Why are call plans so expensive in the USA?

[TheAppleFairy]

Not in Korea and Japan, they had LTE before before we did.

There is a big difference with population density. Think about what it cost to build the infrastructure. Korea and Japan both have a huge population located on a tiny piece of land. They have millions of customers on just a small out of square miles. We have a large amount of square miles for just a few customers. It's mostly just as simple as that.

 

[aristobrat]

There is a big difference with population density. Think about what it cost to build the infrastructure. Korea and Japan both have a huge population located on a tiny piece of land. They have millions of customers on just a small out of square miles. We have a large amount of square miles for just a few customers. It's mostly just as simple as that.

South Korea is ridiculous. They average out to 1,308 people per square mile.
Japan averages out to 873 people per square mile.
UK averages out to 679 people per square mile.

US averages out to 90 people per square mile.

 

[TheAppleFairy]

South Korea is ridiculous. They average out to 1,308 people per square mile.
Japan averages out to 873 people per square mile.
UK averages out to 679 people per square mile.

US averages out to 90 people per square mile.

Exactly, I have lived in both Korea and Japan and I can tell you first hand the population is ridiculous.

Now think about what it cost to put up a tower and how much coverage each tower covers. When they have 10 times more people sharing towers to bring revenue back into SK telecom or Softbank, or NTT Docomo.

On a side note, it's not really cheap to make phone calls in Japan (especially between different carriers), but data is cheap. Right now my wife is in Japan with the kids and she said nobody makes phone calls anymore, they use an app called "LINE", because it uses data and data is cheap. She is charging her bill to our credit card, and it's about $30 a month.

 

[gnasher729]

I thought that $40 is actually expensive but before pointing that out I wanted to be sure of my ground and check that it did not include paying off the cost of the phone.

This proves my point. You pay $40 for an unlimited plan that reduces speed after 250Mb. The prices in the USA are so high you think this is a good deal. Please don't take that as an insult as in the USA it is good compared to the options you have. But compared against charges in Europe it is extremely high. For example I am in the UK I am on a plan that is totally unlimited on calls and data and I pay $24 (£15).

Nobody should be insulted at all, because phone plans are one of the very few things that are cheaper in the UK.

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- 97%-99% depending on the network

- on an iphone 5 my friend Dan next to me is getting 19Mbps on speedtest.net . This is using the advanced 3G network tech(double data rate) we have had for some time as a stepping stone pre 4G.

So he can get through 250 MB which someone mentioned in 105 seconds. Don't know whether to or to .

 

[Wahlstrm]

Sweden

Sweden used to be nice..

My contract costs me $30,50 per month.
It was $36,50/month for the first 24 months to pay for the "free" iPhone 4s.
Unsubsidized the phone was about $780 when I got the contract, so it was a nice deal.

In the contract I get $30,50 worth of call time with is about 600min it also includes 3000 free text messages (I use 5? the rest is iMessage ) and unlimited data which I use a lot of, about 30GB last month..

That was the good old days...

To get a "free" iPhone 5s and 20GB data (max anyone offers now) you have to spend about $80/month (calls included)..

= the prices (for people who needs a decent dataplan) have almost tripled in 2 years in Sweden..

If you can survive on 10GB you can still get a "free" iphone 5s for $40/month + what you spend on phone calls. = ****** deal compared to how it used to be.

Prices are ex.tax

 

[CTHarrryH]

Called capitalism - companies exist to make money and if they can they do. They will always charge as much as they can to make as much as they can. It is the American (and other country) way.

Let's not forget also that they have huge infrastructure costs including dial phone line networks that no one is using anymore but they can't get rid of and are still paying the capitalized costs + the cost of regulation. AT&T in one state I know tried to cut back on the local home line repair call centers and repair staff because usage had dropped so much - but the state wouldn't let them - since they are regulated they were forced to keep staffing levels way above what they needed.

So the American way and government.

And I'd rather have it that way than others although I'd love to pay less.

 

[mrichmon]

The land-area/population density and effective duopoly reasons previously stated are all true.

Plus, the issue of incompatible technology. Switching carrier in the USA usually means replacing your phone. Yes, there are tri- and quad-band phones but those have historically had limited availability.

Replacing a phone to switch carriers adds a barrier to switching. That barrier effectively reduces competition between carriers. It also increases network deployment costs. In countries that use compatible signaling there is reduced need to build out parallel network infrastructure that has been necessary in the USA.

 

[jav6454]

I don't buy the argument about a larger area to maintain. Surely larger area also equates to more customers to pay for the service.

