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Your wireless carrier is gouging you and we have the numbers to prove it

Your wireless carrier is gouging

People hate their wireless carriers. This isn’t a news flash. Yet we put up with them anyway. Alongside death. taxes, and the Star Wars prequels, wireless carriers are something we must accept. While some are trying to repent their ways, carriers in America continue to anger their customers. But if you look at wireless companies in other countries, you start to realize that something is very wrong here. U.S. carriers are charging up to twice as much as many European and Asian providers, all while exerting a huge amount of control over what phones we can and can’t use on their networks.

AT&T, Sprint, T-Mobile, Verizon; listen up. We know just how much you’ve been screwing us over, and it’s about time you change your ways.

U.S. carrier plans are ridiculously expensive, and closed minded

Apple-Intends-to-Crush-CarriersThe math doesn’t add up. It shouldn’t cost more than $100 a month to own a smartphone, and it shouldn’t cost $60 a month for a basic phone either. Phone plans are outrageously priced in the United States. Carrier’s outside our borders charge a fraction of the price for service. It’s time to drop prices, offer more variety, and stop charging a fortune for features like data and messaging.

The price for wireless service anywhere varies greatly due to a number of reasons, but there is a consistent theme: most of them are cheaper. Let’s start with something simple: a smartphone plan with a few hundred minutes, a few gigabytes of data, and unlimited messaging. This is a wireless plan that’s pretty typical with all the necessities covered whether you love your iPhone or your Galaxy S3.

If you’re in America, you can choose between any of the Big Four and pay anywhere from $80 a month (T-Mobile and Sprint) to $100 a month (AT&T and Verizon) depending on your carrier of preference and the number of minutes you want. Verizon is the most expensive, and is even forcing users into new “Share Everything” plans that force them to pay for unlimited minutes and texts, but limit them greatly with high-priced data that’s sold by the gigabyte. 

Price of basic smartphone plans in the United States





Verizon $100 2GB Unlimited / Unlimited
AT&T $95 1GB Unlimited / Unlimited
Sprint $80 Unlimited 450min (Unlimited to Mobile)
 / Unlimited
T-Mobile $70  Unlimited Unlimited / Unlimited 

In the UK, there are fewer carriers, but their prices are fairer. Vodafone, Orange, and Everything & Everywhere (EE) – a collaboration between Orange and T-Mobile – dominate the cellular scene there. All three of the carriers charge less for the same (or better) service from each of the four U.S. carriers, ranging from $62 a month (Orange) to $70 a month (E&E) to $71 a month (Vodafone). E&E offers offer a $70 a month plan which includes unlimited minutes, unlimited texts, and 3GB of data; AT&T and Verizon both charge about $40 a month more for that level of service, and T-Mobile charges about $20 more. 

In other parts of Europe, prices are cheaper, too. Orange in France sells a wireless plan with unlimited minutes, unlimited texts, and 2GB of data for $64 a month. Orange is no small fry, actually serving nearly as many customers as Verizon and AT&T combined. A major carrier in Spain, Telefónica, also offers a fairly reasonable plan with 500MB of high speed data, unlimited texting, and 500 minutes for about $65 a month. One of the few countries in Europe with pricing even close to America is Germany, where pricing is steadily close to AT&T and Verizon. Despite this, the remainder of Europe remains competitively priced, and between $20 and $50 a month cheaper, depending on the plan.

But let’s not forget about Hong Kong and Japan. In Hong Kong, Hutchinson (also known as ‘Three’) will give you an 5GB high speed wireless plan with plenty of minutes for just $59 a month. A similar deal goes for Softbank  in Japan, which will set you back just $55 for unlimited data, SMS, and free calling to Softbank other users between 1AM and 9PM. While Japan’s pricing structure is much more à la carte, it still doesn’t even come close to American wireless plans, unless you’re making some seriously long calls.

