With a few exceptions, the mobile service provider business tends to feature three providers in any single country. With the caveat that nationwide telecom systems always tend to be few in number, virtually every mobile market is highly concentrated, using the Herfindahl-Hirschman Index (HHI), a widely-used measure of market concentration.
A market with an HHI of less than 1,500 is considered to be a competitive marketplace, an HHI of 1,500 to 2,500 to be a moderately concentrated marketplace, and an HHI of 2,500 or greater to be a highly concentrated marketplace.
No mobile market actually can be deemed “competitive” using the HHI test. On the contrary, every mobile market is highly concentrated.
Some might argue that relative lack of competition explains the price of mobile data, which because of less than robust competition costs users an estimated $3.42 per gigabyte, according to the Alliance for Affordable Internet.
In cases where only a single facilities-based supplier operates, breaking up a broadband monopoly can create a savings of up to $7.33 per GB for users, the Alliance for Affordable Internet argues.
Across Africa, for example, a continent with generally less robust competition, the average cost for 1GB data is 7.12 percent of the average monthly salary. In some countries, 1GB costs as much as 20 percent of the average salary, says the Alliance.
If the average U.S. earner paid 7.12 percent of their income for access, 1GB data would cost $373 per month.
Though many would note that the existence of mobile virtual network operators will increase competition, it also is an industry fact of life that capital-intensive connectivity networks will always be relatively few in number. It is an oligopolistic industry.
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