It’s no secret that more and more of us are relying on our phones for everything from email to photo sharing to browsing the Internet. We love our smartphones, and many of us hand over a large chunk of our disposable income for the ability to Instagram. This would all be great if it weren’t for one major issue: In the United States, we’re paying much, much more for mobile data than people in other developed countries.
A new report by the International Telecommunications Union measures the monthly cost of 500 megabytes of pre-paid mobile data around the world. The general trend in the ITU report is that the cost of mobile data is lower in developed countries than developing countries, which is largely due to better infrastructure in many parts of Europe and Asia. But the big anomaly is the United States, where the cost of mobile data is absurdly high. In France, for example, 500 MB of mobile data costs about $14 per month, compared to a staggering $85 in the United States.
One could argue that the disparity can be explained by factors like difference in income and the physical size of the United States. But the ITU used purchasing power parity to compare relative costs. It also measured monthly prices as a percentage of gross national income, demonstrating in essence that Americans spend a larger chunk of our incomes on mobile data—more than 2% in the United States, compared with less than 1 percent in most of Europe. And while the cost of infrastructure to provide coverage in the United States may be high, 500 mb of mobile data in Russia—the largest country in the world—costs only $27.60 a month, less than one-third of what it does here.
In the United States, AT&T and Verizon Wireless have a virtual duopoly over mobile services. Their size and market power have enabled the companies to eliminate unlimited, “all-you-can-eat” data plans in favor of tiered schemes in which customers pay incrementally per gigabyte of data. Although they argue that this gives customers more low-cost options, the numbers suggest the opposite—two years ago, a Verizon customer could use as much data as he or she wanted for $30 per month, but today you can get only a few gigabytes for that price. Meanwhile, both companies’ wireless profits are soaring, thanks at least in part to the increased revenue per user from mobile data. The ITU report notes that prepaid data is more expensive than data purchased on a contract, and that’s true—but two-year contracts, which are the norm in the United States, also lock customers in, giving AT&T and Verizon additional leverage to prevent users from switching to other competitors.
When you look at the map, things don’t look pretty for the United States in the mobile broadband market. In the near future, it’s crucial that we encourage more competition in the telecom sphere. Unless we implement policies that make it easier for new players to enter the market and challenge the existing mobile data duopoly, we might find ourselves paying more and more for less and less mobile data.