Mobile Pricing Comparison raises questions
The OECD has reported the following: “Finland, the Netherlands and Sweden have the lowest prices for mobile phone calls among OECD countries, according to the latest OECD Communications Outlook. The highest were found in Canada, Spain and the United States.” Unfortunately this finding is fundamentally misleading. The details of the methodology that is employed, while applicable across many countries, are inappropriate for North America.
International benchmarking, like any tool or methodology, can be a very valuable technique for developing insights, or a highly dangerous one if used incompetently or thoughtlessly to reach very misleading conclusions.
While it is very difficult if not often impossible to make 100% “apples to apples” comparisons, by being careful (and honest) one can avoid obvious pitfalls, such as the comparisons of WiMAX versus 3G speeds which present the superiority of the former without noting that the bandwidths in which the WiMAX speeds are achieved are much larger than those for which 3G speeds are quoted.
In the case of the OECD report the flaw in the finding about the prices of mobile services in North America is that the baskets of usage (low, medium, high) on the basis of which prices are compared have little to do with the ways in which North Americans actually make use of mobile communications.
For example, the average monthly minutes of use (MOU) in the U.S. is over 800, as compared to just over 100 in Germany. Yet the OECD’s medium use basket (where the U.S. is rated as the most expensive among OECD countries) only amounts to an MOU of about 120, and even the high use basket only corresponds to an MOU of well under 300. So the price comparisons quoted have little if anything to do with how the great majority of Americans actually use mobile services.
It is true there is not much flexibility for low usage customers in the U.S. and that prepaid tariffs are high, which explains the findings of the OECD survey. Nevertheless it is possible to find packages that cost much less than the $53/month quoted in the OECD report for the medium use basket in the U.S. In future surveys the OECD might do well to add a basket of “unlimited” calling, for which the U.S. has packages for around $100/month.
The U.S. Federal Communications Commission (FCC) produces an annual report that contains comparative data on international mobile prices expressed in terms of $ of revenue per minute. In the latest version of this report the U.S. emerges as relatively very inexpensive, e.g. $0.06/minute compared to a Western European average of $0.20, with Finland at $0.12, France at $0.17, and the U.K. at $0.19.
International benchmarking has enormous practical value as a tool for assessing the status and progress of one country compared to others in multiple domains from telecommunications to health care.
But it is important to ensure that international benchmarking is applied by people and organizations with broad global, regional, and cultural perspectives, independently of narrow minded or self-serving ideological biases. Otherwise findings and conclusions may be indiscriminately or inappropriately applied to a country while overlooking an obvious local or national factor or circumstance that may invalidate them, or at least require major reconsideration or adaptation.
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