I commented in a post recently about the suggestions Tim Wu and others have made that the U. S. cellular market compares poorly to European markets in terms of consumer choice of phones and services, innovation and the build out of advanced wireless networks.  The picture painted by some is that the U. S. is behind Europe in these areas and this is one of the principle arguments used to support the notion that conditions and government restrictions must be imposed on spectrum to be auctioned in the 700 Mhz band.

 

Verizon Wireless just filed an ex parte that includes an analysis of the U. S. and European wireless markets prepared by Mark Lowenstein, a noted wireless industry analyst.  Lowenstein adds more details to the post I offered.  Among his key points are the following:

 

Handset Portability.   Lowenstein notes that portability is more prevalent in Europe but it is not a result of government efforts to make the market more “open” but rather due to government technology mandates and related economic factors.   He points out that all European providers use one network technology – GSM – which features removable SIM cards by government mandate.  While some have argued that mandating GSM was a good move by the government, there is now good evidence that the fact that the U. S. did not mandate one standard has given the U. S. a better path towards advanced broadband cellular networks.  Further, Lowenstein says, portability in Europe is a result in part of the fact that the market is different.  Far more Europeans buy use prepaid phones and simply insert their cards from the old phone to the new.  But phones generally cost more in Europe and in the U. S. post-paid, subsidized phones are more the norm in conjunction with service contracts.  Finally, Lowenstein says that Europe continues to regulate network interconnection prices and as a result roaming costs are very high in Europe, unlike in the U. S.  It simply makes more sense for a consumer to purchase a SIM card from a domestic provider in each country visited.   In the U. S., Americans often buy packages of service the include roaming in the set price.

 

Handset Innovation.  The U. S. handset market is “far more innovative than the European market” according to Lowenstein.  This in part because the U. S. did not mandate a network technology standard a consumers today have a choice of phones and networks based on GSM, CDMA, iDEN and other technologies.  This has also led to the development of an American originated technology – CDMA – that is used in every advanced 3G handset in the market today.  Over 150 phones are available in the U. S. market.

 

Handset Locking/Unlocking.  According to Lowenstein, “wireless carriers in Europe do not universally ‘unlock’ handsets purchased from the carrier.”   Handset unlocking policies vary from carrier to carrier and on whether the service being purchased is post-paid or prepaid, or on whether the customer is in a contract.  Unlocked phones are available from non-carrier sources in both Europe and in the United States.  Unlocked phones can be purchased on Ebay or Amazon.com and take to a Verizon Wireless dealer to be activated.

 

Advanced Networks.  Lowenstein also disputes the notion that the U. S. is behind Europe in the build out of advanced 3G networks.  As he notes, “The United States leads the world in the mobile e-mail market and advanced services such as mobile games, mobile search, downloadable music, video clips and location services.”

 

Costs to Consumers.  Somehow, the issue of whether Americans have better prices in our markets gets left out of the debate.   Lowenstein’s analysis suggests that American consumers are better off than their European counterparts when it comes to prices.  As he notes “Consumers in the United States generally pay one-half less per voice minute and one-third less per data minutes that their European counterparts, and as a result use up to five times more minutes per month.”

 

The U. S. generally relies on markets and competition wherever possible to ensure the highest levels of choice, innovation and consumer value.  Government intervention is only justified where there are demonstrated market failures and consumer harms.  The evidence shows overwhelmingly that those advocating intervention have not come anywhere close to making this case when it comes to wireless markets in the U. S.