I pay $61 a month
for three gigabytes of data. Every month, I pay $80
for my cell phone bill. Every month, I pay around $100
dollars for my AT&T plan. Every month, I pay about $200 for
my cell phone bill for my family. The average American spent $1,218 for
cell phone service in 2019. That comes out to just
over $100 per month. And when you isolate just Americans between
the ages of 25 and 64, that average monthly spending jumps
by about $17. Ryan Reynolds believes this is not acceptable,
and it's one of the reasons the actor bought Mint Mobile, a cell
phone company which aims to disrupt the $280 billion dollar
wireless carrier industry. People all across America pay
too much for wireless. Our biggest hurdle is that, you know,
people literally do not believe that Mint Mobile can be as
good for just $15 dollars. You know, the wireless industry's conditioned
us all to think that if we're not paying $100 a month for
wireless, that it can't be any good. Wireless is an essential service, you know,
and it doesn't have to be that way. Before we get into the details of
cell phone service prices, it's important to understand how our cellular system
works and the costs involved in making it run smoothly. It all starts with
the electromagnetic spectrum. In the U.S., the FCC is responsible
for dividing up the radio portion of the electromagnetic spectrum for commercial use,
as well as for use by state, county and local governments. The name radio is a little misleading,
as this portion of the spectrum is used for all types of
communication technologies, including television, cell phones, and, of course, radio. The FCC has to act as a gatekeeper
because the radio spectrum is a limited resource and we are
quickly approaching its limits. Basically, if two phone carriers were to
use the same frequency at the same time, their signals would
interfere with each other. To prevent this, phone carriers bid for
licenses from the FCC to use a specific frequency on
the radio spectrum. And they in turn make those
airwaves available to their customers. Competition for that spectrum when
it becomes available is intense. And so the prices tend to get
bid up to an enormous level. U.S. cell phone carriers are currently in
a bidding war over the part of the spectrum that works best with 5G. The auction proceeds, which
go to the U.S. Treasury, are already close
to $80 billion. When the new spectrum that's being auctioned
at the moment is deployed, y ou'll notice a tenfold increase in the
speed that your phone can deliver. And the distribution of the spectrum in
this auction will really shape the competitive dynamics between the carriers over the
course of the next 5 to 10 years. In the U.S., the three
largest phone carriers are Verizon, AT&T and T-Mobile. They use a total of about
154,000 phone towers across the country. But the phone towers are just one
piece of a much larger network. On the cell tower, t he carriers
are going to place radios and antennas. And at the base of the tower,
a base station that both transmits the signals from the cell tower to the
handset and collects the signal from the handset back to the cell tower. The next piece of fiber. All of those cell towers need to
be connected into a core network that ultimately connects them
together with fiber. That fiber connects into a network operation
center where a lot of the intelligence of the network resides. That's where the
network is controlled. The final piece of the network is
the handset, the cell phone or the terminal at the edge of the
network that is receiving and transmitting signals to the network. Ownership of the network
is somewhat divided. The phone carriers own the equipment on
the towers, but at lease the towers themselves from independent companies
like American Tower and Crown Castle. Verizon and AT&T have some
of their own fiber infrastructure and lease the rest, while T-Mobile leases
all of its fiber infrastructure. With all this hardware,
costs quickly add up. The top t hree carriers spend
about $10 billion a year on capital investments in
their networks. That's going into infrastructure to
make the networks work. And you've probably got between
$10-$20 billion dollars of additional spend per company
in operating expense. k eeping these networks functional. With the arrival of 5G, phone carriers
are doling out even more cash to upgrade their networks. But experts say consumers probably won't
have to shoulder that cost. Currently, none of the big carriers
are charging extra for 5G. I don't think cell phone bills are going
to go up all that much as a function of all the investment
that we're seeing in 5G. And the reason for that is
because we've got a competitive market. And so price becomes a major factor
that decides which carrier you go with. And the discipline that's created by
that competition prevents prices from rising too much. In addition to
the big three phone carriers, customers in the U.S. can choose to go with
an MVNO or a mobile virtual network operator, which don't have
their own cellular networks. They buy capacity from one of the
big three operators and then resell that capacity to end users. And they collect a
very narrow margin. The list of MVNOs in the U.S. is long, but some you may have
heard of include Boost Mobile, Consumer Cellular, Straight Talk, Mint
Mobile and Google Fi. Unlike conventional operators, MVNOs
generally offer customers cheaper, prepaid, month-to-month plans. Actor, Ryan Reynolds, decided to invest
