The average UK smartphone user pays about $30 a month for data and service.
Now think about how much you spend every month on your cell phone plan. Chances are, you're spending over $80 every month, and let's not even get started on how much you'll spend on a family plan.
So why are cell phone bills in the US so expensive? And what can you do to cut costs and save some money?
In this article, we're going to explore the differences between the US and UK cell phone markets and discover why there is such a wide cost gap between the countries.
We'll also offer some cost-saving strategies you can use to cut your monthly cell phone bill, and show you to find a cheaper plan.
In This Guide
Same Plans, Different Costs
In the past, it's been noted that the average cell phone bill for a United States citizen vastly differed from the average cell phone bill for a United Kingdom citizen. Take, for example, a couple of plan details in 2014 from providers Verizon Wireless and Three UK.
The monthly cost of typical smartphone service with Verizon Wireless in 2014 was $109.47 per month. As for Three UK, the typical monthly price was set at $67.97, adjusting for the currency conversion.
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The plan details for both providers were as follows:
- Both plans included an Apple iPhone 5S with 16GB of memory.
- At the time, both plans required a two-year contract. With the plans, you received unlimited voice minutes and unlimited texting.
- Three UK offered unlimited data and required no upfront payment.
- Verizon Wireless required an upfront cost and did not feature unlimited data - at the time. However, it did offer 2GB of data, if that's any consolation.
In other words, not only was Three UK cheaper (and it still is), but Verizon Wireless lacked an unlimited plan and forced an upfront cost to the customer.
However, times do change, and it appears as if Verizon, AT&T, T-Mobile, and Sprint are closing the gap with UK providers, providing more affordable and valuable plans.
Let's examine these changes further.
Related: Are you overpaying on your cell phone bill? We'll show you how to cut your cell phone bill by up to 50%!
Comparing the Most Popular Plans
Let's take a look at the following base - both postpaid and prepaid - plans for individual consumers. We will be comparing the four main carriers in the US with the four largest networks in the UK:
US Individual Plans
- Verizon Unlimited Plan - $80/mo for unlimited data, minutes, and texts.
- Verizon (Prepaid) - $80/mo for unlimited data, minutes, and texts.
- AT&T Unlimited Data Plus - $90/mo for unlimited everything.
- AT&T (Prepaid) - $65/mo for unlimited everything, but no mobile hotspot or HD video streaming support.
- Sprint Unlimited Freedom - $50/mo for unlimited everything.
- Sprint (Prepaid) - $40 for 4GB of high-speed data, unlimited voice, and unlimited texts. Sprint has no prepaid unlimited plan at the moment.
- T-Mobile One - $70 for unlimited everything.
- T-Mobile (Prepaid) - $75 for unlimited everything. Because it actually offers less than the T-Mobile One plan, which is postpaid, this might not be the best choice.
UK Individual SIM Card Plans
- Everything & Everywhere (2GB Pay Monthly) - $24 for 5GB of data, unlimited voice, and unlimited texts.
- Everything & Everywhere (Pay As You Go) - $20 for 2GB of data, 500 minutes, and unlimited texts.
- Three UK (Three Advanced Plan) - $16 for 4GB of data, unlimited minutes, mobile hotspot, and unlimited texts.
- Three UK (Pay As You Go All in One) - $26 for 12GB of data, 300 minutes, and 3000 texts.
- Vodafone (2GB Red Extra) - $24 for 2GB, unlimited minutes, and unlimited texts.
- Vodafone (Pay As You Go) - $26 for 4GB of high-speed data, 500 minutes, and unlimited texts.
- O2 (20GB Pay Monthly) - $28 for 20GB of high-speed data, unlimited minutes, and unlimited texts.
- O2 (Pay As You Go) - $20 for 2GB of high-speed data, 750 minutes, and 2000 texts.
As you can tell from the information above, the individual plans by the four major carriers in the UK are much cheaper compared to the plans from the big four wireless providers. Even with the pay-as-you-go phone plans, they are still cheaper compared to the plans in the US.
Personally speaking, I'm a little envious of how cheap the plans are over there. However, despite the prices, many of the monthly plans in the UK are bound by a contract. In the US, the monthly contract policy among the four major carriers is dead.
Comparing Family Plans
Let's compare the family plan prices between providers. If you'd like to learn more about the US family plans, you can refer to our guide here.
US Family Plans
- Verizon Unlimited Plan - You can add lines to any plan for a line access fee of $20. You'll spend $180/month to share unlimited data with a family of four.
- AT&T Unlimited Data Plus - You'll receive a multiline discount off your total bill the more lines you add. It's $185/month for unlimited everything across four lines.
- Sprint Unlimited Freedom - Like Verizon and AT&T, Sprint eschews the family plan in exchange for the ability to add multiple lines to a single account. It'll cost you $120/mo to share unlimited data with a family of four.
- T-Mobile (ONE Unlimited Family) - For a family of four, you would be paying $140 for the service.
Related: We use our cell phone comparison tool to calculate costs and savings for every major cell phone plan on the market. Check it out to see how much you can save.
