where prices are comparable. Cost structures and business models undoubtedly vary as a result of the level of competition and innovation in each country and it is essential that in the countries that have high prices such as the U.S., we carefully consider additional steps that could be taken with respect to encouraging competition or imposing regulation such that the US becomes an engine of innovation for better and more competitively priced service offerings.
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rapid1 replied on Mon, Oct 18 2010 12:36 PM

To tell you the truth the funny part about this is that the cellular providers in the US limit there own market cap pretty oppressively. Yes; they charge both ways on communications and charge more etc, but if they did not the market would grow extensively making it more of a standard communication wise in the US. If they did that there financial gains as well as consistency would go through the roof. You also have to understand one thing. Supporting landlines costs extensively more in many aspects including adaptation, repair, manpower, land and other considerations as well. Wireless communication is so much more wide reaching as well as maintainable! It sounds like many things in America today shoot yourself in the leg before a foot race so you can expand your wallet because everyone will feel sorry for you and give you money to go to the doctor. Basically it makes no sense in many ways.

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