Study Says U.S. Doesn’t Lag Europe in Wireless
Calls for wireless market regulation that would make the U.S. more like Europe “are not based on sound empirical evidence,” according to an American Consumer Institute study published Wednesday. The U.S. leads Europe in wireless, contrary to popular belief, the free market nonprofit said: “The contention that concentration leads to higher prices, lower usage and decreasing consumer welfare does not appear to be a U.S. problem.” The noncommissioned report based its findings on “widely available” data from the FCC, CTIA and the Organisation for Economic Co-Operation and Development, it said.
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OECD data show that the U.S. wireless market has more wireless carriers and less concentration than any European country, the Institute said. In 2005, the U.S. had 155 mobile operators, and France was second with 25, according to OECD. And the U.S. wireless market is less of a “cozy cartel” than European markets, the Institute said. The U.S.’s top three carriers had combined market share of 70.5 percent in 2005; OECD said the United Kingdom top three have the smallest concentration in Europe with 72 percent. The OECD’s 2005 Herfindahl-Hirschman Index also showed the U.S. to have the smallest concentration index at 2000.5; the U.K. was second with 2274.1. Regarding device choice, CTIA said last month that the U.S. offers 700 handsets, compared with the U.K.’s 190.
FCC data show the U.S. to have lower prices and higher wireless usage than Europe, giving “compelling evidence that the overall consumer welfare derived from wireless service is higher in the U.S. than internationally,” the Institute said. In 2005, U.S. revenue per minute was 7 cents, according to the FCC. The closest European country was Finland with 11 cents. And the FCC has said that whereas U.S. wireless users averaged 798 minutes monthly that year, Finland had 279 and most of Europe less than 200. Those statistics could be skewed by differences in U.S. and European payment systems, the Institute said. Europe uses a “calling party pays” system to bill customers, whereas the U.S. counts minutes for both ends of the conversation. But a May 2 report by Marius Schwartz and Federico Mini corrected for the difference and still found U.S. prices lower than those of all major European countries, the Institute said.
OECD statistics could mislead some to overestimate European wireless market penetration, the Institute said. U.S. wireless subscription numbers generally reflect the number of handsets in operation, whereas in Europe the numbers measure the number of SIM cards, it said. “Because European roaming rates are so high between countries, it is sometimes economical for consumers to have more than one SIM card per handset… to take advantage of lower in-country rates.” So a European customer could be counted multiple times in OECD statistics, the Institute said. OECD figures may also be off because pre-paid wireless plans are more prevalent in Europe than the U.S.; prepaid customers tend to use wireless service less frequently than postpaid ones, it said. “Correction of these differences will decrease the reported European penetration rate relative to the U.S.”