in Mint Mobile in 2019, after having a positive experience
with the company. As a customer, I have a lot of
employees that travel and move around with me a lot, and I
pay for their cell phones. I tried Mint. It was amazing. I tested it through fire first and
then became an owner of the company. I come to the industry with pretty fresh
eyes and I tend to look at the company, I tend to look at the
experience in the same manner a customer would. One of the things that Reynolds
says sets Mint Mobile apart is that the company will actively recommend a
lower gigabyte plan to people who don't use up all of their data. It turns out the average American
only uses 6 gigabytes of data. But people love having unlimited, so wireless
companies use it as a way to increase revenue. Not at Mint,
not on my watch. Mint Mobile runs on T-Mobile's network
and offers one of the cheapest unlimited plans on the market for individual
users — $30 a month for 12 months. And the company's cheapest 3-gigabyte
plan costs $15 a month for 12 months. Verizon, AT&T and T-Mobile
also offer unlimited plans for around $30 a month. But unlike T-Mobile, you have
to get multiple lines. Like most cell phone carriers, including
the big three, Mint Mobile will reduce data speeds for
very high data users. The company says it can offer low
prices by selling plans in bulk and cutting out extra costs that come
with having a physical footprint. In 2015, Google also decided to
break into the MVNO space. Google getting into the wireless industry
here with a service that they're going to call Fi, F-I. What you get for a flat fee
of $20 per month is the basics. You get talk, text, Wi-Fi
tethering, international coverage in 120+ countries. Then beyond that, you buy
your data usage and it's $10 per gigabyte. Since 2015, Google Fi has expanded to
over 200 countries and added an unlimited data plan, which costs $70
a month for one month. But unlike with Mint, Google
Fi offers family savings. With enough people, the price per line can
go as low as $45 a month. Like Mint, Google Fi will also slow data
speeds for customers who use a ton of data per month. Google Fi bounces
between the networks of US Cellular, T-Mobile and what used to be Sprint. As of April, T-Mobile and Sprint merged
and T-Mobile is in the process of taking over Sprint's network. Google says that using more than
one network ensures that customers have better coverage and higher data
speeds than other MVNOs. But there is a caveat. In order for phones to automatically
bounce from network to network, they must be designed for Fi. This includes Google's Pixel phones, as well
as some Samsung, LG and Moto models, but not iPhones, which
only run on T-Mobile's network. Another caveat Google Fi does not
currently support 5G for iPhone users. Generally, when you go with an MVNO,
you're giving up something that you would be getting from the national
carrier that makes up for the difference in price that you pay. You're either getting a lower
network quality, you're probably not getting a subsidy for your handset. You might be getting higher speeds at
certain times of the day, but it speeds throttled down to much
lower levels at peak hour. This slowing down of speeds
is known as deprioritization. So, for example, even though Google Fi
and Mint Mobile both use T-Mobile's network, during times of congestion, the
idea is that T-Mobile will prioritize its own customers before
those of the MVNOs. When asked about this, Google told CNBC
that its Fi customers have the same priority as retail
users from major carriers. Reynolds also said it's not
a problem he's run into. I have never experienced lag
times or anything like that. My experience has been better than
when my business was with one of the big major carriers. A 2019 Study by Tutela, an
independent company that uses crowdsourced data to measure the quality of mobile
providers, found that the majority of MVNOs in the U.S. offer quality that closely mimics that
offered by the big three. For the purposes of this study,
an 'excellent' connection refers to one that's sufficient for things like
1080p video streaming or multiplayer gaming. A 'core' connection is satisfactory
for SD streaming, social media use and web browsing. A sort of intermediate between pure
MVNOs and conventional phone carriers are cable companies, which
also offer phone services. These include Xfinity Mobile and Spectrum
Mobile, both of which piggyback off of Verizon's network. If you're looking for an MVNO or an
alternative to the big three and you don't want to give up on quality of
service, the place to go is to the cable companies. They can make money
by giving you essentially the same network that you buy from AT&T, Verizon
or T-Mobile today at a lower price by bundling it together with
the services that they already give you. As customers find more and more
ways to use their smartphones for things like streaming video, cell phone companies
have to spend a lot of money maintaining and
upgrading their networks. But that's not the only reason American's
cell phone bills are so pricey. Since 2008, average monthly wireless
service bills have dropped 26 percent. But wireless taxes
have increased 50 percent. And that's why customers
aren't seeing savings. Experts estimate that American consumers will
pay $17.5 billion in wireless taxes, fees and government surcharges
to federal, state and local governments in 2020. Taxes, fees and
surcharges make up 22.6 percent of the national average bill. The largest portion of this comes
