US consumers who feel a sense of foreboding that ultimately turns to sticker shock whenever they get their cellphone bill for the month have good reason to feel that way, it seems. According to a new report by Finnish research firm Rewheel, if you live in the US you generally pay more for wireless data than consumers do in most other developed countries.
Mara Faccio, a professor of finance at Purdue University’s Krannert School of Management, agrees with that finding. She likewise has produced a research paper analyzing mobile phone plans and telecom laws in almost 150 countries, and among her discoveries was that the monthly prices in the US are almost three times what German consumers pay and twice as much as monthly plan prices in Denmark.
This isn’t current, of course, but looking at data from 2015 showed her that the average cost in the US of a cellphone plan was $67 a month. That compared to $23 a month in Germany and $31 in Denmark. All told, according to a Purdue University recap of Mara’s work, US consumers pay $65 billion a year more than consumers in Germany do for similar cellphone service and more than $44 billion a year than consumers in Denmark.
Per Purdue, Mara says that an analysis of regulatory data, phone plans and cell service insights from 148 countries “shows that a government’s pro-competitive policies, such as number portability and voice over internet protocol, can significantly reduce prices. In countries where telecom executives are more politically connected — for example, if they have previously held a political office or served on a political board — regulations tend to favor existing operators, markets tend to be less competitive, and prices tend to be higher.”
Going back to the Rewheel report for a moment, it warns that the proposed Sprint merger with T-Mobile might make this dynamic worse in the US. Antitrust enforcement, Mara continues, has been lax in the US and accounts for some of the pricing issues here. She notes that in the year 2000, the two largest mobile phone carriers in the US controlled about 35 percent of the market, while in early 2015 they controlled more than 65 percent.
