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Democracy & Technology Blog What’s up, Walt?

I enjoy Walt Mossberg’s Wall Street Journal personal technology reviews as much as the next person, but his latest jeremiad against U.S. mobile phone companies is way off the mark. Mossberg calls the mobile carriers “Soviet ministries” because they offer two-year service contracts, lock their phones during this contract period, and generally take a “walled garden” approach to content.
But the facts of the U.S. wireless industry are striking:
— Ours is the most competitive wireless market in the world, with the top two players accounting for just 51.5% of subscribers. Some of us wouldn’t mind if our market were more concentrated.
— Prices have fallen some 85% since 1994, from around $.46 per minute to $.07 per minute.
— Average minutes of use in the U.S. far exceed any other nation — by a factor or 2x or 3x — including the supposedly mobile-obsessed Europeans and Asians. U.S. average usage is 834 minutes per month. Europe, just 153. Our prices are much lower.
— After lagging for a decade, the U.S. has deployed fast 3G networks ahead of the Europeans (although after the world-leading Koreans).
— We can choose among some 700 mobile devices in the U.S., far more than any other nation.
— Mossberg compares today’s wireless landscape to the klunky-black-phone monopoly days of the 1960s where Ma Bell essentially owned your phone and did not allow other models. Do you really believe that, Walt?
— Mobile carriers “lock” their phones because they also subsidize those phones. There’s a trade-off. Consumers can choose to sign a two-year service contract in return for an inexpensive, subsidized phone. Or they can buy a phone full price, get it unlocked, and potentially take it to another carrier.
— Apple’s iPhone proves that innovation is alive and well and that partnerships — like the Apple-AT&T deal — work. It’s the first device that brings the real open Internet to life on a mobile device. From here on, other carriers will have to give consumers the full-featured Net, too.
Mossberg should remember another thing: Wireless is hard. If you really think about it, mobile communications seems almost miraculous. It takes huge expense, planning, and engineering to make a wireless network function robustly. Wireless is a bandwidth constrained environment, where operators must tweak their networks to get every last bit-per-second-per-hertz out of their spectrum and equipment and to maximize geographic coverage with limited capital and operational expenditures. Likewise, mobile devices are small computers, which at least for now are limited in storage, MIPs, and battery power. We are improving these metrics at a furious pace, but we still must choose which applications and features to pack into these tiny packages. Any high-end technology starts as an integrated system — all the components and interfaces must be optimized to even get the system to work. As technology matures, systems can break apart and modularize, and more third-party and plug-in components and applications become technically and economically viable. This will happen in wireless, too, but technology and economics must drive the process.
It’s easy to assume wireless signals magically suffuse the ether and that I should just be able to stick any device into the air and get free phone calls and Web access. It’s much harder to actually make it happen. No “Soviet ministry” ever engineered anything close to the wonderous wireless webs we all enjoy everyday.
-Bret Swanson

Bret Swanson

Bret Swanson is a Senior Fellow at Seattle's Discovery Institute, where he researches technology and economics and contributes to the Disco-Tech blog. He is currently writing a book on the abundance of the world economy, focusing on the Chinese boom and developing a new concept linking economics and information theory. Swanson writes frequently for the editorial page of The Wall Street Journal on topics ranging from broadband communications to monetary policy.