Yet Again the Editorial Board of The Wall Street Distorts Wireless Market Reality

          The Saturday Oct. 5^th 2024 edition of the Wall Street Journal falsely claims that wireless telecommunications rates in the U.S. have remained flat despite ravenous inflation: “Even as inflation has surged, wireless prices have remained flat since 2018.” https://www.wsj.com/opinion/dish-directv-fcc-charlie-ergen-jessica-rosenworcel-c50c31b4.

          Just because the Mandarins at the Wall Street Journal offer a definitive statement about something does not make it true.  With characteristic snark and righteous indignation, the Journal polemicists want to convince readers that the reduction from 4 to 3 facilities-based wireless carriers in the U.S. achieved great things for consumers and the overall competitive and innovative health of the industry.  Two prominent researchers claim that TMobile’s acquisition of Sprint singularly enhanced consumer welfare with no apparent downside.  See https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4736059.

          How do consumers allegedly benefit from further concentration of an already oligopolistic market?  It takes creative, selective, and flawed interpretations of statistical facts to pull that rabbit out of a hat.

          To show flat rates, one would have to ignore the widely used carrier tactic of sneaking in new billing line items, or increasing existing ones.  Researchers also would have to ignore clear evidence of actual rate increases by asserting that the average minutes of use and data consumption increased thereby offsetting higher out of pocket payments by subscribers. Additionally, researchers would have to ignore ample evidence that subscribers are being involuntarily migrated to higher costing rate plans.

          Here’s a credible, non-partisan assessment of wireless pricing compiled by the Bureau of Labor Statistics, available at: https://data.bls.gov/pdq/SurveyOutputServlet.  Look for 2018-present PPI Industry Data;

Series Id:	PCU517312517312
Series Title:	PPI industry data for Wireless telecommunications carriers, not seasonally adjusted
Industry:	Wireless telecommunications carriers
Product:	Wireless telecommunications carriers
Base Date:	199906

Does the line appear horizontal to you?

          There are plenty of credible reports that U.S. subscribers are paying more for wireless service and their monthly rates exceed what most subscribers pay throughout the world. See https://www.billshark.com/blogs/u-s-mobile-plans-expensive; https://www.tangoe.com/blog/prepare-for-higher-mobile-phone-bills-this-summer-att-others-are-raising-rates/; https://www.usatoday.com/story/money/2024/05/23/t-mobile-price-hike/73818353007/;https://www.cnet.com/tech/mobile/verizon-price-increase-why-your-phone-bill-might-be-higher-in-march/;https://www.zdnet.com/home-and-office/networking/t-mobile-is-raising-prices-on-several-cellular-plans-heres-how-much-and-when/.

          Consider this scenario.  Let’s assume a Law Vegas hotel dinner buffet is priced at $75.00 per person.  Such a deal, given the diversity of opulent menu options.  Too good to be true, because the rate increased to $100.00.  Consumers of Las Vegas hotel buffets would interpret the new $100 price as a 33.3% rate increase.  The hotel and their sponsored researchers would cast about for ways to explain that the “value proposition” of the buffet “experience” actually increased.  They determine that the average guest increased consumption of buffet items from 2 pounds to 3 pounds, despite the imposition of a 90-minute time limit!

          Here’s the mathematical proof. At the $75 price point the per pound rate of consumption amounted to $37.50 (75 divided by 2).  Despite the $25 rate increase, a 3 pound rate of consumption reduces the per pound rate to $33.33 (100 divided by 3). Apparently, the buffet deal got better, because the attributed measure of consumer welfare increased, despite the price hike.

          Such a deal.

          If wireless consumers increase their network consumption sufficiently, the Wall Street Journal Editorial Board and others can see this as proof positive that the market is robust, competitive, innovative, increasing investment, hiring more employees, and making every subscriber fat and happy.