OECD report says U.S. mobile usage among most costly

A new report from the Paris-based Organization for Economic Cooperation and Development said cell phone users in the United States, Canada and Spain have the highest cell phone bills in the world, while those in Finland, the Netherlands and Sweden have the lowest. However, U.S. wireless trade group CTIA vehemently disagreed with the report's conclusions, and said the group's statistics rely on a flawed methodology.

[1]One of the reasons users in the United States and Canada pay high bills is that, unlike in Europe, customers in North America often have to pay to receive phone calls. "You have to have a certain income level to afford it," Taylor Reynolds, an economist with the OECD's Telecommunications and Internet Policy division, told the Wall Street Journal.

However, Miguel Garzon, a spokesperson for Telefónica, told the Journal that "it is very difficult to compare the different types of plans in different countries." CTIA ratcheted up the criticism, arguing that the report's international comparisons didn't work and were "built on flawed assumptions."

Specifically, CTIA said that buried on page 275 of the OECD report was the following item: "It is important to note again that the OECD calling pattern in the basket can be significantly different than common calling profiles in a specific country." The OECD classified a "high-usage" user as someone who had made 1,680 outgoing voice calls, or 2,952 minutes, but noted that U.S. users average 9,600 minutes of voice calls (combined incoming and outgoing) per year. 

"In this case the basket provides the cost of buying exactly the calls and messages in the OECD basket rather than what may be considered a 'typical' bundle in the market," the report said.

The CTIA seized on this and said it showed that the profiles used in the OECD report do not reflect the reality of U.S. cell phone usage. "Only by picking such unrepresentative 'representative' call packages, could the OECD have reached such a result," CTIA said in a statement.

In response to CTIA, OECD's Reynolds said the report notes that minutes of consumption per year in the United States are high relative to other countries.

Further, he said the baskets do not claim to represent any specific country's exact consumption level, and should not favor any one country at all. "To achieve this we hold a meeting every 2-3 years with operators and telecommunication regulators from around the OECD to discuss usage patterns in their particular countries and find a way to define a 'typical' low-, medium- and high-use pattern for the OECD," he said. "Our last meeting was in July 2009 and we had good representation from the United States.

"The correct way to interpret the Communication Outlook data is to say these are the prices for the same consumption pattern across all OECD countries," Reynolds said. "We select the plan in each country which is cheapest for someone with this exact calling and texting pattern and see how much it costs to replicate in each county. Based on these precise patterns, prices are cheapest in Northern Europe and relatively more expensive in North America."

For more:
- see the OECD release [2]
- see this WSJ article [3] (sub. req.)
- see this CTIA release

[4]Related Articles:
AT&T, CTIA balk at antitrust claims [5]
Justice Dept: Are telecom carriers anti-competitive? [6]
Senators urge FCC to probe handset exclusivity deals
[7]
Correction, Aug. 12, 2009: Due to a reporting error, an earlier version of this article said the OECD classified "high-usage" users as people who used 1,680 voice minutes per year. It is 1,680 voice calls per year.