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    Default Why has the USA fallen so far behind in wireless services?

    I am posting this is Politics rather than General Discussion because I think it is a question of regulation and politics.

    Anybody know or have knowledge as to why cellular services in the US are not as good as in Europe. Please correct that statement if it is not true, but it just seems from comments and posts by Europeans that they pay a lot less for a lot more than customers in the US. It wasn't that long ago that the US was light years ahead of the rest of the world in telecommunications. Why did the US fall so far behind over the last 20 years. I even have an acquaintance whose lived in China for 30 years, and whenever he visits the States he says he feels like the USA is in the dark ages as far as cell phone service goes. Hyperbole yes, but he says it is too hard and too expensive to get his China based phone to work, so he has to get a tracfone or some other workaround.
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    Default Re: Why has the USA fallen so far behind in wireless services?

    Note: I am not an expert in this area, so feel free to fact check my commentary.

    My understanding is that here in the US, two things about cell phones/service distinguish us from the rest of the world.

    1) Tower technology. US: CDMA and GSM. Rest of the world: primarily GSM. As such, nearly all phones are designed for carriers rather than *any* carrier (unlocked).

    2) Subsidized phones. Nearly all phones in US are sold on multiple year contracts at a lower price, subsidized by a higher monthly service rate.

    Of course there are exceptions in the US. I bought a Nexus 4, unlocked and usable on any GSM carrier without a contract.

    Any of this makes sense?

    Sent from my Nexus 4 using Android Central Forums
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    Default Re: Why has the USA fallen so far behind in wireless services?

    Not sure how extensive this applies, and if it's good or bad is debatable, but I seem to remember hearing that the government subsidizes wireless companies in some other countries. Enough so that they have the funds for quicker advancements.
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    Default Re: Why has the USA fallen so far behind in wireless services?

    Taxes are much higher in western Europe, and probably most places that have better wirless service than the USA, and I forgot to mention that in the opening post. I am sure that factors into the equation. I am not so sure about the subsidized phone factoring into overall better service, because its not like you pay a cheaper rate once you pay off your subsidized phone. You don't get any break whatsoever.
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    Default Re: Why has the USA fallen so far behind in wireless services?

    Quote Originally Posted by mmtowns View Post
    1) Tower technology. US: CDMA and GSM. Rest of the world: primarily GSM. As such, nearly all phones are designed for carriers rather than *any* carrier (unlocked).
    That is a great point. Something I hadn't considered. I have a Nexus 4 too.
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    Default Re: Why has the USA fallen so far behind in wireless services?

    Oligopolistic fascist cartel ~ Verizon, AT&T, Sprint and T-Mobile own between 89%-91% of the US market share. Our "innovation" is limited to what they collectively view as the best way to maximize their profits, with competition and service both playing 2nd and 3rd fiddle to the profitability of the cartel as a whole. It's an optimization model where each has bought into a mindset that the status quo solves for the most equitable solution for all and each of the four nodes. The motivations of governmental regulations for the most part agree, with their primary concern being the successfulness of the optimization model (corporate profits) and service to customers being the secondary concern.
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    Default Re: Why has the USA fallen so far behind in wireless services?

    This is the exact same problem we have with Media (news, movies, music, television, publishing, etc). Replace four players with the six media companies that together own 90% of the media produced in the US and everything from the second sentence on is still exactly correct; because those statements are symptomatic of an oligopolistic fascist cartel.
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    Default Re: Why has the USA fallen so far behind in wireless services?

    Is it really as simple as that? 4 major players would have to be in some sort of cohoots to keep it as a monopoly. Reminds me of the Godfather and the mafia, where they each carve out seprate turf and if there is a violation they go to war.
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    Default Re: Why has the USA fallen so far behind in wireless services?

    I think it's more of a balance of power begets power in balance type of theory, than a direct collusion. Where one creates an edge, the others swiftly compensate. Notices how they all have the, "fastest 4G" network or the "largest 4G" network, or whatever their particular tag is? It's all nonsense, but if they were direct competitors rather than pseudo-symbiotic parts of the same organism, they'd probably have someone fact check those claims and declare one to be the actual undisputed leader in "4G".
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    Default Re: Why has the USA fallen so far behind in wireless services?

