International Price Comparisons: An Area of Further Research

20 May 2020
Dr. Christian Dippon

In an article in the Elsevier journal Telecommunications Policy, NERA Managing Director Dr. Christian Dippon examines the accuracy of one of Rewheel’s studies, “The state of 4G pricing – 1H2018,” Digital Fuel Monitor 9th release, dated 1 May 2018 (hereafter “DFM 9th Release”), as a tool to compare international retail prices for mobile wireless services and as a measure of a country’s state of competition. The keen interest by politicians, regulators, and competition authorities in international price rankings has sparked a series of management consultancies to produce regular studies that purport to compare and rank prices for mobile wireless services across the world.

These rankings, they claim, are the Swiss Army knife of competition analysis. A country that ranks lower on a list is declared a laggard or noncompetitive and, thus, supposedly needs regulatory intervention. Such claims require scrutiny and further analysis. An accurate price comparison should follow the scientific method and include a testable hypothesis, a properly designed study methodology, and accurate data collection and interpretation.

One such ranking exercise is produced biannually by Finnish management consultancy Rewheel. The present review fills a void with its analysis of the Rewheel study and suggests that it is a highly simplistic international price comparison exercise. Rewheel’s methodology assumes an unrealistic world where consumers only care about how much data they can get for a certain budget (i.e., price), and all other competitive differentiators (i.e., plan and quality differences) and costs differences (e.g., size of network built) are irrelevant.