A Continental Idea
By: John-Paul Edgette and Robert Roche
The U.S. or Europe. Who’s ahead in providing the best value to consumers? The facts show that a gap perceived by some is virtually non-existent. And, because Americans pay so much less for wireless service and use it so much more than Europeans and others, that America leads the world in wireless is a Continental Idea.
Every few years, a wave of stories appears comparing telecom services in the United States with those in Europe and Asia, but what are the facts behind these stories? Comparing the U.S. and other markets on a variety of metrics including cost, adoption and usage shows that the U.S. is the leader in wireless voice value, providing more wireless minutes at a lower cost than other developed countries. More than that, the U.S. is a strong competitor in the field of wireless data, striving to deliver more applications to more consumers at increasing speeds.
The Price is Right in the U.S.
Individual consumers’ readiness to use a particular application is shaped by their expectations and experiences with comparable products. This can range from comfort with an application, to the absence of an alternative, or to the economics of the alternatives. The high price of wireless voice service in Europe helps explain the lower volume of calls by Europeans as compared to calls in the U.S., and might have helped foster Europeans’ adoption of text messaging. But even as the price of wireless service in Europe has begun to fall, earlier this year Merrill Lynch reported that Europeans still pay an average of 19¢ per minute for an average of 153 minutes a month, compared to 5¢ per minute for 834 minutes a month for customers in the U.S. The U.S. is the leader in offering bucket plans, driven
by competitive market forces to offer more minutes at a lower effective rate.
Of course, when comparing international markets, it’s important to recognize that there are economic, social, and geographic differences between countries and the performance of their markets is shaped by those factors. Whether comparing markets or the behavior of consumers globally in adopting or using similar products and services, it is important to consider these factors, and not rely on overly simplistic yardsticks.