    Quote Originally Posted by jdbii View Post
    Taxes are much higher in western Europe, and probably most places that have better wirless service than the USA, and I forgot to mention that in the opening post. I am sure that factors into the equation. I am not so sure about the subsidized phone factoring into overall better service, because its not like you pay a cheaper rate once you pay off your subsidized phone. You don't get any break whatsoever.
    I didn't mean subsidized in the way Americans are used to with our phones. I meant governments paying to expand networks specifically on top of whatever customers pay. I don't know if they would be considered nationalized telecoms, and my information may be out of date anyway.


    Quote Originally Posted by NothingIsTrue View Post
    Oligopolistic fascist cartel ~ Verizon, AT&T, Sprint and T-Mobile own between 89%-91% of the US market share. Our "innovation" is limited to what they collectively view as the best way to maximize their profits, with competition and service both playing 2nd and 3rd fiddle to the profitability of the cartel as a whole. It's an optimization model where each has bought into a mindset that the status quo solves for the most equitable solution for all and each of the four nodes. The motivations of governmental regulations for the most part agree, with their primary concern being the successfulness of the optimization model (corporate profits) and service to customers being the secondary concern.
    Have any evidence of this? Market competition would keep those companies from hanging on to attempts at price fixing as you're suggesting. There's evidence to the contrary, though. In the Fair Tax book, they addressed this sort of thing and brought up the deregulation of airline ticket prices way back when. The fear was the companies would hold prices up and pocket the savings, but almost immediately one airline dropped prices for more market share, and all the others had to if they wanted to keep up. That set up a downward spiral until they settled at lower prices worked out through the free market. If any cell companies did try price fixing, they would have been found by now and brought up on charges (don't remember the specific name of the charge, though DX ).
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  11. #11  

    Default Re: Why has the USA fallen so far behind in wireless services?

    In a word... Profit

    sent from the best smart phone (not phablet) on the worst network- the Galaxy S3 unfortunately on T-Mobile
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    Default Re: Why has the USA fallen so far behind in wireless services?

    Quote Originally Posted by Mooncatt View Post
    I didn't mean subsidized in the way Americans are used to with our phones. I meant governments paying to expand networks specifically on top of whatever customers pay. I don't know if they would be considered nationalized telecoms, and my information may be out of date anyway.



    Have any evidence of this? Market competition would keep those companies from hanging on to attempts at price fixing as you're suggesting. There's evidence to the contrary, though. In the Fair Tax book, they addressed this sort of thing and brought up the deregulation of airline ticket prices way back when. The fear was the companies would hold prices up and pocket the savings, but almost immediately one airline dropped prices for more market share, and all the others had to if they wanted to keep up. That set up a downward spiral until they settled at lower prices worked out through the free market. If any cell companies did try price fixing, they would have been found by now and brought up on charges (don't remember the specific name of the charge, though DX ).
    Oligopoly - Wikipedia, the free encyclopedia

    The first part of the description of Oligopoly speaks to 2008 numbers of the big 4 as the primary example of what an Oligopoly is:
    "Oligopoly is a common market form. As a quantitative description of oligopoly, the four-firm [concentration ratio] is often utilized. This measure expresses the market share of the four largest firms in an industry as a percentage. For example, as of fourth quarter 2008, Verizon, AT&T, Sprint, and T-Mobile together control 89% of the US cellular phone market."
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    Default Re: Why has the USA fallen so far behind in wireless services?

    "Interdependence: The distinctive feature of an oligopoly is interdependence.[6] Oligopolies are typically composed of a few large firms. Each firm is so large that its actions affect market conditions. Therefore the competing firms will be aware of a firm's market actions and will respond appropriately. This means that in contemplating a market action, a firm must take into consideration the possible reactions of all competing firms and the firm's countermoves.[7] It is very much like a game of chess or pool in which a player must anticipate a whole sequence of moves and countermoves in determining how to achieve his or her objectives. For example, an oligopoly considering a price reduction may wish to estimate the likelihood that competing firms would also lower their prices and possibly trigger a ruinous price war. Or if the firm is considering a price increase, it may want to know whether other firms will also increase prices or hold existing prices constant. This high degree of interdependence and need to be aware of what other firms are doing or might do is to be contrasted with lack of interdependence in other market structures. In a perfectly competitive (PC) market there is zero interdependence because no firm is large enough to affect market price. All firms in a PC market are price takers, as current market selling price can be followed predictably to maximize short-term profits. In a monopoly, there are no competitors to be concerned about. In a monopolistically-competitive market, each firm's effects on market conditions is so negligible as to be safely ignored by competitors.
    Non-Price Competition: Oligopolies tend to compete on terms other than price. Loyalty schemes, advertisement, and product differentiation are all examples of non-price competition."

