Every so often, organizations release information attacking the competitive nature of the U.S. wireless market as compared to other countries. Unfortunately, all too often they have fatal flaws that render them meaningless.
If one is to conduct a credible, rigorous study of international wireless markets to compare against the U.S., it must:
- Be an apples-to-apples comparison that not only takes into consideration the dramatic differences in usage patterns across countries and matches service plans to actual consumer usage in that country (e.g., U.S. 812 minutes versus 295 in South Korea and 248 in Sweden, etc.);
- Consider things such as the unique elements of different rate plans (family plans, free in-network calling, nights and weekends, etc.); and
- Include a comparison of each country’s per capita GDP (U.S. $46,381 versus India $1,049).
Taking the time to consider how each of these elements, and more, impact actual value to consumers should be a key component of any international comparison. Specifically:
- Establish a “Price” for a Country: It does not make sense to arbitrarily choose a carrier and then suggest that the price per unit for that choice is the “price” for the entire country. It makes even less sense when you compare a jumble of different sized carriers, such as the second largest carrier in the U.S. to the fourth largest in the U.K., to the third largest in Japan and Hong Kong, and the largest in a number of other countries.
- Actual Usage Should be Considered: In addition to the concerns with establishing a “price” for the country, it makes better sense to choose service plans for that country that match actual usage in the country. When a plan chosen to reflect the U.S. is 450 minutes of voice and 200 text messages, and the average U.S. citizen actually uses more than 800 minutes of voice and close to 700 texts, the choice is neither representative of that carrier’s customers, nor of the typical U.S. citizen, and ignores the greater value consumers’ actually are receiving from higher usage plans.
- Use Comparable Plan Choices: One should be careful to compare comparable plans. Selecting for comparison a plan from one country that reflects the highest “cost per unit,” and a plan from another country that reflects a “bulk” discount rate skews the picture. For example, it’s accurate to choose for Sweden a plan that on average charges $17.80 for 5,500 texts (with the resulting $.003 per text). At the same time, it would be most accurate to compare that with the widely popular U.S. plan where consumers pay $20 for unlimited texts from the U.S. carrier or the $20 plan for unlimited data and 200 texts, instead of another, less popular option that charges $5 for 200 texts. Failing to do so undoubtedly would cause questions regarding the objectivity of the study and its methodology. When you consider that 40% of Americans are on a “family plan,” and the overwhelming majority enjoy free “nights and weekend” calling, free “mobile-to-mobile” and more, one should factor that into the cost equation.
- Consider Per Capita GDP: Comparing offerings from India ($1,049 per capita GDP), South Korea ($18,717) and Taiwan ($16,768) to the United States ($46,381 per capita GDP) and suggesting that a dollar is the same to citizens of each of those countries are not factually correct.
- Use the Facts on Competition for Your Conclusion: Suggesting that the United States is not competitive without any supporting data is troubling. Competition in the United States has driven amazing innovation, tremendous consumer benefits and staggering usage. The GAO recently reported that prices in the United States have dropped by 50% over the last 10 years. Facts show that the U.S. has one of the three lowest (India and Pakistan) international HHI scores, and is one of only a handful of countries on the planet with five or more wireless carriers.
A truly rigorous analysis will show that the U.S. consumer is getting tremendous value for his/her money. If one wants to see what an unbiased analysis looks like, one of the most comprehensive and accurate reports in this area is regularly produced by Bank of America Merrill Lynch. It compiles a Global Wireless Matrix that presents a wide-ranging list of statistics for nearly four dozen countries, including the U.S., in such categories as minutes-of-use and revenue-per-minute.