ELI5- what do cell phone companies actually do?


I’m wondering what service are we actually paying for every month. What does it actually cost to provide data and how do they turn your services off if you don’t pay. Even before the internet was on phones, what did it cost them to provide us with minutes? I understand the phone companies provide the phones, tablets, etc but aside from that I don’t really get what they do that costs so much.

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You’re also paying for network infrastructure. You’re only using wireless up to the cell tower, which then takes your call or data, and routes it out over the backbone fiber optic network. Your phone number is contained within a database that is queried every time you connect to the network. It is during this handshake that the network checks to see if your phone number and device are supposed to be active or disconnected for non-payment, etc…

The phone company generally does not provide the phones. Google, Apple, and, in the past, firms like Nokia and Ericcson provide phones but do not provide cell service.

Companies like AT&T, Verizon, and T-Mobile’s job is to maintain the hundreds of thousands of towers and other facilities that receive and transmit cellular data. These facilities are what actually makes phones work.

In no particular order:

Network infrastructure, such as the cell tower and the wiring to hook it up the communications grid. Also any technical upgrades, such as the transition to 5G.

Technical and customer support, such as people on the phone lines or at stores. For example, I went into a AT&T store last week to get a problem with my account fixed.

The simple costs of doing business such as advertising and regulatory compliance.

Bandwidth in the air is a at premium. Carriers pay the FCC (or equivalent in your country) for permission to use frequencies exclusively, but each frequency can only carry so much data. Minutes and data limits are intended to keep people from just using the service non-stop or exclusively, ensuring there’s air time on the wireless side generally available for people when they do need it. I mean… if there weren’t data limits, SO many people would just use their cell phone as their only internet and most ISPs would go out of business…. if the cell performance wasn’t horrible because everyone was using it at the same time and congestion ruined it.

After that, the carriers need to built the infrastructure for cellular. All those cell towers need to be set up, maintained, and connected to each other and the carrier’s main network. There’s software that routes calls, validates owners of SIM cards, acts as a data endpoint. Every decade or so it seems like there’s a Next Generation of cellular service that requires upgrades to everything, starting in the busy urban areas but still expected to roll out nation-wide. Enough wireless towers to cover the majority of the country isn’t cheap.

There’s general business costs… employees, electricity, building maintenance and taxes, and all that. Never underestimate how much salaries/wages costs.

And then there’s roaming. Oh god there’s roaming. If you want your cell phone to work in another country, let alone another provider’s network in the same country in areas where you don’t have cell tower coverage, those other companies are going to want to be compensated for having your customers on their towers. And of course I mean money. And if you want your customers to have a good experience away from home, you’ll pay the rates they specify. “It’s nice to be in the position of leverage for once,” said those roaming carriers.

> but aside from that I don’t really get what they do that costs so much.

these companies generally also own the infrastrucutre that enables the devices to actually connect and as they are responsible for building it and maintaining it(and this isnt free for them) that is how they pass the cost to the customer.

plus the cell companies are not the one providing the phones, Manufacturers like Samsumg, nokia, etc..provide them. what they actually do is allowing said devices ot connect to their networks.