One often hears that mobile data or fixed internet access prices in the U.S. market are “too high,” often in relationship to prices elsewhere in the world. It never is an easy task to sort out.
By some measures, often those comparing 1-GB plans, U.S. mobile data prices are on the high side, globally. Of course, U.S. consumers also consume more data than most mobile customers, and tend to buy plans featuring higher usage allowances that cost more. That alone would skew price comparisons.
But adjusting prices for local purchasing power (purchasing power parity), prices for equivalent mobile data plans across countries are consistent. In the years between 2013 and 2016, for example, looking at plans offering 500 MB or 1 GB of usage, retail prices were in increasingly-close ranges, according to the International Telecommunications Union.
And prices continue to fall in virtually all markets. In the U.S. market, it is increasingly easy to find a supplier selling such usage at perhaps $5 to $7 per gigabyte, for just a few gigabytes per month (3 GB to 5G, for example), and bigger packages at lower prices per gigabyte.
Still, prices less than $5 per gigabyte are viewed by some as “too high.”
Whether a product is affordable or not often depends on one’s assumptions. The average price of a broadband internet access connection--globally--is $72..92, down $0.12 from 2017 levels, according to comparison site Cable. Other comparisons say the average global price for a fixed connection is $67 a month.
Looking at 95 countries globally with internet access speeds of at least 60 Mbps, U.S. prices were $62.74 a month, with the highest price being $100.42 in the United Arab Emirates and the lowest price being $4.88 in the Ukraine.
According to comparethemarket.com, the United States is not the most affordable of 50 countries analyzed. On the other hand, the United States ranks fifth among 50 for downspeeds.
Another study by Deutsche Bank, looking at cities in a number of countries, with a modest 8 Mbps rate, found prices ranging between $50 to $52 a month. That still places prices for major U.S. cities such as New York, San Francisco and Boston at the top of the price range for cities studied, but do not seem to be adjusted for purchasing power parity, which attempts to adjust prices based on how much a particular unit of currency buys in each country.
The other normalization technique used by the International Telecommunications Union is to attempt to normalize by comparing prices to gross national income per person. There are methodological issues when doing so, one can argue. Gross national income is not household income, and per-capita measures might not always be the best way to compare prices, income or other metrics. But at a high level, measuring prices as a percentage of income provides some relative measure of affordability.
Looking at internet access prices using the PPP method, developed nation prices are around $35 to $40 a month. In absolute terms, developed nation prices are less than $30 a month.
That is worth keeping in mind as some argue affordability of U.S. fixed network internet access is a big issue. According to BroadbandNow, less than half of U.S. households have access to fixed network internet access at prices of $60 or less per month. The implication is that this is a problem.
Maybe it is not a problem, if the average global price of a fixed network internet access connection is $73 a month.
With global broadband speeds growing by 23 percent on average between 2017 and 2018, one might expect similar shifts in pricing. However, the average price of a broadband access plan globally remains stable, decreasing by 1.64 percent between 2017 and 2018, for example, according to comparison site Cable.
The point, some might argue, is that U.S. fixed network internet access prices actually are not too expensive, when compared with prices in other developed nations.
Comparing mobile service plans across countries always involves judgement calls. One has to find plans that are comparable (GB per month), determine which service provider plans to compare, then assess whether such plans are the “most often purchased” plans in any country, then adjust for price differences between countries.
Buying in larger or lesser volume also makes a difference.
Looking a few service plans offering use of 10 GB to 40 GB (and with the caveat that prices can vary quite a bit between plans offering 10 GB or 40 GB), such plans cost between 1.3 percent of income to 18 percent of income, in various countries, and offered by various service providers within countries.
Assumptions therefore matter. Also, posted retail prices are one thing; actual usage quite another. Customers in Finland and Austria consume quite a lot of mobile data, compared to users in other countries. When that is the case, retail price per GB and actual consumed price per GB tend to correlate better. When usage is low--less than 2 GB per device, per month--then the actual price is quite high.
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