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.
Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.
Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.
While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.
–The Techdirt Team
Filed Under: ajit pai, broadband, data, fcc, wireless
Companies: at&t, centurylink, t-mobile, verizon
Reader Comments
Subscribe: RSS
View by: Time | Thread
Is there anything wrong about it?
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.
[ link to this | view in chronology ]
Re: Is there anything wrong about it?
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.
[ link to this | view in chronology ]
Re: Re: Is there anything wrong about it?
Your argument is specious
[ link to this | view in chronology ]
Re: Re: Re: Is there anything wrong about it?
Still, many other industries still do so widely.
[ link to this | view in chronology ]
Re: Re: Re: Re: Is there anything wrong about it?
[ link to this | view in chronology ]
Re: Re: Re: Is there anything wrong about it?
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.
[ link to this | view in chronology ]
Re: anything wrong about it?
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 ??)
[ link to this | view in chronology ]
Re: Re: anything wrong about it?
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.
[ link to this | view in chronology ]
Re: Re: anything wrong about it?
In what ways?
- ensuring no competition?
- allowing cramming?
- do not prosecute their activities?
Just what do you mean? Certainly not in the way it was implied.
[ link to this | view in chronology ]
Re: anything wrong about it?
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.
[ link to this | view in chronology ]
Re: Re: anything wrong about it?
As if the US is.
[ link to this | view in chronology ]
Re: Re: Is there anything wrong about it?
[ link to this | view in chronology ]
Re: Is there anything wrong about it?
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.
[ link to this | view in chronology ]
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_broadba nd/
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.
[ link to this | view in chronology ]
Re: Re: Is there anything wrong about it?
(I mean, of course there will be counterexamples. This is not a scientific argument, and I did not mean it in any absolute sense)
[ link to this | view in chronology ]
Re: Re: Re: Is there anything wrong about it?
which you provided to back up your claim about population density being the culprit?
[ link to this | view in chronology ]
Re: Is there anything wrong about it?
Do you still want to compare Broadband and wireless prices based on population density?
(Finland and Norway are in a similar place while Denmark have a lot higher population density of course)
[ link to this | view in chronology ]
Re: Re: Is there anything wrong about it?
[ link to this | view in chronology ]
Re: Re: Re: Is there anything wrong about it?
[ link to this | view in chronology ]
Re: Is there anything wrong about it?
[ link to this | view in chronology ]
Re: Is there anything wrong about it?
[ link to this | view in chronology ]
Re: Is there anything wrong about it?
[ link to this | view in chronology ]
Re: Is there anything wrong about it?
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.
[ link to this | view in chronology ]
Re: Is there anything wrong about it?
On the contrary, local companies can deploy local networks in remote areas. That's what roaming was invented for.
[ link to this | view in chronology ]
Re: Is there anything wrong about it?
so why do they then aggressively oppose the small communities activities wrt setting up their own "ISP"?
If it is too expensive for them, why are they such assholes about it?
[ link to this | view in chronology ]
Re: Is there anything wrong about it?
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.
[ link to this | view in chronology ]
Re: Is there anything wrong about it?
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.
[ link to this | view in chronology ]
Am I reading that graph correctly?
...I guess those are 'no internet, text only' plans or something?
[ link to this | view in chronology ]
Re: Government action
[ link to this | view in chronology ]
Kool-Aide Drinking
[ link to this | view in chronology ]
[ link to this | view in chronology ]
Only Some Of The Most Expensive?
Thank goodness Trump and Pai are working on it. Make America Great Again!
[ link to this | view in chronology ]
Re: Only Some Of The Most Expensive?
How can we be the best if we do not have the highest prices?
[ link to this | view in chronology ]
"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...
[ link to this | view in chronology ]
Woo! Canada is #4! Eat that, Americans!
[ link to this | view in chronology ]
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.
[ link to this | view in chronology ]
Here's to wundering..
As well as most corps use a 2nd company to do customer service, so they can Charge for that and write it off taxes..
[ link to this | view in chronology ]
[ link to this | view in chronology ]
US Leads the World With The Most Expensive Mobile Data Prices
[ link to this | view in chronology ]
BULLSHIT
[ link to this | view in chronology ]
Love!!
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!)
[ link to this | view in chronology ]
Re: Love!!
double plus good.
[ link to this | view in chronology ]