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August 22, 2007

Is Europe really more advanced?

Posted by Tricia Duryee at 2:43 PM

When it comes to well-made, fine leather Italian shoes, maybe.

But cellphones?

Definitely not.

The American Consumer Institute studied whether Europe was in fact more advanced when it came to wireless technology. It concluded that the U.S. is ahead.

"International statistics suggests that the U.S. wireless market, in fact, leads its European counterparts, and the U.S. wireless market, compared to Europe, appears to be more competitive and vibrant," the study's summary said.

I thought maybe the The American Consumer Institute was paid to conduct the survey on behalf of the U.S. cellphone industry, but it claims that's not the case.

"No -- we are a 501(c) (3) nonprofit educational and research group and do not conduct paid-for research," a spokesman said. "The study just tests a common belief that the U.S. lags Europe. It uses widely available empirical evidence in its analysis. The result somewhat of a surprise to me too. It could be Europe once had a lead and it has vanished, but the belief has remained."

The question is an important one, especially as the FCC is evaluating how to make the wireless market even more competitive, so that innovation can move even faster.

The study cites multiple sources and suggests there are actually more wireless operators (155) in the U.S. than in most countries, and that even though the top three carriers have a majority of U.S. subscribers, there's still a lower concentration than in other countries.

The study then tries to answer the question: If the U.S. market is not as concentrated as its European counterparts, could it still operate as a "cozy cartel," effectively driving up consumer prices and restricting supply?

Once again, the answer was no.

The average price of a minute is far less in the U.S. than in other countries. In Germany, it was about 27 cents a minute. In the U.S., it's closer to 7 cents. Only one country was listed as cheaper -- Hong Kong at about 4 cents.

However, in Europe customers get billed for making a phone call, whereas the person receiving the call does not get billed. In the U.S., we pay for both types.

An independent study found that even though this is the case, the minutes are still cheaper in the U.S. than in all European countries.

Check out the report here.

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Tricia Duryee
Tricia Duryee
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