Ro's Recz

After having lived in Europe and Asia, I have never understood how US cell phone plans are so much more expensive. In Asia I paid about $20 a month (and this was considered expensive), while in Europe I paid about $10 a month for cell phone service. This is not just for basic phone services, as they also included plenty of data. On the other hand, most cell phone plans in the US cost around $70 a month, but can also go much higher depending on your carrier.

In this Youtube video by CNBC, they explain why cell phone bills from the major carriers in the US are so expensive. While you should watch the entire video to see the full details, it basically comes down to the fact that these major carriers have to bid for licenses from the FCC that allow them to use a certain frequency. In the US, there are so many users and so much data being consumed that competition for these frequencies is intense, which in turn raises the costs.

While it may seem like people in Europe also use a lot of data, according to the video the average US consumer uses 2x as much data as the average European consumer. While this does not explain all of the enormous price differences between the US and Europe, it does help to bridge some of the gaps. Also, according to the video, new companies such as Mint Mobile are starting to offer much cheaper rates to their clients; they can do this because they do not actually own the frequencies, but are instead borrowing some of the data from major carriers like AT&T and Verizon.

While the YouTube video does not explain everything, I thought it did a good job of explaining the basics of the cell phone industry. I still do not fully understand why the costs in the US are so exorbitant, but it was also reassuring to hear a part of the video say that when 5G rolls out, they don’t expect cell phone plan prices to change too much.