[...]

True, but there is more "Out there" places where there is no people, but coverage is needed. Example, wide open ranges in rural areas and along every major Interstate. There is lots of area where people don't live, but the coverage needs to be there.

 

[ElectronGuru]

The US has at least 3 overlapping (redundant) antenna networks. Do we know how many these other countries have?

 

[rgarjr]

Part of the reason is demand. Pretty much everyone wants a smartphone nowadays, even small kids are sporting them.

 

[ShashankaN]

You should see the prices here in India it's less than 5 dollars a month. Quite literally everyone has a mobile phone and this is leading to heavy competition in mobile carriers

 

[Merode]

Wow, 45$ is a lot. In Poland with my plan, I have a limit of 57zł total monthly which is about 18$, and it can't go any higher. It includes local calls, messages and internet.

Well, it's a plan without phone so I bought my iPhone seperately (and saved tons of money, operators overpice them). The operator is a daughter company to french Orange.

I guess it's a one thing that's not cheaper in USA. ;-)

 

[nebo1ss]

Hmmm

UK: 0,093,788 square miles, 064 million people
US: 3,537,110 square miles, 317 million people

So knowing that neither the US or UK has literally every square mile covered with phone service, "in general" US cell carriers have 37x more land to cover, while the potential customer base is only 5x more.


Yeah, there is definitely some disparity there.

But after seeing how expensive the price of gasoline is in the UK, or how many home Internet connections "down under" are capped (to the point people on here have to worry about if downloading an OS X update will put them over), I guess you can sum it up as "you win some and you lose some".

On the issue of the Price of Gasoline in the UK. It is very high compared to the US but it is really an issue of how the Government chose to collect taxes. You will find that the major part of the per gallon cost of gas is going to the government in taxes. In the US Property taxes for example is significantly more expensive than the UK. However, again this is a matter of how you chose to collect taxes. In New York i was paying $25,000 per annum in property taxes and in Connecticut $17,000 per annum. I now live in London and pay $3,000 per annum in property taxes. There is also a misconception that income taxes is high in the UK compared to the US but I can assure you that by the time you pay Federal, State and in City taxes it is higher in the US. Just to balance the issue VAT or purchase tax is 20 percent in London and only 8 percent in New York.

 

[yeah]

By being forced to pay $70+ for 24 months? T-Mobile is moving to the right direction but it would be great if they can offer a basic $30 plan that gives us limited minutes and Internet.

T-Mobile offers a $30 100 minute, unlimited text and unlimited data prepaid plan. (2G speeds after 5GB of 4G/LTE speeds.)

They also offer unlimited talk, text and 500MB of high-speed data for postpaid customers for $50 a month for the first line.

 

[minimo3]

You can get unlimited talk, text and 3G data on republic wireless for $25/mth with no monthly contract. Is that low enough? If you don't like their hybrid service you have a plethora of MVNOs like h2o, straight talk and air voice. Most of them offer unlimited everything plans around $45-50. Bottom line is, customers have lots of choice.

 

[bjb.butler]

I am watching the CES coverage and there are many adverts for an AT&T call plan for unlimited calls for $45 and that doesn't even include unlimited data . They say it as if thats amazing. (I am from the UK).

A big reason is the size of the countries. The United States is about 30x larger than the UK, and has 5x the amount of people.

That is a lot of land of and people to cover, and in return, lots of towers, service, and infrastructure that must be paid for.

That being said, if you live in a decent-sized city, you can get unlimited talk/data/messages for $40~$50 a month through an MVNO

 

[blarivee]

T-Mobile offers a $30 100 minute, unlimited text and unlimited data prepaid plan. (2G speeds after 5GB of 4G/LTE speeds.)

They also offer unlimited talk, text and 500MB of high-speed data for postpaid customers for $50 a month for the first line.

I did not know they throttle the $30 unlimited plan. Do they also throttle for the postpaid unlimited everything plans?

 

[aneftp]

Cell plans are not expensive in the USA:

Why?

Most (greater than 60% are on family plans with subsides, and or have corp discounts also (88%).

Most non USA people don't realize that.

My total bill for 4 lines with ATT (all unlimited data (throttled after 5GB) with unlimited texts and essentially unlimited minutes (because of rollover and any mobile) is $210 (includes all taxes).

That comes out to around $52/line BEFORE THE SUBSIDY.

My brother pays something similar with verizon (his is $220 a month for 4 lines). Before the subsidy.