in the form of FUSF surcharges. The Federal Universal Service Fund, which
is something we all pay into, it's administered by the FCC. And what it does is, it pays for
broadband and pays for phone services in some rural areas where it may not
be profitable to offer these services. Part of the reason the taxes on cell
phone bills are so high is because of the Tax Freedom Act, which forbids
states, localities and the federal government from taxing
internet access. Back in the day, states used to
get hundreds of millions of dollars by taxing landlines, but with people increasingly
ditching the home phone in favor of cell phones, states have tried
to close the gap by levying massive taxes on the voice and text
portion of cellular plans, which are not covered under the
Tax Freedom Act. In some cities across the nation,
taxes on wireless phone services comprise close to 30 percent
of consumers' monthly bills. In Chicago, that ratio balloons
to nearly 40 percent. But Boesen thinks that this trend
of rising taxes can't continue forever. I think what we're seeing in some
states and localities is that maybe they'll need to find
new taxes elsewhere. These new taxes, Boesen believes, may
come from online communication tools like Zoom or Skype, which have
become paramount for remote work and staying connected to family
and friends during Covid. For example, since November, California,
New York, Maryland and Virginia have required Zoom to charge
some customers local communication service taxes. But taxes aside, another reason
Americans spend a lot is because they use a lot of data. For a family of four, it's probably 40
to 50 gigabytes and your friends in Europe are at half of that or less. On average, the more usage on the
network, the more carriers have to invest in the network to make the
capacity available for you to use. The more it costs them,
the more it costs you. If you look at what users in the U.S. pay per unit of data, it's actually
not more than most markets around the world. Experts say that rethinking the
structure of the FUSF is something the incoming administration will need to
address, as taxes on phone bills in many parts of the
country are becoming unsustainable. Chaplin says the issue has been under
discussion for years, but change is difficult. Telephone companies that provide
service in rural markets are often big employers in those markets, and
so have a lot of sway with senators in those markets,
that ultimately have sway over the FCC and
how policy is formed. While policy may eventually provide some
relief, experts say there are few things you should consider when deciding which
phone plan is best for you. Activities like video and audio streaming
suck up a ton of data. So if you're big on watching shows
or listening to podcasts on your usual, non-Covid world commute, you might want
to go with an unlimited plan. But if you mostly use your smartphone
to browse the web or send the occasional email, you might save some money
by going with a limited data plan. And of course, you can always look
for Wi-Fi to avoid eating away at your data. That's when it becomes possible
for you to consider one of the MVNO options out there where you can
buy one, two, three, four gigabytes a month instead of paying
for unlimited usage. Chaplin says that only about 20 percent
of the data that people consume goes over the cellular network because most
of the time we're in a place where we have access to Wi-Fi,
like our office or our homes. The reason that that's so expensive
is because the infrastructure required to cover that 20 percent
of traffic is enormous.
Some states just tax way too high, see Table 2 in the link below (sucks to be in illinois)
https://taxfoundation.org/cell-phone-wireless-taxes-and-fees-jump-sharply-in-2019/
All I can say is we're very very fortunate that AT&T was not allowed to buy T-Mobile or it'd be a mess. Our service is so much more expensive than Europe when data is considered
Funny thing is, nearly every state doesn't charge any taxes or fees on wired home internet, not even sales tax, based on recent laws that have passed (each state needed to pass it individually). My bill is 80 dollars, nothing more. Dunno why it can't be the same for phone service, which is an essential need. Electricity is the same way with a bunch of extra fees ("customer charge", and paying 10 dollars a month for some hurricane that did damage 15 years ago but paid off over 20 years)
That's weird that he comments how he's not had lag or anything... def. compared T-Mobile v. Mint in same location and at the time mint was wayyyyy slower than the direct T-mobile connection.
The linked video never mentions Mint by name, but does show a screen shot of Mint plan options.
Edit: okay. I somehow missed the first part of the video.
Thanks for sharing!
Well a lot of people in the US love to finance their phones and get into a never ending upgrade cycle. Which in turn ties with their phone plans leads to high bills.
Just buy a phone that you want, within your scope of budget (unlocked) get on a carrier if you have to or use mint like I do and save tons of money. I mostly use wifi anyway I'm on the 3GB plan, works fine for me. Have like 1 GB on average left over per month.
I accidently added the video with a timestamp at the end of the URL that brings you to later in the video. Here's a link with no time stamp that starts the video at the beginning for whoever needs it.
I had no idea he is the owner of mint mobile.