While cellphone customers in the United States tend to pay more every month than consumers in other developed countries, they get more for their money in terms of voice and data use.
For example, Americans pay an average of 4 cents for a minute of talk time, while Canadians and the British pay more than twice that, according to recent data from Merrill Lynch and Bank of America. In Japan, where the top three wireless carriers control 97 percent of the market, locals pay 22 cents a minute.
“Pricing is what sets the U.S. apart from the rest of the world,” said Sam Paltridge, an analyst at the Organization for Economic Cooperation and Development. “Americans spend less than average on communications.”
The question for regulators in Washington is how ATT’s $39 billion bid to buy T-Mobile might change that. Analysts and industry experts worry that the deal could hurt consumers, in particular by eliminating T-Mobile’s low-cost phone plans. Some are urging regulators to block the acquisition, which would leave two major companies, ATT and Verizon, with nearly 80 percent of the wireless market, followed by the much smaller Sprint. ATT has said the merger will benefit consumers, in part by improving network quality and reach.
As they consider the deal, regulators may look abroad to see how competition affects wireless markets. With only three major network operators, the market in the United States would function similarly to some European markets, like France, which also has three operators, said J. Scott Marcus, the former chief technology officer at the telecommunications company GTE and former Internet policy adviser at the Federal Communications Commission.
“It will definitely become an oligopoly market,” Mr. Marcus said. “That will be less good than what one had before, but not awful.”
Of course, using other countries as a guide to how consolidation may play out is tricky, because every market is shaped by local cultural and business factors.
In Japan, for example, the average amount that consumers spend on data is the highest in the developed world — but not because of a lack of competition in the mobile industry. Japanese cellphone owners like to do a lot of browsing on their cellphones, and they are prepared to pay for that, said Steven Hartley, an analyst at Ovum, a research firm in London. Mr. Hartley said over 40 percent of mobile operators’ revenue in Japan comes from data services, compared with 25 percent in the United States.
Americans tend to talk nearly twice as much as people in most other developed countries, which led to the popularity of bigger buckets of voice minutes. And plans that offer nationwide calling with no roaming fees have also kept prices low. In Europe, which in theory is one market but is actually divided into many smaller national markets, roaming charges are a frequent and bothersome reality.
Europeans and Asians were quicker than Americans to embrace so-called prepaid phone service, in which customers do not have a contract and pay for chunks of voice minutes and data capacity as they go. This means phone owners are generally not tied to a single wireless company and have more flexibility to switch among services. Some even carry around multiple SIM cards, the fingernail-size chips that activate a cellphone for use, and decide which one to install based on which offers the cheapest rate for the country they are calling or visiting. For example, someone living in Spain who often visits family in France might purchase SIM cards for wireless services in both countries.
And phone customers outside the United States tend to have more handset choices, since cellphones are less likely to be “locked” for use with one particular carrier. But they have fewer opportunities to upgrade cheaply, because carriers are less likely to offer a free or discounted phone to those who commit to a one- or two-year contract.
Some of that is beginning to change, said Chris Jones, an analyst at Canalys. “Smartphones are beginning to get more popular in the U.K., so more people are buying smartphones and the contracts that come with them,” he said. Even so, those contracts can cost around £30 or £35 a month, or $48 to $56, and they do not include data, he said.
In general, the breadth of options in Europe has not yet led to significantly cheaper service, said Roger Entner, an analyst at Recon Analytics in Dedham, Mass. “It only drives down prices if competitors are willing to compete on price,” he said. “The market is more or less equally divided up, so there isn’t the same hypercompetitiveness that we have in the U.S.”
Heike Troue, the director of a public policy institute in Berlin, said that she was satisfied with the range of mobile choices available there. An iPhone 4 owner, she pays T-Mobile 90 euros a month, or $127, for her all-inclusive contract, which provides 1,000 calling minutes, three gigabytes of data transfers and 1,500 text messages. Since she signed up for the plan last November, she has never hit those limits. “One can only talk so much,” Ms. Troue said.
At times, high costs abroad have prompted lawmakers and regulators to step in. European and British telecom companies are bowing to such pressure by lowering or planning to lower termination fees — the fees that the caller’s carrier must pay to the recipient’s carrier. The goal is to give carriers more flexibility to compete by selling more generous packages with larger chunks of talk time, text allotments and cheaper data services.
European regulators have also ordered that limits be placed on roaming charges for calling and texting, and are working on a similar limit on data roaming charges.
In South Korea, the government has put pressure on the three major carriers — SK Telecom, KT and LG Telecom — to cut rates on text messages and calls, and it also limits the amount of subsidies the companies can offer on new phones.
Regulators in the United States could require ATT to make some concessions for the T-Mobile deal to be approved, like giving up wireless spectrum in some cities. The review by the Justice Department and the F.C.C. could take several months, and analysts say it could be a year before the full effect of the deal is clear. Some analysts say that the combined company might actually lower prices to better compete with Verizon. But others warn of side effects.
Mr. Paltridge of the O.E.C.D said that the overall consequence of combining ATT and T-Mobile might be broader than most consumers think. For example, it would leave only one American carrier using GSM, the world’s most common cellular standard. That means ATT could raise rates for Americans using their phones overseas and for foreigners visiting the United States.
“If the two merged, there would be an international angle to the competition issue,” he said.
Bettina Wassener and Sei Chong contributed reporting.
Article source: http://feeds.nytimes.com/click.phdo?i=d6f3e02bc8f87dea863122fe43958d86
Speak Your Mind
You must be logged in to post a comment.