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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.

But before you pack your bags and buy a one-way ticket to London, note that the quoted cost doesn't include roaming or international calls. And because of the U.K.'s proximity to the rest of Europe, most customers likely either pay to have some international plan built in or endure occasional overage fees. Adding extra roaming and international minutes costs £12 ($18.42) per month, which translates into an additional $442.08 over two years. And that's the bare minimum cost.

Smartphone users in the United States seem to be roughly on a par with consumers in Australia. Our plans cost about the same for data and unlimited voice/text within our countries. Though the fee structures are different—Telstra factors the device cost right into the plan, so subscribers pay nothing up front, but they have a bundled bill over the course of their contract—the bottom-line figure is quite close.

The phones themselves tend to be priced the same no matter what country you purchase them in—but surprisingly, phones by themselves are often cheaper in the United States than elsewhere. (Thank you, carrier subsidies.)

For example, in the United States, a contract-free 16GB Samsung Galaxy S4 costs $750 on its own, or $630 to $650 through a carrier. In the U.K., the cost is roughly  £500 to £649 ($760 to $986). In Japan, the nation's largest carrier, Docomo, offers the S4 for ¥83,160 ($838) to buyers prior to signing up for a plan. Since carriers in other countries typically don't subsidize phone costs within their plans, customers must purchase the phone at full value in order for retailers to make any profit.

Big in Japan
If you think Japanese consumers have it better than we do, take a closer look. Plans offered by Japan's Au Kddi don't take the cost of the phone into consideration: Customers can pay for the phone entirely up front, or they can add a monthly payment to their plan over 24 months—totally unsubsidized. Also, carriers in Japan usually don't offer unlimited voice or messaging plans that include communicating with people on other carriers. So the "unlimited" plan that Au offers covers only Au-to-Au calls. If you want to call or text a friend on another carrier, you'll have to pay ¥21 ($0.21) per 30 seconds or ¥3.15 ($0.03) per outgoing text. Those aren't exorbitant charges, but they can add up.

Germany and China, meanwhile, finish almost neck-and-neck, with a $52 difference after two years.

T-Mobile Germany requires a standard one-off charge for the device, and then makes up for the rest of the cost in the bill. So does China, but its pricing system is a little more complex: The higher your monthly bill is, the lower your down payment will be. For example, for a 16GB iPhone 5, a customer who wants 1.6GB of data a month or more will receive the iPhone practically for free. But China doesn't offer a truly unlimited calling plan. The plan we looked at allows you 1950 minutes and 580 texts nationally—a respectable number—but then charges you $0.02 per minute or per text for any overages.

 

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