Price of basic smartphone plans around the world




Minutes / Texts

Orange (UK) $54 1GB Unlimited / Unlimited
Orange (UK) $62 3GB 600min / Unlimited
Everything & Everywhere (UK) $62 1GB Unlimited / Unlimited
Everything & Everywhere (UK) $70 3GB  Unlimited / Unlimited 
Vodafone (UK) $56 1GB  Unlimited / Unlimited 
Vodafone (UK) $71 2GB Unlimited / Unlimited
Telefonica (Spain) $65  500MB (Unlimited)  500min / Unlimited
Telefonica (Spain) $77 2GB (Unlimited) 500min / Unlimited
Deutsche Telekom (Germany) $83 2GB (Unlimited) 120min (Unlimited in network) / Unlimited
Orange (France) $64 2GB  Unlimited/Unlimited
Orange (France) $77 3GB Unlimited/Unlimited
Softbank (Japan) $55 7GB (Unlimited) $.22 per minute (Unlimited in network) / Unlimited
Hutchinson (Hong Kong) $59 5GB (Unlimited)  2000min / Unlimited
*Prices converted using Google on 3-22-2013

While we’re just talking about a simple smartphone plan here, the fact remains just about any plan you suggest will cost significantly less in Europe, the UK, Hong Kong, or Japan. For example, in the UK with Orange you can choose to have a bare minimum plan and pay the bare minimum price – about $30 a month – for 100 minutes, 50 texts, and 100MB of data. Hutchinson in Hong Kong will offer you a voice-only plan with 550 minutes for just $8 a month. No matter how you frame it, in almost any case the international carriers are offering not only cheaper plans, but plans with more variety in minutes, data amounts, and other important factors. Why don’t American carriers do the same?

2-year contracts are terrible

What could you do in two years? While most of us can’t see two weeks ahead, let alone two years, it seems to have become this sort of magic number for American carriers to choose with new plans, and it’s plain silly.

A 2-year contract makes no sense for you and me. They only make sense to carriers, who rake in big bucks by locking customers in for so long. Have you ever wondered why there are only limited options for customers who want to pay month to month, or why carriers don’t offer a 1-year contract, even if it cost more?

Across the Atlantic,  many of the biggest mobile operators in Europe and the UK either offer 1-year contracts, 1.5 year contracts, or offer an incentive of some kind to go for the 2-year lock-in. Vodafone lets you choose 1-year contracts when building your plan. If you buy a plan with more data, Orange will drop your contract period by a year. E&E, the UK’s biggest mobile operator is also cool with one-year contracts. Even Deutsche Telekom, parent of T-Mobile USA, offers a 10 percent discount when you go for a 2-year contract.

Carriers throughout Europe are also open to different contract lengths, including Orange France, carriers in Hong Kong, and beyond. In the U.S. you can either get a 2-year contract or pay month to month, but everywhere else carriers offer options ranging from 1 to 2 years in length. Many American carriers used to offer 1 year contracts, but that prospect dried up fast a few years ago. Worse, many month-to-month plans are only usable with subpar devices or force other odd limitations. The only one close to offering a variety in contract length is T-Mobile and its Value Plan, which lets you run without a contract after 20 months, but we have complaints about that plan too. We’ll explain later.

Don’t cap data, throttle it

bobbarkershowWhy do AT&T and Verizon have to cap data plans (cut you off), instead of throttling them (slowing down your speed if you overuse)? What’s the excuse? Whatever reasons the two largest carriers in the U.S. may give, many carriers outside the U.S. don’t just cap data once you reach the limit, they throttle it.

Throttling is a very common way to offer a set amount of high-speed data, and then limit users to a mere 128 Kbps (or other slower) Internet connection should they exceed that limit. If a carrier doesn’t already offer ‘unlimited’ data in some way, they offer data as a “high speed” amount, rather than a hard cap on usage. Most of the top carriers around the world slow down your mobile Internet speed if you go over, rather than slap you with a hefty overage charge.

Vodafone, Telefónica, Orange, Deutsche Telekom, and Hutchinson are but a few of the many wireless carriers out there that throttle you once you go over your data limit. American carriers used to be same way with the invisible “soft cap” in data plans just a few years ago, throttling heavy users. These days, hard caps are now in place by the top two carriers. They pay for a ceiling of data that isn’t completely used, and are punished if they go over. It’s like some sort of sick game of The Price is Right.

