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August 28, 2008


Steven Hoober

I'd like to see solid penetration rates for smaller subsets of the U.S. Not that certain areas are too cool, just that others have little or no coverage. My impression is that we're around 100% in any urban or suburban area you care to name (some people have more than one device, but not over 10% of people).

Sure there are a few hillbillies and naysayers, but most people I see without a mobile phone are in areas with no coverage. Or, with such poor coverage that any data service past SMS is essentially a non-starter.

The past 3-4 years I've spent a lot of my vacation time driving around the U.S. I often slouch in the back seat with a computer and aircard (EVDO). On major highways, you can generally get some level of data, but not always. get off the highway anywhere more than an hour from the center of a top-50 market and you are still in some peril of having not even a voice signal.

Unless some major technology change occurs (none of which, like LEOsats, seems likely anytime soon), overall US penetration will never get as high as some more densely populated countries.

Tomi T Ahonen

Hi Steven

Thanks, very good comments and your views are valid, and quite widely supported as well.

I agree with part, not with part.

So your view of America today, is very valid. Yes, the 100% penetration levels will be in cities, and if the national average is 85%, then it means that in rural areas of poor coverage, the penetration rates are correspondingly around 60% (to give the average to 85%). Bear in mind, that in Italy or Taiwan, with 135% penetration rates, it means that in their cities like Rome, Milan and Taipei, the average penetration rate is also greater - probably 160% or so - and in their rural areas the penetration rate is far less, perhaps 110% or so...

And like you say, the high rates are the result of multiple subscirptions - the world average early last year was 28% (I haven't seen the latest stats for this for the end of 2007 yet). In Western Europe, half of the total population has two or more phones. In America about 15% of cellphone owners have two or more subscriptions (ie an iPhone owner also having a Blackberry for example). But yes, in Europe thats already half of the population..

The point I'd disagree with you, is how will America evolve. You say that because of the population density - ie lack of it in rural America - that part of America is destined to bad network coverages and lousy services.

Here I totally disagree. Finland is a far less densely populated country than America - and one of the largest European countries by geographical area - about the size of the US State of Montana or half the size of Texas. And Finland has a small population of 5 million people, so the user base is very small to support a cellular telecoms industry spread across the forests, lakes, swamps and tundra of rural Finland.

Yet in Finland you'll be hard-pressed to find any location, where you wouldn't get coverage. And yes, we have Finnish readers who will immediate object, that at their summer cottage in the wilderness they have lousy coverage etc. But I mean compared to America - in Finland on all the main roads, as you drive, you maintain excellent coverage (almost) everywhere. Geography and population density is a red herring. The real reason why Americans have bad coverage is a bad business model - an outdated business model that almost the whole world has moved beyond, but the USA, Canada and a handful of other countries still ascribe to, which is that both the caller and the receiver of cellphone calls, are billed for the call.

There have been countless studies proving that if the cellular industry shifts to a "caller pays" model - charging more for hte caller, but nothing to the person receiving the calls - the overall industry fares much better, there is greater growth, better profits and far more incentive to bring excellent network coverage to poorer regions (where callers might not be wealthy to make many calls, but whose wealthier relatives, working in the cities, could afford to call them and put the costs of the calls to their phone bills)..

I discuss this to a great degree in the 17th chapter of my brand new book, Mobile as the 7th of the Mass Media. The penultimate chapter of the book is entitled "Why America Lags" and goes through the 12 reasons why US industry has fallen behind; and also the 5 reasons which are red herrings and not the reason - including the one you mentioned, geographical size (population density). You might be interested in reading that chapter. I've just blogged about the book including a link to where you can order it..

But yes, thank you for writing.

Tomi Ahonen :-)

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