US, Canada, and Spain 'win' the battle for most expensive cellphone bills
By Laura June 
posted August 12th 2009 11:21AM
posted August 12th 2009 11:21AM
Update: The CTIA has issued a statement in response to the OECD's study, stating that it is, essentially, inaccurate by way or its choice of unrepresentative calling packages. The CTIA's full statement is after the break.
[Via IntoMobile]
CTIA-The Wireless Association(r) Responds to Organisation for Economic Co-operation and Development (OECD) Communications Outlook Report on Usage and Cost for Mobile Phone Calls
WASHINGTON, DC - CTIA-The Wireless Association(r) issued the following statement today in response to the OECD Communications Outlook report on usage and cost for mobile phone calls:
The headline from the recently released OECD Communications Outlook report reads that Finland, the Netherlands, and Sweden have the lowest prices for mobile phone calls among OECD countries, while the highest prices were found in Canada, Spain, and the United States. But since U.S. consumers enjoy the lowest per minute rates of all of the OECD countries, what today's OECD report really shows is that some international comparisons just don't make sense - especially when built on flawed assumptions.
The real story is buried on page 275 of the OECD report which states:
"It is important to note again that the OECD calling pattern in the basket can be significantly different than common calling profiles in a specific country. For example, the high-usage OECD basket includes 1,680 outgoing voice calls per year while users in the United States average 9,600 minutes of voice calls (combined incoming and outgoing) per year. In this case the basket provides the cost of buying exactly the calls and messages in the OECD basket rather than what may be considered a 'typical' bundle in the market."
Since the average U.S. calling profile is nearly three times greater than the OECD's "high usage" basket (and, in fact, the average U.S. calling profile is nearly six times greater than the OECD's "average" usage basket), it is no surprise that most other sources show the price per-call (or price per-MOU) in the United States is the lowest among the OECD countries.
How did the OECD get it so wrong?
Only by picking such unrepresentative "representative" call packages, could the OECD have reached such a result. For example, the OECD defines a "medium use" customer as someone making 780 minutes of calls a year, and sending 600 SMS and 8 MMS messages a year. And the report says that based on their methodology, a U.S. customer would pay $53 a month in order to get that level of service. But that assumed "medium" basket works out to about 63 minutes, 50 SMS messages, and less than one MMS message a month. That just doesn't reflect reality.
CTIA's semi-annual survey shows that the average wireless consumer uses around 760 minutes a month, and over 400 text messages a month. Even if we only count half of those minutes as outgoing minutes (to mirror the OECD assumption), that's still six times as many minutes as the OECD methodology assumes. Plus, the CTIA survey showed that the average monthly consumer bill is $50.07. Moreover, since the most recent CTIA survey, a number of unlimited voice and text message plans have been introduced by U.S. wireless companies providing U.S. consumers with even greater value. For example, Tracfone offers its "Straight Talk" plan of unlimited minutes and text, nationwide, any time, for $45 a month, and Boost has a $50 a month plan that offers users unlimited talk, text, web and walkie talkie service.
When you look at the price American consumers actually pay for their wireless service, our per minute rates are the lowest of all the OECD countries.
yes we do with the power of internet, and we get to skip the commercials :)
600 SMS a year? I send that in less than a week...
Obviously this means we need universal phone coverage for all.
@Mycroft
If it doesn't involve euthanizing my granma's cellphone, then I am all for it...
Socialist im scared AAHHHHHH (im going to the next electronic show and yelling my ass off) first your eco-friendly phones now you want to tell me to recycle and now this UNIVERSAL PHONE COVERAGE this is abused!
And we get to get raped in the a.ss for text messaging and slow crappy internet usage.
Cell carriers ARE raping customers. The FEDS should look into price fixing by the carriers.
Notice their hasn't been a race to the bottom with pricing for service? How can this be? Where's the competition?
Apparently the cost of the plans has fallen between 20 and 30% since 2006. Not exactly a race to the bottom, but still dropping. However, with new data plans (not covered in the survey) that price drop is negated.
I would like to know when the rate plans dropped that 20%, because they seem to have only gotten higher...
xcrunk,
Price fixing by the government just means that more people will use it. If you think service is slow now, wait until the price is arbitrarily dropped by the government.
What should happen is that the federal government should reduce corporate taxes from 40% to 25%. The price of the service will fall greatly then.
Bullshit. The companies will use that as extra profit. Reducing corporate taxes will not reduce rates. What we really need is a new carrier modeled after a european one that offers european prices. Then people can finally stop taking it in the ass. I predict that eventually something similar to car companies will come in where foreign competitors will come in, offer higher quality products for cheaper and you'll see the slow crumbling of carriers that have become too large to survive.
Bob...you can manipulate the stats to give the wrong impression and the carriers are using smoke and mirrors here. Sure they may have dropped prices a bit at the high end and upper middle, but the bottom end has moved up.
