The cost of cellphone service in America

gallery-3438131Everything about this article regarding cellphone service prices in America as compared to other developed nations is the worst kind of informational journalism. 

It’s remarkably easy to compare the cost of services, plans, phones, etc. against one another, but the piece obfuscates that by relying on he-said-she-said journalism. 

Not only that, but Dan Richman buries the meat of the piece — that the FCC is launching an investigation into cellphone company pricing practices — to the very bottom, rather than that being the hook to do actual consumer journalism.  To you know, perform a service and determine whether or not Americans really are being ripped off by cellphone companies, which most assuredly we are. 

U.S. residents pay the world’s highest rate — about $53.30 per month — for a “medium-use package” including 780 minutes of outgoing voice calls, 600 text messages and eight multi-media messages per year, says an August report by the Paris-based Organization for Economic Cooperation and Development.In contrast, Finns, Swedes and the Dutch pay $11 to $12 per month for the same plan, according to the report, which covers 26 countries.

Americans also pay the most — about $22.50 a month — for what the group termed a “low-use package” including 360 minutes of outgoing voice calls, 396 text messages and eight multimedia messages per year. That compares with $4.16 a month in the least expensive country, Denmark, with Finland, Sweden and Norway just slightly more expensive.

And yet this passage is glanced over in deferrence to the mouthpiece of the cellphone service industry, which, suprise!, claims that Americans don’t pay that much at all and in fact it’s cheaper than other countries.  Obviously. 

One way to think about this is to ask yourself if you are happy with the level of service you receive for the amount you pay.  You want unlimited minutes, texts, and data every month?  Well, that’s $100 from any of the four cellphone carriers in America.  Even for the minimum plan you’re talking about $40 with no texting or data. 

If you want to understand how America cellphone companies rip consumers off look at the pricing structure for text messages.  Let’s use a baseline of 200 text messages a month. 

Without a bundled package it costs 20 cents per message, or $0.20.  Sending 200 text messages would cost $40 per month.  So, of course you purchase the 200 text message bundle for $5 per month, figuring you’re saving yourself $35 per month. 

It actually costs a cellphone company .3 cents, or $.003, to send a text message.  It costs a cellphone company only $.60 to deliver 200 text messages, for a net profit of anywhere from $4.40 to $39.40 off text messages alone. 

You can imagine what the profit margin off minutes and data plans (unlimited for $30 per month) is as well. 

The point being is that it would be nice if the upcoming FCC investigation causes cellphone carriers to be a little more consumer-friendly either in the wallet or in the service plans they offer.

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