SMS vs. telephone calls

I found this item over at Nielsen, especially in light of this earlier item on this blog.

Given this data, is it any wonder that carriers would try to hike rates? After all, text volume seems remarkably inelastic given prior price increases. Economics suggests that they would raise prices in this case!

Regulation of Text Messaging?

In this previous post, I had discussed rising text message rates in the US. According to this article in Forbes, it has gotten the attention of Sen Herb Kohl (D-Wis) as well. Here is the announcement from his website. While specific action is unlikely in this session given the upcoming election, Forbes notes a possible connection with the EU's action on mobile phone price regulation.

While Kohl blames this on industry consolidation, I believe that there are other interpretations that should be considered. For one, the price increase is for a-la-carte messages, not for packages or bundles of messages. Second, carriers often offer cheap or free messages between users in their networks as a way to increase switching costs for users. Should they be prevented from doing this?

Verizon Wireless is opening up its network!

This has got to be the news of the month, perhaps the news of the year! It has gotten the attention of the major news sources (see this in BusinessWeek, this in the NY Times, and this over at CNet). I believe that it is no accident that it comes on the heels of the Open Handset Alliance's Android project, which has been substantially supported by Google). Not surprisingly, the blogs have been buzzing about this as well (see this from Om Malik and this from BusinessWeek). As I mentioned earlier, this was the essential vision of Tim Wu in his "Wireless Carterfone" treatise.

I applaud Verizon's move because it will almost certainly increase choice and innovation. It is likely to transform the industry in profound ways as well. I am also delighted that this move was Verizon's choice, not a policy originating from a court or a government agency. They must have a business model in mind that will make their investment more profitable for their shareholders in the long run.

The success of this effort will clearly depend on prices ... what will unbundled access cost and what will technical certification at Verizon's facilities cost. By the way, I have read some commentators who have questioned Verizon's testing ... suggesting that this should be an independent lab (I can't find the specific references anymore, regrettably). I disagree. I think it is perfectly reasonable for Verizon to establish, define and support conformance testing for devices attaching to their network.

Update (2007-12-5): This item argues why this move makes economic sense for Verizon.

US Wireless by the numbers

This report from CTIA contains historical data on US mobile operations. A couple of facts from the report

• There were 243.4 million mobile subscribers in June 07, up from 219.6 million the previous June.
• The average bill was $49/month, an amount that has been virtually unchanged since June 2003.
• These consumers used over 1 trillion minutes in the first half of 2007, a record. Minutes of use has grown 18% year over year.
• There were 210,360 cell sites in service in June 07, up from 197,576 the year before.

Have fun poring over the data in this report!

Verizon Wireless and Vodafone

As you may know, the second largest US wireless carrier, Verizon Wireless, is a joint venture between Verizon and Vodafone. This partnership has worked pretty well all in all, though it has posed some challenges for Vodafone, not the least of which has been the use of CDMA in the Verizon Wireless network vs. GSM in the Vodafone network. This has made it difficult for Vodafone to offer the kind of on-net roaming to its customers that it can elsewhere in the world.

The rumor reported inthis article, if true and assuming it is executed as reported, raises some interesting questions:

• Would Vodafone convert the Verizon wireless system? How would they do this? How much would they be willing to invest?
  
• How would this change the competitive dynamics between Verizon and AT&T in the US? Would it make sense for Verizon to continue offering its quadruple-play packages in markets where fiber has been deployed?