The Saturday Oct. 5th 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.