    These two characteristics are dead on with the big four.
  14. Thread Author  Thread Author    #14  
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    Default Re: Why has the USA fallen so far behind in wireless services?

    Quote Originally Posted by Mooncatt View Post
    I didn't mean subsidized in the way Americans are used to with our phones. I meant governments paying to expand networks specifically on top of whatever customers pay. I don't know if they would be considered nationalized telecoms, and my information may be out of date anyway.
    That is my suspicious. I think in western Europe the public pays a heck of a lot more in taxes and the state invests a lot more in telecom. Therefore, more competition, better service, and lower prices (disclaimer: I am no expert in any of this and I am only broadly speculating). The countries are a lot smaller and it is a lot easier for the State to impose a single cell tower standard. Or in a place like China, the authorities can easily impose any standard they want. I suppose in China, the one company that gets the support of the State is the oligarchy. In Europe, it might be harder for any single company (or handful of companies) to control the market because with so many governments to answer to.
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    Default Re: Why has the USA fallen so far behind in wireless services?

    Quote Originally Posted by NothingIsTrue View Post
    Oligopoly - Wikipedia, the free encyclopedia

    The first part of the description of Oligopoly speaks to 2008 numbers of the big 4 as the primary example of what an Oligopoly is:
    "Oligopoly is a common market form. As a quantitative description of oligopoly, the four-firm [concentration ratio] is often utilized. This measure expresses the market share of the four largest firms in an industry as a percentage. For example, as of fourth quarter 2008, Verizon, AT&T, Sprint, and T-Mobile together control 89% of the US cellular phone market."
    That sounds like regular competition, just on a different scale, and practices described don't sound far fetched. But you described them as a cartel, which by your link would mean they have a written agreement between the four to manipulate the market. Again, do you have any evidence of that, or that their practices are meant to hold prices artificially high?

    In just about any industry, you have the few big players with the majority of market share, with many smaller companies filling in the gaps.
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    Default Re: Why has the USA fallen so far behind in wireless services?

    Quote Originally Posted by Mooncatt View Post
    That sounds like regular competition, just on a different scale, and practices described don't sound far fetched. But you described them as a cartel, which by your link would mean they have a written agreement between the four to manipulate the market. Again, do you have any evidence of that, or that their practices are meant to hold prices artificially high?

    In just about any industry, you have the few big players with the majority of market share, with many smaller companies filling in the gaps.
    The cartel part is because I think of them (the leadership) spending weekends in a smoke-filled room around a 7 card stud game, with huge cigars and huger mustaches, twitching them in anticipation of the mountains of pennies they will pinch from the consumers. The FCC is probably the dealer. Thinking of cartel in it's usage relative to drug cartels, rather than corporate cartels.
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    Default Re: Why has the USA fallen so far behind in wireless services?

    Quote Originally Posted by Mooncatt View Post
    In just about any industry, you have the few big players with the majority of market share, with many smaller companies filling in the gaps.
    I think there is a difference in telecom with other industries. The major players seem to control many aspects of the telecom industry. I am not exactly sure how to verbalize it, but, for example, the auto industry doesn't exclusively control roads, highways and bridges. You don't drive a Ford car, only on Ford roads, only a Ford Mechanic, and use only a Ford bank. Toyota, BMW, and Fiat, can come into the market to sell their cars, build their factories, and use the transportation infrastructure to compete against Ford. Whereas the cell phone companies control and own (or lease) the towers. They control the spectrum. (Do they get to exclusively use the spectrum they bid for and win?) They have their own phones, you only interact with their respective companies, they control the financing of their phones.
  18. #18  

    Default Re: Why has the USA fallen so far behind in wireless services?

