It would be hard to imagine an industry today that is more “dynamic” than the wireless industry. In a relatively short time a “cell phone” has become a necessity to virtually everyone, and one of the areas of most rapid technological innovation is in wireless handsets. Every few months one company or another introduces a new, feature-rich handset, which consumers eagerly gobble up.
At the same time, service providers compete fiercely for customers, continually upgrading their networks to provide better and faster service and even
financing consumers’ purchase of sophisticated handsets.
It would seem that this is at least one industry that has succeeded in pleasing consumers, delivering innovation, creating high-paying jobs, and funneling tax revenue to virtually every level of government. You’d think government would be pleased, yet every level of government seems to have the wireless industry in its crosshairs.
States already tax wireless communications with high, discriminatory taxes which are only getting higher as states scramble for revenue. And while wireless already has to comply with complex federal and state regulations which often do not align, here comes the FCC with multiple new regulatory proceedings, all of which threaten sweeping new regulations in the wireless communications market.
The wireless industry is a disturbing case study in how governments punish success through higher taxes and increased regulations, all in the name of “protecting consumers.”
And now along comes a report from the OECD claiming to find that U.S. consumers are getting a raw deal from wireless companies compared to European consumers.
To be kind, the OECD decided to make up facts rather than study reality. Instead of studying real customer bills and spending patterns, they dreamt up three levels of consumer usage and then cast about for some estimate of what a person in each category would pay—and voila! Out comes a made up number than runs counter to a consistent stream of data from other studies.
The fact is that US consumers use more minutes a month than the typical user in the EU. As more units are consumed, the further the price per unit drops. Consumers see this cost savings as they purchase “bundles” of minutes often along with other services. In other words, American consumers talk more and pay less per minute.
But these lower prices (and greater choices) that American consumers enjoy are directly threatened by increased regulation from the FCC, and from communications taxes that today typically exceed the levels of taxation on gambling, liquor and pornography.
What’s really best for consumers is for government to repress its natural inclination to tax and regulate, and take a backseat so consumers can continue to enjoy lower prices, enhanced services and the benefits of innovation.
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Today's TechByte was written by Bartlett D. Cleland, director of IPI Center for Technology Freedom.