U.S. mobile bandwidth is rich world’s most expensive, and it could get worse

by Steve Blum • , , , ,

Mobile broadband prices in the U.S. are the highest in the developed world, according to a report just published by a Finnish research company. A study by Rewheel concluded that even though there are four seemingly competitive mobile operators in the U.S., “gigabyte prices are not competitive”, and “the US has the 5th highest gigabyte prices in smartphone plans and is the most expensive market in mobile broadband among the 41” European Union and other developed countries (i.e. those that belong to the Organisation for Economic Cooperation and Development).

One gigabyte of mobile data in the U.S. costs $6.77 on average. That’s higher than any other country, although perhaps there’s some comfort in knowing that Canada is second highest, at $6.18 per gigabyte. The European Union average is $2.33 per gigabyte, and the overall OECD average is $3.03 per gigabyte. (I’ve converted Rewheel’s cost figures from euros to dollars, using its benchmark rate of €30 equals approximately $35).

The story gets even bleaker when competition is factored in. Like many developed countries, the U.S. has four competing mobile operators, but that doesn’t translate into competitive prices. The average mobile broadband price in countries with four carriers is $2.97 per gigabyte, less than half the cost in the U.S. Countries with only three mobile operators have an average per gigabyte price of $3.73, which is still three bucks cheaper than in the U.S. market, which is theoretically more competitive.

Theoretically. And maybe not for long.

T-Mobile is trying to get permission from federal authorities and the California Public Utilities Commission to buy Sprint. Rewheel concludes that “the 4 to 3 US merger, if approved without the upfront entry of a new 4th [mobile network operator] will lessen the already weak competition”.

Despite the Alice in Wonderland claims made by the two companies, competition will not intensify if there are fewer mobile carriers in the U.S. market. Fewer competitors equals less competition. If that wasn’t obvious to the Federal Communications Commission, the federal justice department and the CPUC before Rewheel’s report came out, it should be now.