It's never fun to realize you’re being ripped off, but it’s smarter to acknowledge it than to pretend it’s not happening.
The truth is the U.S. ranks among the costliest in the world for cellphone data plans. In fact, according to research by the International Telecommunication Union (ITU), the average phone plan with only 500 megabytes of data costs $85 in the U.S., compared to $24.10 in China and just $8.80 in the U.K.
That puts the U.S. in the same bracket as developing nations when it comes to mobile plans with data, since all are in the $80 to $110 per month range for a plan.
The same plan that costs you $85 a month here costs you around $10 in the U.K. We pay more here for a phone service than many Third World nations.
In America you need a phone. It’s almost as necessary as food and water.
We need them to access our bank accounts and our emails. We use them to find our way in strange places. We use them to consult the Internet or take pictures. We use them to plan our days and schedule events.
It’s become almost impossible to imagine life without your iPhone and your access to social media. Leave the house without yours and you’ll feel exposed and undressed.
What’s fascinating is how much the average punter loathes their own carrier. First, we know they are charging up to twice as much as many European carriers and Asian providers.
Second, let’s consider the two-year contracts that they force us into. These work out well for the four big carriers, who make huge profits by their turning customers (us) into cash cows for so long.
But why there are only limited options for customers who want to pay month to month? Or why don’t carriers offer a one-year contract, even if it costs more?
If you want a monthly plan here in the U.S. be prepared to be offered a subpar phone that looks like it was constructed in the last century. You may not be able to store music on it; you may not be able to send an email.
It’s the difference between being trapped and being rewarded. In Europe if you pay $80 a month for a 5-gigabyte data plan plus unlimited talk and text, you’ll only have to pay about $50 for a Samsung Galaxy S3. European carriers long ago realized their customers prefer being rewarded for a longer commitment through bigger and better plans, rather than simply being trapped by a contract.
Texting offers a particular proof of the price-gouging going on. Carriers can transmit SMS messages for free, or almost free, but they can charge the customer up to 20 cents for each text. That represents a markup from between 6,500% to 7,314%. Feel the burn?
You can still pay a fee for unlimited texting, but that represents almost pure profit for the big four. What do you really get in return?
Hidden fees also represent opportunities for carriers to charge us more and make more profit for themselves. For example AT&T recently added a new $0.61 fee to its customers’ monthly bills. They called it a “Mobility Administrative Fee,” whatever that means. For us it means a new charge but for AT&T it means hundreds of millions of additional dollars.
When asked to explain the new fee AT&T wrote that it will “help cover certain expenses, such as interconnection and cell site rents and maintenance.” Isn’t that reassuring?
In America most people would never buy TVs or appliances on an installment plan – because they realize that they’ll pay much more in the long run – so why do we do it for cell phones? Those long-term contracts really don’t represent deals.
The fact is we’re being charged far too much for wireless service for far too little in return for our $80-$100 monthly investment.
The only real option at the moment is to buy a phone up-front and opt to go with a prepaid carrier, a route that’s becoming more popular here. The big four carriers have no plans to cut us a break after all.