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Rules of the Game

Rules of the Game

The mobile communications industry attracts an enormous amount of attention for many reasons. But most commentary comprises issues such as market concentration, spectrum, costs to users and not least, the impact of mobility and apps on society. The emphasis is usually on economic and regulatory factors. Now two academics have put politics firmly into the mix by identifying the mobile industry as a test-bed for government intervention in competition, in a paper entitled ‘Political determinants of competition in the mobile telecommunication industry’. Why, they ask, does the price of the same basket of mobile phone services vary around the world from about $10 to $47? Why does the price of a 1 GB mobile data plan vary from $11 to $100? And was it telecoms reform in Mexico that really led to Carlos Slim taking a beating amid average user revenues dropping and traffic increasing? If so, why aren’t more governments enacting this kind of reform?

The interesting point is that they have not set out to look at the mobile sector as such – these issues are not unique to the industry - but it is an ideal subject because it is possibly the most nationally segmented. Each country controls its own communications destiny in terms of setting rules (such as number portability and allowing voice over IP) and allocating spectrum – and unlike other industries, mobile systems are fairly similar globally. So what accounts for the massive differences in prices and how is government power to set the rules of the game used around the world - and in whose interest is it used?

You have to take your hat off to the researchers as they crunched a lot of data to carry out a series of analyses, including the ITU’s ICT Regulatory Tracker, prices from both the ITU and the GSMA, quality of service and spectrum auction information, as well as measures of taxation of mobiles, democracy, and political connections, including corruption. There aren’t many studies that have thrown as much diverse data at the communications sector, and this paper numbers 54 pages of narrative and tables.

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