    Quote Originally Posted by jdbii View Post
    I think there is a difference in telecom with other industries. The major players seem to control many aspects of the telecom industry. I am not exactly sure how to verbalize it, but, for example, the auto industry doesn't exclusively control roads, highways and bridges. You don't drive a Ford car, only on Ford roads, only a Ford Mechanic, and use only a Ford bank. Toyota, BMW, and Fiat, can come into the market to sell their cars, build their factories, and use the transportation infrastructure to compete against Ford. Whereas the cell phone companies control and own (or lease) the towers. They control the spectrum. (Do they get to exclusively use the spectrum they bid for and win?) They have their own phones, you only interact with their respective companies, they control the financing of their phones.
    I kinda see your point, but I still don't think it's anything near the orchestration NothingisTrue was describing, or at the very least the impression I get from his posts. I do agree that their prices can be high for what you get, but that's more a result from lack of competition imho. Where he describes their dominance as a way to keep prices high, I think they were just the successful ones that are so far and above the others that there is no competition to force their prices down. Since businesses are in this to make money, they are going to charge as much as they can get away with. It's only natural.
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    Default Re: Why has the USA fallen so far behind in wireless services?

    Quote Originally Posted by Mooncatt View Post
    I kinda see your point, but I still don't think it's anything near the orchestration you're describing, or at the very least the impression I get from your posts. I do agree that their prices can be high for what you get, but that's more a result from lack of competition imho. Where you describe their dominance as a way to keep prices high, I think they were just the successful ones that are so far and above the others that there is no competition to force their prices down. Since businesses are in this to make money, they are going to charge as much as they can get away with. It's only natural.
    agreed.
  20. #20  

    Default Re: Why has the USA fallen so far behind in wireless services?

    Quote Originally Posted by jdbii View Post
    agreed.
    I had to edit my post because I didn't realize it was you I was quoting but should still get the intended point across.
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    Default Re: Why has the USA fallen so far behind in wireless services?

    I don't think it really takes cooperative orchestration; the problem with a government supported oligopoly is that it makes it difficult for competition to enter the market, thus competition and low risk self interest become far too aligned for the corporate good. We're not going to get a 5th party ubiquitous LTE provider naturally through our market, no matter how much the consumers may want such a service. Both Verizon and the FCC will actively prevent it, and it's in the self interest of the other 3 big carriers for them to do so. It's entirely a product of risk vs margin, and right now they're all in a very low risk, high margin business with no incentives to makes changes to the current model. They don't have to agree on anything for this to take place.
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    Default Re: Why has the USA fallen so far behind in wireless services?

    Quote Originally Posted by mmtowns View Post
    1) Tower technology. US: CDMA and GSM. Rest of the world: primarily GSM. As such, nearly all phones are designed for carriers rather than *any* carrier (unlocked).
    If only everyone in the US used the same GSM frequencies. I'd say the world, but that's stretching it.
  23. Thread Author  Thread Author    #23  
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    Default Re: Why has the USA fallen so far behind in wireless services?

    Quote Originally Posted by Mooncatt View Post
    I had to edit my post because I didn't realize it was you I was quoting but should still get the intended point across.
    I kind of figured you were responding to NothingIsTrue, but replied 'agreed' anyway since I agreed with your larger point and I figured if I replied 'agreed' it might throw you off and you'd be more likely to double-check who you were quoting. I also agree with much of what NothingsIsTrue is writing also.
  24. #24  

    Default Re: Why has the USA fallen so far behind in wireless services?

    Quote Originally Posted by jdbii View Post
    I am posting this is Politics rather than General Discussion because I think it is a question of regulation and politics.

    Anybody know or have knowledge as to why cellular services in the US are not as good as in Europe. Please correct that statement if it is not true, but it just seems from comments and posts by Europeans that they pay a lot less for a lot more than customers in the US. It wasn't that long ago that the US was light years ahead of the rest of the world in telecommunications. Why did the US fall so far behind over the last 20 years. [emphasis added]
    First off, I would dispute that Europeans or Australians/New Zealanders get more for their money. It's my understanding (unless something has changed and I haven't heard about it) that they pay more for less, in no small part due to taxes.

    However, to your point about our service over here kind of sucking, well... The comment below about there being an oligopoly is very certainly a part of it, I would estimate. There's been so many mergers in this country, and our d*mn fool FTC and FCC go along with it, that of course you are left without much (not zero, to be sure) competition.

