Tuesday, April 30, 2019

U.S. Mobile Prices are Not "High"

One often hears that U.S. mobile internet access prices are among the highest in the world. As Samuel Clemens (Mark Twain) is reported to have said, there are lies, damned lies, and statistics. And cross-country internet access prices arguably are included in the sphere of such realities.

The problem with comparing prices for anything globally is that price levels are different from one country to the next. So it should not be surprising that mobile internet access prices vary as well.

Economists use a concept known as purchasing power parity to normalize for such differences, removing distortions based on the differing value of currencies (and therefore purchasing power) as well as differences in cost of living.

Once prices are measured using the PPP method, it turns out that mobile internet access prices are significantly lower than the world average in places such as Europe, the United States and the developed world in general .

As you might expect, prices are below world averages in all developed nations and U.S. household spending on communications is among the lowest in the world. That arguably is true for fixed network internet access as much as mobile access.

One sees the same trend if internet access cost is adjusted for gross national income, another way of removing price distortions.

The point is that endless repetition of false statements does not make them true, no matter how often one hears those claims.

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