Are U.S. Mobile Prepaid Data Plans Really Out of Whack?

There is a recurring problem when comparing Internet access or mobile data costs across countries, beyond the obvious problem that all local prices are meaningful primarily in relation to other consumer goods in any particular country. In other words, wealthier countries are going to have higher prices for just about anything.  

The other problem is that when making a comparison of rates, one has to make a choice about what sorts of plans to compare. Prepaid mobile is the dominant way most end users in the world buy their service. But that is not the way most people buy service in most parts of North America, with the exception of Central America, where prepaid is dominant.  

In terms of “actual” prices, prepaid prepaid mobile data data plans in the United States are among the highest in the world, an International Telecommunication Union study suggests.

The average prepaid U.S. phone plan with 500 MB of data costs $85 in the United States, compared to $24.10 in China and $8.80 in the U.K., in terms of U.S. dollar Purchasing-power Parity (PPP).

Whether those findings are correct, some will contest. The issue is that most people do not buy prepaid plans in the United States. And the new Target brightspot service, for example, costs just $50 a month, and comes with unlimited domestic voice, text messaging and mobile data access, with 1 Gb of data access on T-Mobile US 4G networks (HSPA+ and Long Term Evolution), the balance on T-Mobile's 3G data network.

Beyond that, one might question which U.S. prepaid data plans were chosen for analysis, as some of us would have a tough time finding prepaid plans with charges that high, even if the selected plans were those available only to consumers with no credit history and no banking relationships.

According to the analysis, the cheapest countries around the world to pick up a prepaid phone plan with data are India, Indonesia, Germany, Italy and the U.K, where $10 plans (PPP) cost $85 in the United States.

That aside, the more important insight is simply that prices make sense mostly within the context of all other goods and services in a single country.

Even if you accept the logic that the prepaid data plans are high, and ignoring the fact that most consumers do not buy those plans, that $85 phone plan is just 2.1 percent of the Gross National Income in the United States, whereas in Botswana the cost of a prepaid mobile data plan  is nine percent of GNI, and in Morocco is 20 percent of GNI.

Using even the ITU data for mobile prepaid (and that is not the best way to look at U.S. mobile data plans, since most people do not buy prepaid) U.S. prepaid prices are comparable to Canada, Mexico, most all of Europe and Russia, one might argue.