NCPA - National Center for Policy Analysis

U.S. Less Wireless

November 7, 2000

There are more than 100 million wireless subscribers in the United States, but wireless has grown more slowly in the U.S. than in any other industrialized country.

  • About 36 percent of America's residents subscribe to wireless phone service -- a "penetration" rate less than half that of some European countries, and 15 to 20 percentage points lower than other technologically advanced nations such as Japan and Israel.
  • At current growth rates, according to the marketing firm IDC, wireless penetration at the end of 2003 will be 54 percent in Europe and 45.9 percent in the U.S.

Why does the U.S. lag? There are numerous reasons, including government regulations.

  • Unlike Europe, where one standard is almost universal, American carriers are split among three broadly defined digital technologies, preventing phones tuned to Sprint's network, say, from working on AT&T's.
  • The Federal Communications Commission's 1983 cell phone regulations require cell-phone users to pay for all calls, even those they receive -- in contrast to the conventional caller pays principle.
  • That regulation has delayed widespread acceptance of cell phones by years and reduces their use -- whereas wireless subscribers nearly doubled in some Latin American countries that recently introduced caller pays, according to a 1999 FCC staff memo.
  • Also, the FCC initially granted only two licenses in postage-stamp size areas, limiting competition and increasing costs; but when the so-called duopoly regulations expired 10 years later the number of competitors shot up to an average of 4.5 per city.

Another important reason for the U.S. lag is that conventional phone service is cheaper. In Europe and Asia, local calls are still metered at the equivalent of 2 to 8 cents a minute, while unlimited local calling here is about $18 a month.

Source: Michael A. Hiltzik, "A Wired Nation Where Wireless Doesn't Rule," Los Angeles Times, October 19, 2000.

 

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