So the ones with single lines really get ripped off in the USA if they go with the bigger carriers. They are better paying full price for their and going prepaid ($30-50/month).

So I don't think cell service is that expensive in the USA.

Other countries don't have family plans with the built in savings as the USA.

 

[Badrottie]

Because Americans are making more money than anyone in the world.

 

[whitedragon101]

Cell plans are not expensive in the USA:

Why?

Most (greater than 60% are on family plans with subsides, and or have corp discounts also (88%).

Most non USA people don't realize that.

My total bill for 4 lines with ATT (all unlimited data (throttled after 5GB) with unlimited texts and essentially unlimited minutes (because of rollover and any mobile) is $210 (includes all taxes).

That comes out to around $52/line BEFORE THE SUBSIDY.

.

How much does it come to after subsidy?

 

[aneftp]

How much does it come to after subsidy?

The subsidy is around $17/month per line. (Around $400-450 subsidy over 24 months per line)

So if most on family plans are paying $50-60/ line a month before subsidy. That means around $35-45/line. Which is why I stated 60% are on family plans which offer huge savings especially combined with business discounts.

 

[thelookingglass]

The subsidy is around $17/month per line. (Around $400-450 subsidy over 24 months per line)

So if most on family plans are paying $50-60/ line a month before subsidy. That means around $35-45/line. Which is why I stated 60% are on family plans which offer huge savings especially combined with business discounts.

What's this subsidy you keep referring to? The subsidy towards the full price of the phone? That only holds water if you actually bought a phone through the carrier. The problem is that the rates DON'T change if you didn't buy a phone through the carrier or if you've for all intents and purposes already paid off the full price of the phone. That's why it's a ripoff. And that's why the T-Mobile plans are attempting to be more transparent in the cost of the phone vs the cost of the service.

The fact of the matter is, cell phone plans are expensive here because just a few large companies control the industry. Sure there are cheaper plans from smaller players, but the towers are controlled by a few companies so they can charge more or less what they want. It takes a player with strong financial backing, like T-Mobile, to shake things up a little bit in the industry. But you can see by AT&T's willingness to play ball in lowering prices that margins are really quite high. After a tower is constructed, there are some fixed maintenance costs of course over the life of the tower, but the rest is pure gravy for the carriers.

 

[aneftp]

What's this subsidy you keep referring to? The subsidy towards the full price of the phone? That only holds water if you actually bought a phone through the carrier. The problem is that the rates DON'T change if you didn't buy a phone through the carrier or if you've for all intents and purposes already paid off the full price of the phone. That's why it's a ripoff. And that's why the T-Mobile plans are attempting to be more transparent in the cost of the phone vs the cost of the service.

The fact of the matter is, cell phone plans are expensive here because just a few large companies control the industry. Sure there are cheaper plans from smaller players, but the towers are controlled by a few companies so they can charge more or less what they want. It takes a player with strong financial backing, like T-Mobile, to shake things up a little bit in the industry. But you can see by AT&T's willingness to play ball in lowering prices that margins are really quite high. After a tower is constructed, there are some fixed maintenance costs of course over the life of the tower, but the rest is pure gravy for the carriers.

The subsidy is toward the full price of the phone. So if iPhone is $650. On 2 year contract it's $199 (or even lower depending on sales). So $450 subsidy every 24 months.

Sure the price stays the same even after your contract has ended. But you can easily buy another phone and flip the phone on eBay or Craigslist and use the profit to subsidize your own plans.

My response is to why people think Americans pay too much for cell service. And for many of you in family plans. It's not transparent like you said. Tmobile is trying to be transparent.

But I am perfectly happy with what I am getting with ATT. My brother is perfectly happy with what he gets with Verizon.

Tmobile doesn't offer much for those already on Verizon or ATT on family plans. Especially in terms of coverage. Pricing is a wash for me. We all know overall coverage is better with the two big carriers.

 

[Dontazemebro]

The UK is smaller than Oregon or even Michigan for that matter. If the US was the same size we would probably have similar rates as well.

I think it's rather obvious why we pay more.

 

[gnasher729]

A big reason is the size of the countries. The United States is about 30x larger than the UK, and has 5x the amount of people.

That is a lot of land of and people to cover, and in return, lots of towers, service, and infrastructure that must be paid for.

Just saying: Phone plans in Luxembourg should be really cheap then, because they have so few towers…

5x the amount of people would give 5x as much revenue if the plans cost the same, so they can afford five times more cell towers. I wonder how large the _populated_ area of the USA is. You wouldn't put up cell towers where nobody is living.