Household Spending on Communications Ranges from 2.3 to 3.4 Percent of Household Income

By Gary Kim December 12, 2013

U.K. residents spend 2.3 percent of household income on communications services, according to a recent study by Ofcom, the U.K. communications regulator. In France, the United States and Italy, consumers spend 2.5 percent, Ofcom says. In Spain, consumers spend 3.2 percent of household income (not individual or per capita income) on communications, while in Germany consumers spend 3.4 percent.

To create the index, Ofcom created five household profiles, ranging from a low-use household with basic needs to an affluent household that uses a lot of communications services. Ofcom then identified the best deals available in each country that matched the needs of these households.

The United Kingdom was either the cheapest or second cheapest in four out of five of the profiles. While U.K. prices were consistently cheaper, not all communications services were the most competitive relative to other countries. But some will disagree with the magnitude of the findings, as the Ofcom data seems incongruous, in some cases. 

For example, Ofcom says a typical handset with 200 minutes, 50 texts and 200MB of data costs on average £14 per month in the United Kingdom. In the United States, this would cost £57, about four times as much, Ofcom maintains. Not many people in the United States would agree that a plan including 200 minutes, 50 text messages and 200MB of data “typically” costs $93.49.

Do you really think it costs a U.S. consumer $94 to get a mobile plan with just 200 minutes of voice usage, 50 text messaging and 200 MB of data? Does that fit with your experience?

That’s an occupational hazard for analysts and researchers doing cross-country comparisons. Even when the methodology is sound, the results can be disjointed, or arguably wrong. 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 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), the ITU maintains.

Whether those ITU findings are correct, some will contest. The issue is that most people do not buy prepaid plans in the United States. 

Edited by Cassandra Tucker

Contributing Editor

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