UK Family Plans
- Everything & Everywhere (Sharer Plans) - With EE, you can share a 4GEE Plan with up to four other people. These plans come with unlimited calls and texts as well as lots of shareable data. The best part is that you can add people to your plan whenever you want. The best part is that even if you purchase the One The Go Max Share Bundle Plan, you will pay only $34 per month for 16GB of data.
- Three UK (Family) - Three UK doesn't appear to have any family plans.
- Vodafone (Family) - As of April and May 2017, both Vodafone Red+ and Vodafone Family have been discontinued. However, Vodafone has stated via FAQ that details on alternative products to replace the service will be arriving soon.
- O2 (Sharer Plans) - O2 has what is known as Sharer plans. With these plans, you can share your data allowance among multiple O2 devices. What you'll need is an O2 phone or tablet on an eligible tariff. Once you have your lead device activated, you can add up to nine other phones, tablets, or sim cards to share the allowance. There are no line access fees with these shared plans.
While family plans are currently non-existent with two major UK providers, O2 and EE ensure that you're paying a cheap price. In fact, line access fees appear to be normal in the US, but not in the UK. With that being said, all four US major providers offer plans for families, even if they turn out to be far more expensive compared to UK family plans.
Why Are US Plans So Expensive?
While there are many benefits that the US carriers offer, like no two-year contracts and switching incentives, these plans are more seriously more expensive. The fact that you can purchase a plan featuring 20GB of data in the UK for the same price as a 2GB plan here in the states is a bit of sore spot. Even if the US is doing better when it comes to pricing and value, there is obvious room for improvement.
So why, oh why, are US plans so much more expensive?
One word: competition. Or the lack thereof.
You see, Britain forced companies to lease their networks to competition at a price. However, in the United States, that hasn't happened.
According to Sascha Meinrath, the founder of the Open Technology Institute at the New American Foundation:
"The United States lacks meaningful competition in its cellular market sector, which leads to higher cell plan prices than a growing list of other countries."
In other words, it's a lack of competition and regulation that's affecting the cell phone bills of American consumers. That means that the big four can price plans extremely high, and unfortunately, consumers accept it. What is also unfortunate is that - in the past - the big four have been either accused of or caught for shady practices. For instance, Verizon and Sprint both have been fined $158 million by the FCC for shady billing practices.
According to Mashable, the two companies hid extra charges in customer bills. As a result, Verizon was forced to pay $90 million while Sprint was fined $68 million. In 2016, unions reported to the FCC that T-Mobile was signing up customers for services they never ordered and charging them for said services. As for AT&T? In 2014, the FTC forced AT&T to pay $105 million for hiding extra charges in customer cell phone bills.
Nevertheless, it appears as if these companies have learned their lessons, but the problem remains that the plan prices are still incredibly high compared to what citizens in the UK are paying for. However, it also appears as if competition between the four major networks has grown fiercer because consumers are making their voices heard. As I've mentioned earlier, we're seeing more features added (e.g. mobile hotspot), more data, and cheaper prices alongside these plans.
Furthermore, we are experiencing more (and better) deals on Apple iPhones and Samsung Galaxy devices.
MVNOs: The Cheaper Alternative
MVNOs - or mobile virtual network operators - are far cheaper solutions for American consumers who are looking for fantastic cell phone plans while on a budget. Take, for instance, Virgin Mobile. They offer an unlimited everything plan - dubbed Data Love Unlimited - for $60, which is as cheap as the Sprint Unlimited Freedom plan.
Boost Mobile is even cheaper. With the Boost Mobile Unlimited plan, you can receive unlimited data, unlimited talk, and unlimited text for just $50 per month. There are dozens upon dozens of MVNOs that offer similar plans at similar prices, and more MVNOs continue to pop up.
So if you want a cheaper, prepaid option, you can always rely on an MVNO. However, you can always consider switching major carriers as well. All four major carriers offer incentives - such as buying out your contract - to switch.
Of course, if you really want to save on your cell phone bill, you can always refer to our cell phone savings calculator.
US Providers Now Offer More Bang for Your Buck
Nowadays, the four major carriers - AT&T, Verizon, T-Mobile, and Sprint - have created a more competitive environment. More often are you seeing headlines regarding massive changes to carrier plans, all because competition has grown fiercer.
In fact, Verizon has recently re-introduced the unlimited data plan, simply because the wireless provider lost hundreds of thousands of subscribers to other carriers, which emphasized unlimited data. What this means is that each carrier is now more than ever vying for your attention, and consumers have more power than they realize to choose the kind of plan they want at the best price.
More than likely (unless you take advantage of an employee or student discount), you'll be paying anywhere between $35 and $70 per month for the available basic smartphone plans.
In other words, due to the ever-growing competition between the major four carriers, you're paying less for bigger plans and better features, i.e. international long-distance calling or unlimited data and high-speed internet.
Although American consumers will continue to spend quite a lot of money each month on their cell phone bill, major carriers are taking strides to make each dollar you spend count. Most carriers offer incentives to switch, nifty perks like HD video streaming and hotspot capabilities, and have upgrade programs so you can get the latest devices. MVNOs, the smaller providers, can pack huge, often hidden, savings if you're willing to look.
For some simple money-saving strategies you can start today to shave dollars off your bill, read our guide to how to lower your cell phone bill.