Monday, August 25, 2014

Mobile service in the UK is cheaper than in the US

Minh Uong
New York Times
We've looked at the bad deal US landline Internet users get compared to places like Korea, Sweden, Japan or Latvia. (The list could be longer). How about mobile connectivity?

The New York Times just published a short article comparing the price charged by UK Cellular company UK Three (UK3) to that of Verizon in the US. The article compared prices for a two year contract with a subsidised Apple 5s phone.

UK3's price in this example is over $40 less than Verizon's. Furthermore, UK3 allows unlimited data transfer while Verizon has a 2 GB per month usage cap. Since UK3 is a low-cost carrier, I checked the prices of Vodafone accounts in the UK. A 3G Vodafone account with a 2 GB cap costs $72.31 per month. A 4G plan with a 4 GB cap is $79.60.

The author of the post cites one significant difference in explaining the price differences between the two nations:
Britain has forced companies to lease their networks to competitors at cost. The United States has not, allowing a formidable barrier against competitors.
The US Congress tried to spur competition in a similar manner with the Telecommunication Act of 1996, but the incumbent operators and their lobbyists defeated that attempt in courts and state houses.

William Kennard, who, as chairman of the United States Federal Communication from 1997-2001, was charged with implementing the Telecommunications Act, stated near the end of his term that “all too often companies work to change the regulations, instead of working to change the market,” and spoke of “regulatory capitalism” in which “companies invest in lawyers, lobbyists and politicians, instead of plant, people and customer service.” He went on to remark that regulation is “too often used as a shield, to protect the status quo from new competition -- often in the form of smaller, hungrier competitors -- and too infrequently as a sword -- to cut a pathway for new competitors to compete by creating new networks and services.”