Why Is Cell Phone Service So Expensive in the U.S.?

Cell phone service has increased in price over the years, especially in the United States. While there are affordable options with select carriers, a lot of people have a hard time finding a phone contract for less than $80 a month. This begs the question: “Why is cell phone service so expensive in the U.S.?”

Growing Networks Need Growing Funds

One of the main reasons why the price for cell phone service has increased in the United States is because of the growing number of cell phone users. More users bring about the need for bigger networks, and it costs money to expand those networks throughout the country. Of course, the new users that have come along have already brought in more money, but perhaps the phone networks are discovering that they simply need more to meet their current demands.

Supply and Demand

From a simplistic perspective, you could say that the demand for cell phone service has gone up in the U.S. and thus the price has followed. This is basic economics, and it ties into the reasoning above. Think about what happens to the price of gas when summer arrives. More people need gas to go on vacation, so the price goes up. Companies take advantage of the demand when they can because their prices will eventually have to drop. We’re just going through a high demand time at the moment on cell phone service.

New Technology Calls for More Money

In order to introduce new phones, tablets and other mobile devices, cell phone providers need a source of funds. A portion of the money that networks get from their services goes to the development of new devices for future users. They still charge money for the devices when they come out, but they need a good amount of start-up money to put new products on the shelves. For instance, a lot of phone companies are working on smartwear right now, like watches and arm bands, that are connected to their phones. Until some of these products come to market, they have to be funded by current cell phone customers.

Another factor is the technology in new phones costs more than older technology. That’s why phone prices and the networks tend to increase. Part of the money goes to the development of new devices, but part of it also goes to the most recent products out on the market. If you want to continue having new gadgets, you’ll sadly have to pay the price.

How to Save Money on Cell Phone Service

You can’t combat the price increases in the cell phone industry, but you can take steps to lower your costs. Here are some simple ways to save money on cell phone service:

  • Compare rates from multiple providers before selecting a phone carrier. Keep in mind, any cancellation fees you may have if you are currently under contract.
  • Check out different kinds of plans from the phone provider you like best. You may save more with a prepaid plan based on the way you use a phone, or you may be better off with a family share plan.
  • Get a basic phone instead of a smartphone if you don’t plan to use the Internet. This will save you from having to pay for a data package.
  • Minimize your usage as much as possible. If you have a landline at home, use it to make local calls. If you never use your landline, you might think of getting rid of it to save money on the other end. Adjust your cell phone minutes accordingly.
  • Bundle your phone package with other members of your family if you all want to be on the same network. If you have children, you can get apps and specific phones that allow you to limit how much your children can be on the phone. This will help keep your costs down.


About Lynn Oldshue

Lynn Oldshue is a PR professional who has worked with the Birmingham Zoo, Coca – Cola , the Alabama Theatre, and the Saenger Theatre. She has covered personal finance issues for 10 years. Lynn can be contacted at [email protected]