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No, U.S. smartphone costs aren't highest in the world

Leah Yamshon | Aug. 7, 2013
Sure, our phone bills are high, but so are everyone else's. We compare smartphone costs and plan rates for several countries around the globe.

More than $1260 a year—that's the average cost of a high-end smartphone in the U.S., once you factor in the cost of the voice, data, and text services. Yes, for about $105 a month, you earn the privilege of Instagramming your Sunday brunch and having nearly 24/7 Web access at your fingertips.

The hefty cost of smartphone ownership has to make you wonder what people around the world are paying for the same devices and services that we have here. Given our massive rate of data consumption and the big charges that show up in our monthly bills, we must be paying more than everyone else in the world, right? Right?

"Absolutely not," said Daniel Hays, principal and U.S. wireless services advisory leader at Pricewaterhouse Coopers, "We do not pay more here in the U.S. than others in major markets do."

When you add everything up, the total cost of owning a smartphone in the United States is about the same as the cost of owning one in Japan or Germany. Ultimately, our phone costs fall somewhere in the middle: We don't have the cheapest phones and plans in the world, but we don't have the most expensive, either.

Smartphones—the devices themselves—cost pretty much the same around the world as they do here. The service plans are responsible for the big differences between carriers globally.

Cost of ownership
To investigate those differences, I calculated the average cost of two-year ownership of an Apple iPhone 5 in the United States and in five major mobile markets around the world: Australia, China, Germany, Japan, and the United Kingdom. I sampled the prices charged by the largest carriers from each country. For each, I picked a standard plan: I compared plans that offer 2GB of data and unlimited voice and text—or the closest equivalent to that—for one person with a single mobile device.

I found that owning an iPhone 5 is least expensive in the U.K., at $64.70 per month on EE. Japan is next, at $74.11 per month on Au Kddi. Germany placed third at $92.13 per month on T-Mobile Germany. China's Unicom charges $96 per month; and Australia's Telstra will cost you $116.23 per month. The average cost of owning an iPhone 5 from AT&T, Sprint, T-Mobile, or Verizon in the United States is $105 per month. To determine these averages, I calculated what the monthly fees would cost over a two year period, added the cost of the phone itself, then broke it down into a monthly cost for 24 months.

London calling
U.K. consumers seem (at first look) to have the best deal, with a $1553 two-year cost of ownership. EE offers several data rates and minutes allocations to choose from, which of course determines your monthly bill. It also determines how much you'll pay as a deposit for the device up front: The higher your monthly bill, the lower your phone cost will be. The phone cost won't drop all the way to zero in any case, but subscribers can walk away with an iPhone 5 for $15 if they sign up for a plan covering 10GB (or more) of data a month.

 

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