TELECOM Digest OnLine - Sorted: Re: America the Worst For Cell Rates and Plans

Re: America the Worst For Cell Rates and Plans

John Levine (johnl@iecc.com)
28 Jan 2005 21:34:16 -0000

> The reality is that most Europeans have a much cheaper service.

I just came across a most interesting article in the current
European Economic Journal on this very topic. See pages 5-7:

http://www.european-enterprise.org/public/docs/EEJ.pdf

It argues that due to the "termination monopoly" in which anyone who
wants to call you has to pay the price your carrier sets, the average
per minute price for calls in Europe is much higher than in the US,
and a simple chart shows that the lower the per minute price, the more
calls people make. A big advantage of charging all the calls to the
subscriber is that the overall price becomes a competitive issue,
which drives the per minute price down and provides for cheap bundled
plans.

In a monopoly environment, prices tend to stay high unless regulated
down, and that's what's happening in Europe, increasing regulation of
termination prices.

He also points out that roaming prices are an even worse problem for
the same reason, they're set by whatever carrier your carrier happens
to have a roaming agreement with, but now there's international
politics added to the mix.

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