U.S. residents pay more for mobile phones than most of rest of the world

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Consumers in the U.S., Canada and Spain spend more money on mobile phone services than the remaining 27 countries in the OECD, according to a new report. Taylor Reynolds, an economist with the Organization for Economic Cooperation and Development and author of the report, says residents of the Scandinavian countries pay the least to use their phones.

5 Responses to “U.S. residents pay more for mobile phones than most of rest of the world”

  1. Jon Gordon says:

    Listener Fred H Olson sent this message to be via email:

    Your segment today was on a topic I’ve thought about a lot – I think the

    cost of cellphone use in the US is outrageous – SO I DO NOT HAVE a cell

    phone – it is simply too expensive. I’ve had mobile communications for

    about 30 years – an amatuer radio handheld. I still use it some tho

    cellphone use has made it less useful since fewer people use “2 meters”

    (wavelength). Your segment however got the pricing problem backwards.

    Yes the cost in the US is a result of the pattern of use BUT the pattern

    of use is a result of the pricing structure. The pricing encourages

    using lots of minutes. It is not possible to use a cellphone for a few

    minutes at a reasonable cost per minute.

    See table for ARRP “low cost” service provider at end.

    Note incredible cost per minute range.

    For me the ideal cost of making cellphone calls would be comparable

    to what it used to be to make payphone calls. Instead to get a reasonable

    cost per minute you have to sign a contract for a bunch of minutes per

    month. So since people buy plans with lots of minutes, they use them.

    Even the prepaid phones have a minimum use since the prepaid

    amount has to be used in a certain period of time – so you can not for

    example prepay for $10 worth of calls to be used over 6 months.

    (I would like to make very few calls compared to what most people with

    cell phones in the US make.)

    My study of this was a while ago and not comprehensive, I wish I had a

    more thorough study of it.

    Some questions that would be of interest:

    What is the cost per minute range of packages available?

    What percent of minutes that people pay for do they use?

    Based on that what is the average cost per minute people pay?

    I refer to the way cellphone service is sold as a racket and most people I

    mention this to agree.

    Fred

    8/14/09 ARRP “low cost” cellphone servicefor zip code 55411

    https://www.consumercellular.com/CartSystem/PlansAndLines.aspx

    Plan Name Monthly Included Add’l Time average **

    Fee Minutes Cost/Minute Cost/Minute

    Anywhere Casual $10.00 0 $0.25 .25

    Anywhere 250 $20.00 250 $0.25 .08

    Anywhere 500 $30.00 500 $0.25 .06

    Anywhere 1000 $40.00 1000 $0.25 .04

    Anywhere 1500 $50.00 1500 $0.25 .03.33

    Anywhere 2000 $60.00 2000 $0.10 .03

    ** calculated and added by Fred not shown on web site.

  2. Dean Blevins says:

    Mr Gordon, a good follow-up to this story might be the effort by David Pogue to “Take Back the Beep” http://www.nytimes.com/2009/08/13/technology/personaltech/13pogue-email.html?_r=1&8cir&emc=cira1

  3. Barry says:

    We really listened to your podcast about buying a new phone.

    We also chose the My Touch. But they go back to the store today. I want the online experience — but I don’t like Google being at the heart of it. I know most people don’t care about this but I really don’t like Google keeping records of every time I buy a book, eat a burger, fill my tank, see a friend and turn a page.

    I don’t know what I’ll get — probably a Blackberry. iPhone is definitely out.

  4. Jon Gordon says:

    I certainly understand your concerns.

    I’ve basically decided that to live my life without be tracked by corporations like Google is almost impossible. One would have to live a very unusual, off-the-grid kind of existence. That’s just not me. So I’ve just sort of given in to it all. That’s unfortunate but possibly better than being a hermit. 😉

  5. Bruce says:

    My wife and I have prepaid cell phone plans from T-Mobile. They have a loyalty program known as Gold rewards. After purchasing $100 in refills (either all at once, or over time), the expiration period is one year, and purchasing additional refill minutes extends the period by another year. A $100 refill works out to 10 cents/minute call time, and my usage is somewhere around $100-130 / year, about comparable to the average mentioned in the broadcast. My wife, on the other hand, probably uses about 200-300 minutes a year, and because I bought both of us $100 refills initially, I have been buying her an annual $10 refill card, which gives her a blended per minute rate of 11-12 cents a minute. While it is a heavy front-end load, averaged out over the 5-6 years I expect will exhaust her balance, her average cost of service will be somewhere on the order of $30/year. I think for most US mobile carriers, the cheapest post-paid plans start around $30/month, with something like 400 minutes per month. No doubt Americans are using more minutes when their plans have maximum “free” airtime of 400-1000 minutes (or unlimited), so they feel like they are wasting money if they use substantially fewer minutes than their limits.

    Our phones are unlocked Palm smartphones that replaced our dying PDAs, but we got the SIMs for them by buying a cheap prepaid phone with a little time for about $30. Get a “free” phone with a contract, and the contract will probably run much more than $30/month because the contract requires the buyer to purchase a lot of add on features. I wouldn’t mind being able to access the internet once in a while from my phone, but I’m not willing to go from paying about $8/month with my prepaid account to $60-90/month for my occasional use. T-Mobile’s prepaid comes with a couple of news sites and unofficial access to a few Yahoo! services like driving directions.

    In the UK, there’s a lot more competition with the prepaid plans, it’s common for the carriers to offer things like free instant messages or free minutes to other phones in the same network for the weekend if one refills on Friday, and unlimited data for $1-$2/day. I suspect the percentage of users with prepaid plans vs. postpaid is much higher there and in Europe, and paying per minute instead of a flat rate with a maximum affects the way they use the phones.