27 August 2007

Comparative mobile rates

I have compared US and European mobile rates in previous blog posts. Along that line, this paper (by way of the PFF blog) is relevant. It contains a systematic comparison of the US mobile communications market to those of our main trading partners. The results of this analysis might be surprising to some.

Difficulties with the data remain, for example:
This report has shown that the U.S. market has lower market concentration, more competitive prices and greater acceptance among consumers. However this finding is counter to published international data on market penetration. The problem with these international statistics is that they do not count the same things. In the U.S., wireless subscriptions primarily reflect the number of handsets in operation. However, in the Europe, the statistics reflect the number of Subscriber Identity Module (SIM) cards. Because European roaming rates are so high between countries, it is sometimes economical for consumers to have more than one SIM card per handset, in order for consumers to take advantage of lower in-country rates.

This figure says a lot about the conclusions:

The report's conclusion reads:
The data from the OECD and FCC show that European wireless markets have higher concentration, higher prices and lower usage. From this analysis, the U.S. wireless market gives consumers more choice, offers more competitive prices and encourages more consumption. Compared to Europe, reported problems of high market concentration, high consumer prices, low usage and decreasing consumer welfare do not appear to be a U.S. problem. In summary, there is no evidence of market failure or that the U.S. wireless market somehow lags behind the European wireless market. In fact, if anything, basic comparisons of consumer welfare between these markets demonstrate the opposite conclusion.

Do you believe the results? If it is true that the market concentration is low compared with many of our trading partners, is it still high enough to be of concern to regulators?

Update (29 Aug 2007): You might be interested in this related item over at ARS Technica.

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