Greetings from the socialist republic of Europe, where the cost of everything cellular is much, much lower than it is in the capitalist, free-market U.S. -- wait, that can't be right. Can it?
Well, yes. The latest datapoint comes from the GSM Association, which "represents the interests of mobile operators worldwide." It's compared the costs of using 4G LTE networks in Europe and the U.S. and concluded that it's much more expensive to use in America than it does Over There.
How much more? Well, obviously it depends on the sort of contracts you compare, but the International Herald Tribune analyzed the study and said that it's between two and ten times more expensive, which is nothing to be sniffed at:
According to the study, Verizon Wireless...charges $7.50 for each gigabyte. ... more than 10 times what consumers pay in Sweden. ... Having a data-only plan...would reduce the per-gigabyte charge at Verizon Wireless to $5.50.
The LTE comparison mirrors the trend for other types of mobile services, like 3G, which also tends to cost more.
So why is this? The IHT talks to several sources that all spout their pet theories, but the only fact that really rings true is the old chestnut of competition.
In theory, the U.S. has four major national carriers (plus some smaller ones and some virtual operators). So there should be plenty of competition, right?
Well, no: in practice, it's far harder for American consumers to switch networks, thanks to a litany of reasons. Here are but three:
- The legacy of using different 2G and 3G standards (the GSM and CDMA families).
- The fact that CDMA, as implemented, makes it hard to switch between Sprint and Verizon while retaining your phone.
- The patchwork, incompatible nature of frequency allocations for 3G GSM-family networks (UTMS), which makes it impractical to switch between AT&T and T-Mobile.
It's ironic that unencumbered competition has actually caused the very anticompetitive problems that the U.S. is struggling with. Over in Europe, where regulators ensure one set of wireless standards and manage the market to ensure a maximally competitive environment.
Richi Jennings , editor of Input Output UK, is also an independent analyst, specializing in blogging, email, spam, security, and other technology topics. His writing has won ASBPE and Neal awards. You can encircle him at +richi, follow him as @richi on Twitter, pretend to be his friend at Facebook.com/richij or just use boring old email: firstname.lastname@example.org.