Why do Cell Phone Bills Cost So Much in the U.S.?

People pay so much for their cell phone bills for a variety of reasons. Unfortunately, a big part of that is due to the fact that a lot of people don’t know that less expensive options exist that deliver a similar experience. In this article, we will discuss why cell phone bills cost so much in the U.S. as well as what alternatives exist for consumers who are fed up with paying so much for their wireless service. 

If you want a quick wireless provider comparison tool you can check out the various services and plans in your area and filter out the ones that cost too much. You don’t want to be stuck paying for data and services you don’t need, and our comparison tool helps you focus on a plan that’s right for you. Without further ado, let’s get into it. 

How Does the American Cellular System Work? 

In loose terms, the way that our cellular system works is through the transmission of data through radio waves. The frequency spectrum is vast, and a subset of that spectrum is used for communications. Radio towers are constructed to send and receive radio transmissions from devices, and those towers are all connected with fiber to central locations that process the data that’s being sent and received. 

Those networks need to operate on different frequency systems, and they are divided up through auction in order to cut out the possibility of any interference, regardless of the number of devices using the network. As the number of devices grows and the actions done by the devices become more and more data-intensive, networks need to grow stronger and faster in order to keep up. What makes our phone bills so expensive is all the money that goes into making our cellular systems work. Licenses to utilize the spectrum, maintaining and upgrading the network, and the other associated costs of running their business have pushed cell phone providers to output plans at a very high cost. 

So, is it hopeless? Are we all forced to pay a high bill for our cellular service? Fortunately — no. There are ways to save, and the emergence and quality of MVNOs is the best way to do it. Before we get too far into MVNOs, let’s talk, in broad strokes, about a few of the moving parts that bring us the mobile data we use today. 

The FCC Divides the Usable Frequency Spectrum 

Many years ago a frequency band was set aside for telecommunications. The width of this band and its exact position on the radio frequency spectrum are a bit arbitrary, but the band that we use for telecommunications is monitored very closely by the Federal Communications Commission. Radio communications are amazing, but any interference on the band has serious consequences. 

To evade that, the FCC has divided the band of usable frequency in order to auction it off to companies that have use for it. These auctions let the major wireless networks construct sprawling networks all over the country with the assurance that their slices of the spectrum are theirs and theirs alone. This division of the spectrum is also visible in the new addition — the CBRS Spectrum. 

Auctions for Radio Spectrum

The division of the band and the subsequent auctions are an expense so large it is almost impossible to fathom. The competition between the big three networks (Verizon, AT&T, T-Mobile) is immense, and that competition drives up the price more and more. The United States is at a point where the amount of bandwidth used is entirely encompassing the frequency band that’s been given to telecommunications. 

Since they need so much, any slice that these big companies can get over the other ones lets them have a stronger network and support more devices using it before data speeds start to slow. There are a few tiers of priority usage, and usually the premium plan of a major wireless network never has data speeds slowed, then the basic plan has some premium data but data that could be slowed if things get really bad, and at the step below that are the MVNOs that run on the network. 

The networks are created with the understanding that, at this time, there is a fair likelihood that the data used on the network can exceed the amount of data available to be used, and in that case, the lower tiers get slower data speeds so the upper tiers can still enjoy the highest speed data available. That constant attempt to increase the total network speed drives up the costs to upkeep the network, which is the inclination for major wireless networks to up the cost of their plans.

CBRS Spectrum Bolsters Network Strength

The CBRS band is the name in the United States for the private spectrum that’s recently become available for its residents. CBRS was made available by the FCC in 2016, and in the following years, it has created tremendous change in the way that businesses are able to set up communications networks. In April 2016, the FCC opened up a lot of that spectrum for private use, which created a new way for companies and corporations to communicate using 4G LTE and 5G on their private networks. 

Using CBRS as a private 4G LTE or 5G network can enhance the speed at which devices can communicate with one another. CBRS technology presents a cost-effective way for companies to create and maintain the infrastructure necessary to host communication between all of their devices. In the United States, 5G CBRS networks, and the devices that use them, have to enter into the Spectrum Access System (SAS) database that keeps a record of all the spectrum that’s being used all over the United States. 

Network Upkeep Costs a Small Fortune

Major wireless networks have to build, upgrade, and maintain their wireless networks in order to ensure that all their users are getting hyper-fast data at all times. This three-way competition between Verizon, AT&T, and T-Mobile means that all of these phone companies are spending billions keeping their networks up to date, performing maintenance whenever something is broken, and working hard to figure out how to increase the speed (with 5G) and the bandwidth available, especially in urban areas. 

When we say billions, we mean it. Networks, together, spend over 10 billion to upkeep their networks and over 10 billion to create more infrastructure to support more devices. The cost to upkeep these networks is astronomical. One of the things that drive this is the amount of data we use as a nation. In a video by CNBC, they talk about how the cost per unit of data in the U.S. and, say, Europe is very similar, but Europeans pay much less for their wireless bills because they use a lot less data. We’ve driven up the cost of premium wireless by requiring the networks to be so strong in order to support our data usage. 

