There is a troublesome trend occurring where some people are suggesting that the mobile environment in Europe is better for consumers than the U.S. This is bothersome and unfortunate since these individuals fundamentally fail to understand reality, or selectively choose facts to support their beliefs.
Around the world, it is understood that the United States is leading the mobile revolution.
“Europe was long viewed as a pioneer in mobile, but... is now lagging behind other regions in the deployment of mobile broadband, particularly in 4G/LTE,” said Anne Bouverot, Director of the GSMA.
Neelie Kroes, European Commissioner for the Digital Agenda, acknowledged the same.
“Even as we roll out the latest networks, I know we also need to look ahead to invest in researching the next generation of networks – I am talking about 5G. OK, we missed 4G, we were the leader in 3G, now let’s take over the 5G.”
I believe the best way to address the “grass is greener in Europe” delusion is to look at the facts. As John Adams observed, “Facts are stubborn things; and whatever may be our wishes, our inclinations, or the dictates of our passion, they cannot alter the state of facts and evidence.”
So let’s look at the facts. If you remember just one thing I’m about to throw at you, remember this: Americans use a lot more wireless service – voice, text and data – than our counterparts in Europe – and more of us are on faster 4G/LTE networks.
European carriers are struggling to try and replicate this model for their consumers. According to GSMA, “the EU is lagging well behind the U.S. in deployment of next generation wireless infrastructures and the advanced services they make possible, and that EU consumers are worse off as a result.”
As the head of the U.S. wireless industry trade association, I’m proud that our members created – and continue to develop – these innovative products and service that so many Americans want – and do – use. But I can’t help but feel bad for our friends in Europe.
Americans Talk and Use Data…A Lot
A lot of people get confused when they try to compare a U.S. plan to one from the EU. Setting aside the EU consumer for a moment, even within the U.S., our consumers are different – very different. As a result, America’s wireless companies offer a wide variety of plans, ranging from pre-paid and post-paid, to family plans, tiered or unlimited plans, to a combination of the alternatives.
As you will see in a few statistics below, the EU consumer is very different from the American consumer. The OECD Communications Outlook and Ofcom try to make comparisons based on a number of theoretical baskets, but they are largely artificial since they ignore extremely different usage patterns and fail to take into consideration dramatic differences in network and device performance that lead to a very different consumer experience.
In the U.S., wireless consumers use four to five times as many voice minutes than those in the five largest EU countries. Americans also use more data – a lot more. Earlier this year, GSMA released a report that compared the U.S. and EU. Among the multiple statistics in the report, two usage statistics jumped out:
- Europeans used 174 voice minutes, while Americans used 901 minutes.
- Europeans used 273 MB while Americans used 480 MB.
This discrepancy in usage in the U.S. versus Europe isn’t new. In fact, Americans have consistently used more minutes than Europeans, even when taking into account the national differences in billing practices. The precise amount varies depending on the countries compared, but the U.S. minutes are dramatically different, and significantly greater than the Western European average or the national averages reported by Bank of America Merrill Lynch.
- France average is 234 minutes
- Germany average is 132 minutes
- Italy average is 170 minutes
- Spain average is 158 minutes
- UK average is 184 minutes.
More Investment and New Devices Encourage More Usage
The usage patterns described above and by GSMA’s report often drive the range of plans offered to consumers in each of the countries. In turn, the revenues from the subscribers’ purchase of those plans allow for capital investment to upgrade networks, which improves the networks and results in greater usage by consumers.
Something that’s not discussed by many in the U.S. is what is causing the increase in the ever-growing disparity among the U.S. and Europeans. It’s two-fold: investment and innovation.
First, let’s look at investment.
- The U.S. carriers invested about $94 per subscriber while the rest of the world’s carriers invested about $16 in 2012. The EU5 invested about $35 per subscriber.
But 2012 isn’t an anomaly for U.S. carriers and their investments in infrastructure, from towers to antennas to capacity to faster networks. Over the last 10 years, U.S. carriers invested almost $250 billion. And this figure doesn’t include the billions they paid to the U.S. government to acquire spectrum.
Thanks to the long-term strategy and thoughtful planning by the U.S. carriers, U.S. data speeds are faster, on average, than those in Europe and the gap will widen.
- Now, more than 62 million Americans use 4G/LTE compared to about 3.5 million EU residents¹, and 4G technology covers more than 90 percent of the U.S. population, compared to about 47 percent of the European population.
Second, the most innovative devices are usually introduced in the U.S. first, and quickly adopted. With slower networks in Europe, what’s the incentive to upgrade to new devices that can do even cooler, better and faster things? In the U.S., Cisco noted that an average 4G smartphone used 1,302 MB a month, while a non-4G smartphone used 577 MB. As this chart shows, that gap is only expected to grow by 2017.
For those few in Europe who do have access to 4G and use it, European 4G-generated traffic was almost twice European non-4G-generated traffic. But it’s important to note that both forms of European traffic were still less than half that reported by Cisco for similar U.S. users.
So, as you can see, the facts paint a picture that differs from what some are trying to argue. The U.S. wireless consumer is living in a world-leading mobile environment that others around the world are trying to replicate. The value the U.S. consumer receives from his or her mobile service is unparalleled and unprecedented.
1. See Informa Telecoms & Media Group, WCIS+ Database, subscribers by geography and technology.