Report: U.S. Does Not Pay More for Cell Service

It appears that an old-fashioned game of he said/she said is brewing when it comes to whether U.S. mobile subscribers pay more for service than users in other parts of the world.

The Organization for Economic Cooperation and Development (OECD) said in August that this was the case; now, the Phoenix Center is urging that the OECD report be viewed with “great skepticism.”

The OECD surveyed mobile carriers in its 30 member countries. For a consumer subscribing to a “medium-use” package that provides about 780 voice minutes, 600 text messages and eight multimedia messages, the survey found that the monthly price of service ranged from $11 a month for service in the Netherlands to $53 a month for service in the U.S. as of August 2008. On a yearly basis, American cell phone users are spending about $635.85 on cell phone service. Lucky users in the Netherlands and Finland pay the lowest amount for cell phone service, only $131.44 per year. And cell phone users in Sweden only pay $137.94 per year, the OECD said.

Phoenix Center Chief Economist George Ford says poppycock.

Ford says the OECD’s methodology of computing expenditures levels in countries for three arbitrarily chosen “baskets” of mobile phone usage cannot be used to compare prices meaningfully across countries. And, he contends the usage levels assumed by the OECD are exceedingly low by both United States and Canadian standards. Since pricing plans for mobile services are dependent on usage, Ford said that “such large discrepancies between assumed and actual usage are plainly problematic…”

When it comes to the Dutch’s much lower bills, Ford said he found that American consumers would actually pay more for mobile service at current usage levels if they faced the pricing plans offered in the Netherlands.

Ford said he recommends that the OECD should primarily document the variety of pricing plans offered in each country, “rather than create price indexes of dubious merit.” In so doing, the OECD can “serve as a useful and policy-relevant provider of data, rather than a purveyor of ‘filtered’ data of questionable credibility.”

Both parties in the debate claim to be objective, nonpartisan research organizations.

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