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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.

"Penetration potential promises to make smartphones available to a whole new sector that could never afford them before," says Hays.

Consider India, a country that Hays considers "a critical center for mobile data growth." India currently has 699 million active subscribers, amounting to 73.1 percent of its total population. The average mobile bill in India is only $2 a month for a basic voice and messaging plan, according to Hays, with calls averaging 0.25 rupee (a fraction of a penny) per minute. That seems insanely low. Costs are kept low in part by the population's low average income, and in part because cheaper equipment makes providing services in emerging markets less expensive. Operator costs for voice calls are not especially high either—carriers have excess voice capacity and can offload it for less.

India's government is lending a hand in helping mobile use grow, too. In January, Indian IT Minister Kapil Sibal launched a "Scheme for IT Mass Literacy," with the goal of making one person in each household e-literate. Because 59 percent of Indians have access to the Internet only via mobile, expanding mobile reach is the most promising way of achieving that goal. In 2012, the government brought low-cost, locally made tablets into public schools nationwide. This Android-based tablet, called the Aakash, costs buyers only $50.

Local manufacturing of devices like the Aakash keeps costs down, as well. In developing countries, small companies are popping up that market their phones only in that area. Intex in India offers Android phones for as little as $64. China-based Tecno recently built a factory in Nigeria, where it will manufacture phones specifically for the Nigerian market. Tecno's current lineup of Android phones start at $82. And Smartfren in Indonesia aims to keep phone prices low, as about half of all phones in Indonesia are priced at under $50.

In other emerging markets, companies (and in some cases governments) are introducing financing plans and rebates to make devices more affordable. On January 1, Malaysia began to offer a rebate on monthly smartphone plans for people between the ages of 21 and 30 with monthly incomes below $925. China's three big carriers—China Mobile, China Telecom, and China Unicom—also offer rebates on phone plans. For Unicom customers, the rebate amount depends on the cost of the monthly plan, ranging from 66 to 245 yuan ($10 to $40) per month for a two-year contract.

The plans of the future
Whether you live in Calgary or Calcutta, some worldwide trends in phone pricing are starting to emerge, indicating what we might see next.

"We can expect to see a lot of innovation in mobile device financing in the next few years," says Hays. This includes different ways that phone prices are bundled into monthly plan costs, monthly financing on devices alone for regions where prepaid models are in, and even leasing or renting devices from carriers.

 

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