A more revealing figure would be what has happened to the price of entry in the past 5-10 years. It used to be around 2003 that you could get a basic plan for around $19.99 -$29.99. Now you see that entry level begins at $40 with the top four carriers. That's an approximate 25%-50% increase in the price of entry. They aren't cutting their costs...they are consolidating everyone into a smaller pricing structure.
@Penguin Warlord- the old AT&T Wireless was partly NTT DoCoMo, and the T-Mobile here was supposed to be that. Only they got caught up in the "race to the bottom". Now if only they would encourage the entry of more foreign competitors (I'd like a Three America- I've been very happy with their service in HK) I'd be happier.
t-mobile is a German company
for $100 per month i can have FIVE phones with AT&T that share 700 minutes and each have unlimited in-network calls at any time, unlimited night and weekend calls to any carrier, and nationwide coverage with free roaming on any roaming partner's network. by the way, in-network calls includes more than 120 million wireless, landline, and business phone numbers. All for only $20/month per line. it seems impossible to me that this is the most expensive of any country. and then for $30/month more total, all lines can have unlimited texting to any domestic carrier. i just don't see how that is "being raped"
@youngcalihotty
In Singapore, where the cost of living is 11th highest in the world, I can get unlimited 3.5G data, free tethering/internet calls, bundled minutes + SMS/MMS/Video calls etc etc etc for what would amount to roughly USD$40. There is a much more powerful bundle that pretty much amounts to near unlimited everything for about USD$70. But to be frank, I opted for the $40 plan using it for both business and personal calls (with free to negligible cost regional and international calls). I've yet to pay any extras on top of that $40 and I get reliable coverage even in bomb-shelter grade structures & tunnels.
Singapore is an extremely pricey place to live (more expensive than NY last time I checked and where the price of a basic, low end car will set you back $45,000!
Let me guess, The Netherlands can probably receive MMS on their iPhones too...
Aye :)
We also have HDTV, 100/100mbit fiber connections and kick ass health care :)
Or at least I do
Yes we can.
I pay € 30 a month for 150 minutes (incoming calls are free), 150 sms messages (again, incoming free) and unlimited 2 Mbit/s 3G for my iPhone.
Although I hate AT&T and Verizon, the high costs are actually due to population density.
Netherlands: 1025/sqkm
US: 31/sqkm
source: google'd "#COUNTRY# population density"
It's not surprising that Canada, Australia, and Russia have high costst as well, as each has an even smaller density than the US does. Here's a list from Wiki of nations with greater population densities than the US: Madagascar, Zimbabwe, Azerbaijan, Cameroon, Djibouti. It's hard to compare apples to oranges, especially when you don't take into account that an Apple is different from an Orange (UK).
I hate the fact I have to pay $20 for unlimited texting ($30 on my AT&T family plan for everyone), but it's the price you have to pay if you don't want cramped living.
I've got a better comparison, let's compare real estate in Japan to real estate in the US (337/sqkm for the former).
I propose we have discounts for those living in cities then. It's not at all fair that I have to pay for those who have chosen to live in rural areas.
If MetroPCS can get their act together a little bit more, I'm seriously considering switching. $50/mo for unlimited EVERYTHING, with no contracts to sign.
Hung,
An excerpt from the OECD study: "Finland, the Netherlands and Sweden have the lowest prices for mobile phone calls among OECD countries, according to the latest OECD Communications Outlook."
You are defending high US prices for low population density. How then do you explain Finland offering the lowest mobile prices?
Finland: 17/sqkm
US: 31/sqkm
I would think population density would lower costs. For the same reason the carriers hate building towers out in the middle of Utah. 10 customers per tower is not as profitable as 200 customers per tower.
GebradenKip: That's a bit expensive.
For about £45 (52 Euro) a month here, you get 1200 minutes anytime, any network (incoming calls are also free in the UK), 500 sms messages and unlimited 3G data.
I'm Dutch, but I don't benefit from those low prices.
Mind you, I live in Canada.
+2! :-)
I am shipping up to Sweden wayy-yooo!
That's because you forgot to research in Brazil. I've payed a bill of US$3.000 last year!
They didn't "forget" Brazil, the OECD is only the most developed economies in the world. Brazil is not a member of the OECD.
It didn't say that the research was limited to the OECD countries, it just said that it was conducted by the OECD.
Stop being such an ass, you just made bad comments for everybody. Go get laid.
You are the ass, moron.
I blame the government
You’re government should definitely get allot more involved in stuff like this, and stop companies from using different standards (which makes competition go by by). This is one of the best examples of how capitalism isn't always the best way, and the main reason why the US should become more socialistic. ;)
Cheaper cellphone bills for everyone!!!
"780 minutes per year of voice calls, and 600 SMS per year."
