Why are American mobile phone plans so expensive?

Why am I writing about mobile phones?  Bear with me . . .

First, the background:

The Actuary family has, as many families have, expanded the number of mobile phones in the household as each successive child became old enough to need one, though we have also economized by taking advantage of the Xfinity mobile “Bring Your Own” phone service, which for a fair bit of time enabled us to pay next-to-nothing for service, by selecting a by-the-Gig option which was originally fairly generous in its pricing and in the data built into the baseline plan.  It also helped that my husband’s phone service is through his employer and the kids are/were often at school/on campus and connected to wifi, and I am, of course, working at home.  But recently we’ve discovered that our phones are using much more data than in the past, concluded that this was not an aberration but a matter of phones and apps simply using more data, and we needed to bite the bullet and price out alternatives.  As it happened, we chose to stay with the Xfinity plan because the “all lines after the first at $20 for unlimited data” worked in our favor.

At the same time, we did some additional pricing of individual lines, because I wanted to assess whether to push my oldest into his own phone plan.

Here’s the math:

If I look at the verizon.com website, on the landing page itself, I am offered the “Best Value” plan, for $117 per month.  That doesn’t seem like much of a bargain to me, even though it touts that it’s $39 cheaper than T-Mobile’s comparator plan and $35 less than AT&T’s.

On AT&T, I have to look a bit further for their costs, since what I see is a promotion of their phone offers, but after a few clicks, I get to “phone plans,” where the “best” plan is $50.99/month for never-slow data, or as low as $35.99 per month per line for data which may be slowed during busy network use times.  But it turns out that even the cheapest option is $65.99 for a single line, plus taxes and fees, $60.99 each for 2 lines, or $45.99 each for 3 lines.  For nudging my oldest to more independence, this is no help.

What about T-Mobile?  Their lowest cost plan is $50/month for a single line, for 50GB of “premium data” with lower-speed data thereafter, though, somewhat mysteriously, the $50 “essentials saver” and the $60 “essentials” plans appear to have the same features.

What about prepaid plans?  Their cheapest deal is $40/month for one line, with 10GB of 5G data, or a “special offer” of 4 lines for $100, though if I click on the link, I learn that 4 lines are actually $130/month (or perhaps it’s really bad web design?).

Or what about a fully-prepaid provider, like Cricket?  Now the prices begin to drop, down to $25/month for a single line when a year is prepaid in advance.

Are these reasonable prices?  Let’s take a look at Germany.

Here’s T-Mobile’s parent company, Telekom:  honestly, the rates are a bit confusing because their website seems in the middle of a changeover, so the best I’ve got is more along the lines of a poorly translated press release which promotes plans starting at EUR 29.95/month for 20GB data, or unlimited data for 4 people for EUR 19.95 each.  Interestingly, they promote their plans as appropriate for four roommates to get together.

Alternatively, another large carrier in Germany is O2. For existing customers, their rates start as low as EUR 4.99 per month for 2GB (with various fine print about slower speeds and I’m not entirely certain how that plays out) with the “Starter Flex” plan, or for unlimited lines, starting EUR 19.99 for unlimited, going up to EUR 29.99 for “unlimited unbegrenzt” or “unlimited unlimited.”  Yes, there’s fine print, and yes that’s contingent on a 24-month contract, and the plans would range from EUR 39.99 to EUR 49.99 without a contract.

But let’s say you don’t want a long-term contract — then you want Aldi Talk.  yes, the same company that gives you cheap private-label food and the Aisle of Shame will sell you a prepaid cell phone plan, with prices ranging from EUR 9.99 to EUR 19.99 per every 4 weeks, with pricing based on data speed.  This is, in fact, the choice we will likely make when we travel to Europe next (there’s no roaming charge within the EU), bringing currently unused phones to swap a SIM card in.

And, yes, for the time being, the exchange rate is effective 1:1.  It had been almost identical as recently as January when it was 1.02, and now it’s 1.08 USD to 1 EUR, so not quite, but close enough not to fuss with conversion.  What’s more, German prices build in taxes rather than adding them on.

So why is a German cell phone plan so much cheaper?

I don’t 100% know why but I have a guess, and that’s that we in the US are far too accustomed to looking for “deals” and “sales.”  For many years, cell phone plans automatically came with a new phone and only comparatively recently did it even become possible to bring your own phone to the major carriers, even though T-Mobile and Xfinity offered this earlier.  Ads on TV relentlessly promote the ability to get the latest iPhone or Samsung Galaxy or to get cash back if switching from another carrier. And rather than providing economical plans for individuals, they advertise their “family deals” even though they aren’t really all that spectacular.  Plus their bundles, the extras included “free” like streaming subscriptions, high-speed data, and so on — endless bells and whistles which drive up the price and condition shoppers to look for the most bells & whistles rather than the best price on a basic plan.

It’s the same reason that it’s difficult to shop for clothes at department stores such as Kohl’s, where the constant hammering of sales and Kohl’s cash and coupons makes it hard to assess what a true “fair” price is for the shirt you have your eye on. It was a disappointment to me that JCPenney’s attempt at “everyday low prices” failed and they switched to a heavy discounting model instead — not that it did them much good in the end.  In comparison, a German department store has sales, yes, but they’re more likely to moderate price reductions or else end-of-season clearance sales (that is, assuming there have been no substantial changes), so there’s much less reason to question the prices.  It is what it is.

What’s to be done about it?  Probably nothing, though I wish there were alternatives to American Consumer Culture.