    As regards AT&T, you have to understand that they make hundreds of billions of dollars each year off of nothing more than their physical and satellite-based networks. This includes a significant portion of U.S. backbone, undersea cabling around the world, and so forth. What money they make off cell service is icing on the cake. I'm not saying they'd want to give it up willingly, but they could afford to completely lose their cellular business, and they'd keep right on going.


    Quote Originally Posted by mmtowns View Post
    Note: I am not an expert in this area, so feel free to fact check my commentary.

    My understanding is that here in the US, two things about cell phones/service distinguish us from the rest of the world.

    1) Tower technology. US: CDMA and GSM. Rest of the world: primarily GSM. As such, nearly all phones are designed for carriers rather than *any* carrier (unlocked).

    2) Subsidized phones. Nearly all phones in US are sold on multiple year contracts at a lower price, subsidized by a higher monthly service rate.
    There's actually a lot of countries (far more than I realized) which have some implimentation of CDMA. In fact, here's a list. So, I guess it's not really a matter of us being divided and distracted between two different standards.


    Quote Originally Posted by Mooncatt View Post
    Not sure how extensive this applies, and if it's good or bad is debatable, but I seem to remember hearing that the government subsidizes wireless companies in some other countries. Enough so that they have the funds for quicker advancements.
    European and many other governments tend to subsidize quite a considerable number of things; far beyond the scope of what the U.S. subsidizes in terms of variety (but not necessarily in terms of raw dollars -- i.e. the Farm subsidy, welfare, etc.) We're much more dependent on the private sector in this country to decide when and where service will be established. A friend of mine, for example, lives in a suburb of Carrollton, Georgia. All of his neighbors just got, within the last two years or so, DSL service. He can't get anything. Unless he's willing to fork over the dough for them to install equipment just for himself, they've told him he's just out of luck.

    And, believe it or not, there are parts of the U.S. which have only (relatively) recently gotten electricity (like within the past 20 years). Shoot, I've been around for 40!


    Quote Originally Posted by NothingIsTrue View Post
    Oligopolistic fascist cartel ~ Verizon, AT&T, Sprint and T-Mobile own between 89%-91% of the US market share. Our "innovation" is limited to what they collectively view as the best way to maximize their profits, with competition and service both playing 2nd and 3rd fiddle to the profitability of the cartel as a whole.
    In no way am I disputing what you've said. But if you want to see what's worse, just take a look at basic services. At least with cell service you arguably do have a choice. Try choosing a different power company, or cable TV provider, or wired telephone service provider. Good luck!


    This is the exact same problem we have with Media (news, movies, music, television, publishing, etc). Replace four players with the six media companies that together own 90% of the media produced in the US and everything from the second sentence on is still exactly correct; because those statements are symptomatic of an oligopolistic fascist cartel.
    What's scarier is who owns the media companies which own the news industry. Go do some research and you'll find that it's largely military contractors who own all of it, or have a controlling interest. GE, Boeing, McDonald Douglas, Westinghouse... they are all military contractors.


    I think it's more of a balance of power begets power in balance type of theory, than a direct collusion.
    Couldn't agree more.


    Quote Originally Posted by ItnStln511 View Post
    If only everyone in the US used the same GSM frequencies. I'd say the world, but that's stretching it.
    Well, there probably comes a point where you need different ranges. Personally, I think they should figure out what other ranges, potentially, they might use for GSM, and then phones should be designed to transceive on all sets of frequencies, and then just roll out different ones in different areas. Then, we have plenty of spectrum, plenty of bandwidth, and if they'd get off their &sses and build more towers, we could have far better coverage, which is perhaps the single most immediate bugaboo in this whole stinking works.
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    Default Re: Why has the USA fallen so far behind in wireless services?

    Quote Originally Posted by ItnStln511 View Post
    If only everyone in the US used the same GSM frequencies. I'd say the world, but that's stretching it.
    Here in the US, we always have the option of paying more money up front for a phone to steer clear from contracts. Two additional hurdles remain: 1) some/many carriers do not give a break to customers who bring unlocked or unsubsidized phones (as was mentioned by another commenter). 2) Many phones are not carrier unlocked or multiple carrier capable as you mentioned. Nexus 4, for example, is built with multiple GSM radio frequencies. In other countries, there may not be GSM frequency differences amongst carriers, so it's either not an issue or not possible.
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