It would be better if U.S. carriers were more like Softbank in Japan and offered some clear scale showing just how you pay for your data, and showing how you don’t have to pay for unlimited unless you go over the “unlimited” threshold. (Ting, a tiny carrier in the U.S., does offer freedom of service like this.) This à la carte methodology is not only more economical for the carrier, but applies common sense and is completely transparent with the customer.

Data capping is a poor excuse to charge customers $10 per gigabyte overage fees when they really did nothing wrong. No one can effectively plan their data usage two years in advance, so shame on American carriers for punishing its customers for being human, or for picking a ceiling they can never be allowed to touch.

Why is texting not part of data?

Texting, or its more official name, SMS (Short Messaging System), has been around for ages, and has molded the very way we speak. Twitter alone is a testament to the power of the 140 character message, and while we continue to revolutionize our ways with it, we also continue to let carriers charge us for texting like we’re in the Stone Age. While some carriers, such as T-Mobile and Sprint, try to bundle texting with ‘unlimited’ deals, others continue to charge a small fortune for a service that is, essentially, using data.

AT&T is really the worst offender. It charges $20 per month for SMS on any of their older, non-unlimited mobile plans. While most carriers, inside and outside the United States, offer plans that include unlimited messaging, the problem is more than just the insane markup on messaging, but the fact that it’s pretty much the equivalent of a tiny, miniscule piece of data (unless it has a picture attached). Carriers should throw SMS into the equation as a data-using application. The only reason it’s not is that this would kill the $5-$20 markup wireless carriers get on SMS. Wireless carriers need to start being honest with their customers and drop SMS fees. It won’t be long before all voice goes over data as well.

U.S. subsidized phones are still overpriced

While we’re busy talking about ending subsidies for phones in America, over in Europe subsidies are all the rage.

While we give credit to T-Mobile for its efforts to actually change its ways, we have a serious problem with its new “Value plans,” where you get an impressive smartphone plan for just $55 a month, but only if you buy your phone outright. Sure, if you have the $600 to drop, you can pay as little as $55 a month for an unlimited 4G plan with 400 minutes of talk. But, for reference, let’s look at Everything and Everywhere in the UK.

U.S. carriers like Verizon and AT&T charge $200 for a Galaxy S3 or iPhone 5 with any 2-year contract. But Everything Everywhere lets you buy a 4G-powered smartphone of choice, and depending on the plan you buy, it increases the subsidy for you phone – as in, you pay less. That’s right. If you pay $80 a month for the 5GB data plan, plus unlimited talk and text, then you only have to pay about $50 for a Samsung Galaxy S3. If you go for its top plan – a whopping 20GB for only $95 a month (20GB will cost you $180 per month on Verizon) – then you you can pay as little $35 for an iPhone 5. How you like dem apples? European carriers have realized their customers like it when they’re rewarded for going in for the long haul and for bigger & better plans, rather simply trapping them.

Perhaps the irony in it all is that T-Mobile’s own parent company, Deutsche Telekom, does the same exact thing. If you buy a plan with the German wireless company, they’ll discount the phone even more, even though their prices are not much better than those in America.

T-Mobile USA’s Value Plan is cool and all, and it really makes sense. But it should reward those who are willing to take a 2-year contract, much in the way Everything Everywhere does. Is this so much to ask? And these aren’t the only folks that do it either. Orange, Vodafone, and others all offer up a discount if you pick a bigger plan, actually giving incentive to those who foot a bigger bill. Orange France will even give you a subsidized phone every year if you cough up just $95 a month – still cheaper than Verizon and AT&T (and that’s with unlimited calling, texting, and 5GB of data.)

Will it change?

In the end, U.S. carriers are unlikely to learn from their international counterparts. We can only hope that a smarter competitor emerges. Right now, we’re spending too much on wireless service and getting far too little in return for our $80-$100 monthly investment. While T-Mobile and Sprint remain the edgier than Verizon and AT&T, all four of them could use a price makeover. Here’s to hoping something changes soon.

We’re not holding our breath though.

First image courtesy of imagefactory/Shutterstock