Is that per month, because 780 minutes a year is nothing, that would only be 65 minutes a month
That's how much a lot of people actually use their cell phones. I have a constant bank of ~3500 rollover minutes with AT&T, and I've never come close to hitting the 450 minutes I'm forced to pay for. If there were a 100 minute/month plan, I'd be on it in a heartbeat. That's a big part of where the pricing is so skewed. The minutes you pay for vs. the minutes you actually use.
Also, as one commenter pointed out, his incoming calls and SMS are free in the Netherlands. Think about how many outgoing minutes you use per month.
I can't believe that 65 minutes a month is normal in developed countries. That would only be 2.16 minutes a day on average. A lot of people use a cell phone instead of having a land line at home. Unless you have no friends and family, you will be talking more the 2 minutes a day.
@CtrlBurn, I agree completely. I have thousands upon thousands of rollover minutes that I never use. Let me trade some of those minutes for texts. Or better yet, since I have unlimited data let me just use that for texting. It's absurd that texting costs what it does.
Then why do you text so much. Start calling more! I text for question/answer stuff but so many people text whole conversations. Calling is cheaper. I know everyone gets screwed on texting, but everyone is letting themselves get screwed. Stop using it so much and the price will drop. Its only expensive because it can be.
@interspectrum: I live in the US, but I use my cell phone much less than 65 minutes a month. I'm actually looking for a reasonably priced Skype Smartphone (ie: not just a wireless skype phone, but e-mail, web browsing and application support) for this very reason - I'm always either at my desk (where I can't use my cell phone), at home (where my VOIP line give me much cheaper rates than any cell phone), somewhere with WiFi access, or somewhere I don't want to be bothered. My Google Voice line is set up to forward calls to the correct destination - I receive maybe a dozen calls per month on my cell phone, and those are typically very short conversations.
I hear people say they need their cell phone, but very few people (truckers may be the exception, due to the extreme amount of time spent on the road) really do.
I think per year was supposed to be per month. I could be wrong though.
Yeah Engadget, tell that to T-Mobile Netherlands. High bill after bill after bill :(
It really depends on how you buy your phone here. If you buy an SIM-only, rates are dead-cheap.
If you opt for an smartphone for some sort, you get the phone absolutely free (even the most expensive ones, stuff like iPhones, blackberry, X1, N97 etc) but the rates can be a pain.
"If you buy an SIM-only, rates are dead-cheap."
Indeed, I'm sim-only and would melt the phone before I started paying for calls/texts/data outside of my plan
Eh, depends on what contract you have and how much you pay for it.
Example: T-Mobile Flex 15, 15 euros a month 0,20 a minute and SMS, you get 75 free SMSes/Minutes, but Flex 100 costs 100 euros, gives you 1000 free SMSes/Minutes and costs 0,10 for each when you get outside those borders. (There are loads of other options as well)
But yeah, Pre-Paid is dirt-cheap, unfortunately it's pretty hard to get an internet contract with it as well (The only one offering this is KPN), and ofcourse you'll have to pay for your cellphone instead of getting it for free.
*Whoa, I thought you guys were talking about pre-paid... I have no idea how I came to that conclusion, but I apologise.
@MMaster23, thank you! Those are some of my points in my long post. lol. Glad to see it confirmed by someone who lives there.
Europeans don't pay for incoming calls either. In England contracts are for 18 months, and usually get a free phone.
In Canada: 3 year contracts and an expensive plan for a slightly subsidized phone.
Protectionism hurts consumers.
18 months? Here in Scandinavia, at least in Norway, there's a law against cell phone contracts longer than 12 months. The reasoning being that consumers should and must be free to choose more competitive offers. The cell phone companies and MVNOs compete for real here. Of course you get to keep your number if you change provider etc.
The government even provides a free, neutral online plan price calculator to determine what provider is the best for your needs [depending on number of minutes/SMS you need]. They update it daily and providers use it in their advertising. It's all public and free information.
Ironic, how the US calls *my* country "socialist".
LOL!
Everyone thinks that because they don't pay for the incoming call that it's FREE. But it's not. It simply means what it says. They don't pay for the incoming call. But someone does. Who? The person who called them. That is why their billing method is called "Calling Party Pays." The person who makes the call pays for it. There's no such thing as "local calling." You pay for all calls you make. Wait, your friend is on a different carrier? Okay, you're going to pay even more for that then. Oh, what's that? Your friend is in the next state over? Ya, you're paying even more. And since you are currently on another carriers tower, you're paying more for that too.
Is there a big number of people only using 780 minutes per YEAR? I'm not much of a talker, and I go through at least 400min per month.
And who is paying $53 for 65 min and 50 text messages per month??
they don't get to watch "The Real Housewives of New Jersey" in the Netherlands, do they?
no, they get to smoke legal weed!