While the cost of plans at premium wireless companies is pretty expensive, there is a much more affordable option. Mobile Virtual Network Operators (MVNOs) use the networks that major wireless companies have built and maintained. They have a much smaller running cost and therefore are able to provide plans at a much cheaper price point, while giving the same speed and coverage that major wireless networks are providing. 

Mobile Virtual Network Operators: An Affordable Option

MVNOs are a fantastic way to save money on your phone bill. They offer plans that give limited data at a significantly reduced cost. Major wireless networks want everyone on their unlimited plan because the average user does not need 50+ GBs of data each month. A lot of people spend the majority of the day within WiFi zones and only use their mobile data occasionally, but will still have unlimited plans from the major networks. Major networks have transitioned into offering more and more expensive plans, going from offering limited and unlimited plans to unlimited and unlimited + plans. 

Those unlimited plans can provide great value to people who are on the move or like to watch social media and stream videos when they are out and about. If you take a bus or a train to work and like to watch something on your phone, for instance, that will chew through data. Also, changing carriers is a hassle. As limited plans disappear, and you are a long-time major network user, it is likely that you’ll get a new plan on that network. New users will too. If everyone they know has major networks providing their phone service, it is much more likely that they will get that service as well. 

We are here to talk about MVNOs! They are a great way to save big bucks on your cell phone bill each month and have an amazing set of plans that provide less data, perfect for people who don’t use multiple GBs every day. 

How do MVNOs Differ from Major Wireless Networks?

The main difference between MVNOs and Major Wireless networks is that they don’t have to construct, operate, and maintain their own cell towers. This, in turn, lets them make less expensive plans that offer the same nationwide coverage as the major companies. In fact, there are some MVNOs that are owned by the major carriers whose cell towers they rent. One problem with MVNOs: a lot of people just don’t know about them. 

Since they are so small, they don’t have the marketing budgets of those larger companies. Major wireless companies also have the advantage that they’ve been around for a long time and that, well, it is very inconvenient to switch companies. You want to make sure that your phone is unlocked and that you don’t have any outstanding contracts at your company that will cost you extra if you cancel your service. Alongside that, you want to make sure you go through the process of porting your phone number so you don’t have to start from scratch with a new phone number. For people who are not tied to any major carrier at the moment, well, an MVNO has a lot of advantages. 

The Pros and Cons of MVNOs

While cheap plans are a big draw, it is not all sunshine and roses when it comes to MVNOs. They have pros and cons just like any provider. The small nature of many MVNOs results in them having plans that don’t offer as many incentives other than their price. Also, of course, the data deprioritization is a bit of a cloud overhead, which means you are never entirely certain if you will get the high-speed data that is possible with the plan. 

Pros 

• MVNOs offer cheap plans, contributing to overall savings on wireless bills every month. Oftentimes every one of their plans is at a lower price point than the cheapest plan at a major network.
• MVNOs offer service on major networks, using the same coverage nationwide. Some even use multiple networks! 
• MVNOs love it when you switch. The nicest a phone company will ever be to its customers is the moment they say they’re joining the party. All phone companies are looking to get new business, and you can also find the best deals as a first-time customer. 

Cons

• MVNOs have slower service. While they use major networks, their customers have less priority over the bandwidth, so in times of heavy use, MVNO customers will lose data speed.

Overall, we really like MVNOs. If you don’t need all the bells and whistles associated with an unlimited data plan, an MVNO gives you fast and steady coverage when you need it and with huge overall savings. There are a lot of MVNOs out there, and plenty of plans are offered by different companies, which means you have the chance to shop around and figure out which one works best for you. 

Lowering the Cost of Your Cell Phone Bill

Americans pay a lot for their cell phone bill. We are in the market of helping you lower the cost of your cell phone bill, and the best way to do that is to figure out exactly what you need and then find a plan that delivers that. If these major wireless unlimited plans are overdelivering it means you are paying for parts of the plan that you do not need. Figure out how much data you use and plan accordingly. 

If you want to take it even a step further, you can always construct a routine that cuts out as much data usage as possible. This generally means that you will spend as much time as you can in Wi-Fi zones, and download any audio or video that you want to watch when on the move beforehand. Downloading media on Wi-Fi is such a good way to limit your data usage. 

Phones Count, too

Companies spend lots of money marketing their newest phones and new releases. They are getting more and more expensive, and the option to pay them off over two or three years makes the phones seem way cheaper than they are in reality. Right now on Verizon’s website, the iPhone 13 is cheap at $22.22 a month. The catch? It’s $22.22 for 36 months. That brings the total to $800 over those three years. That’s a lot of money! It is purposefully easy to commit to a large phone contract like this one. When you are paying off a phone it means that you cannot bring that phone to another carrier until you pay it off in full. 

Why do Cell Phone Bills Cost so Much in the U.S.?

It is, unfortunately, not so simple. Alongside the increasing data usage and network speeds, there are significant phone bill taxes that states have enacted as landlines become less and less common. We cannot be sure whether or not cell phone plans will trend upwards or downwards as technology continues to change, but there will always be MVNOs that offer plans at much lower prices if you want to decrease your cell phone bill. 

Cell phone bills will always be a tough pill to swallow, but do some research on MVNOs if you want to save some money in that department. There are so many amazing MVNOs, and they  come to bat every day, ensuring that they provide great service to all of their users.