Are we paying too much for cell service?

Do Americans overpay for cellular service?

Six consumer-oriented organizations answered a forceful "yes" in a July federal filing with the Federal Communications Commission. Backing their assertions is an international study concluding Americans pay the world's highest cell phone rates. And a U.S. senator is examining whether text messaging is priced out of line.

The cellular industry is vigorously refuting assertions it's anticompetitive, in pricing or other respects.

"It's not business as usual for the cellular industry," said Charles Golvin, a principal analyst for Forrester Research. "A number of vocal inquiries are being raised these days about many issues: handset exclusivity, phone applications, messaging prices and pricing in general."

Paul Orchard, 33, a self-described "cellular power-user" living in Seattle, said he sees American cellular service as reasonably priced overall, but limited.

"I've researched it thoroughly, and even though good prices can be found, some aspects of our service aren't as good as elsewhere in the world," he said. "Most countries charge only for outgoing calls, not incoming calls, and some allow minutes to be bought and sold by individuals. Our service is less flexible, which makes it not as good a deal."

So far, dueling statistics yield no clear answer on whether Americans pay too much for their beloved cellular service, though an upcoming FCC inquiry may provide insight.

Costliest service?
U.S. residents pay the world's highest rate — about $53.30 per month — for a "medium-use package" including 780 minutes of outgoing voice calls, 600 text messages and eight multi-media messages per year, says an August report by the Paris-based Organization for Economic Cooperation and Development.

In contrast, Finns, Swedes and the Dutch pay $11 to $12 per month for the same plan, according to the report, which covers 26 countries.

Americans also pay the most — about $22.50 a month — for what the group termed a "low-use package" including 360 minutes of outgoing voice calls, 396 text messages and eight multimedia messages per year. That compares with $4.16 a month in the least expensive country, Denmark, with Finland, Sweden and Norway just slightly more expensive.

Vote and discuss

But the OECD's data is misleading, said the Cellular Telephone Industry Association, the official voice of the cellular-service companies.

Not an accurate reflection
For one thing, Americans use far more minutes than those in other countries: an annual average of 9,600 minutes, according to the OECD. It also said the average U.S. wireless consumer sends or receives more than 400 text messages each month.

"What the OECD did doesn't even remotely reflect the state of pricing here," said CTIA vice president Chris Guttman-McCabe. "They picked a customer who doesn't exist in the U.S., and then gave him a plan that makes no sense for him."

The OECD used a single AT&T plan, offering a 450-minute-per-month bucket, for its study.

"We don't know why they chose that and ignored lower-priced packages," he said.

The more appropriate comparison, he said, would have been something like T-Mobile's "Pay As You Go" offering of $100 per year for a monthly cap of 1,000 minutes, text messages at 10 cents each and multimedia messages at 25 cents each.

At about $13.25 per month, that plan would rank the U.S. among those countries with the lowest cellular-service costs. And, he said, prepaid plans such as BoostMobile's would easily have competed with the lowest-cost OECD offerings.

Both plans were available in 2008 when the OECD made its study, and both offer totals close to or below the least expensive plans in the other OECD countries.

In any case, the CTIA said, the proper way to view cellular costs is by minute, not in bundles. By that measure, the U.S. is among the cheapest in the world.

June figures from Bank of America/Merrill Lynch show Americans on average pay 5 cents per minute for cellular service, compared with an international high of 28 cents per minute in Switzerland.

The U.S. figure is tied for cheapest with Colombia and Russia but is more expensive than nine other countries, including Bangladesh, Pakistan and the Ukraine.

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