May 30, 2003

Why Is Wireless Better in Wales?

The always-interesting Philip Greenspun draws analogies between bad wireless coverages in the U.S. today and the robber barons of the medieval Rhine:

Philip Greenspun's Weblog: ...After two days of touring Wales, a country that apparently has yet to discover the mixing faucet, it has become apparent that there is better mobile phone coverage in the remotest sheep pasture or coastal outcrop than in downtown Boston. How can such an otherwise backward place be so far ahead of the U.S. technologically?

Most folks are familiar with the story: in Europe the governments mandated that all cell phone systems be built using the GSM standard. Thus you can make or receive a call any time that you're within range of any antenna from any provider In practice this means nearly 100 percent coverage of the land area of Europe.

One of the advantages that the U.S. had over Europe in the days prior to European Union was an absence of trade barriers. In feudal times every local duke or prince was able to levy tariffs on goods traveling through his town. Thus it became cheaper to undertake the hazardous sea voyage round the horn of Africa rather than pay all the toll collectors on the land route. Pre-Union Europe retained some of the vestiges of that feudalism and her economic growth was inhibited.

The U.S. by contrast was a model of efficiency. The government built roads from coast to coast and you could drive a truckload of goods from Virginia to California without paying a toll. True free marketeers will argue that it is better to charge road users every time they set their tires on pavement and this may indeed be the case in our congested cities. But most of the time the cost to society of an additional car on the road is too small to bother collecting and the road generates economic growth for all, thus justifying the role of government in paying for it...

Posted by DeLong at May 30, 2003 11:37 AM | TrackBack

Comments

Isn't it just because fixed-line networks in Europe were much worse than in the US until very recently, so people have had to go for cellphones. In Germany or Italy, the landline networks are even worse than in Britain, so cellphone ownership took off very quickly. And in Brazil, where the landline network is utterly terrible, cellphone networks have taken off quickly too, despite much lower incomes.

Posted by: PJ on May 30, 2003 12:24 PM

Several years ago my business partner and I were discussing the crappy cell phone coverage we had here in the SF Bay area. Turned out there was a lady who worked for a cell phone company (forget which) sitting next to me. She had been listening to our conversation and told us that the issue was that they couldn't get land to put up cell stations. Why was it so hard, I asked, to get land for that? She explained that it had to do with the railroad's "ownership". They owned a lot of the land that they needed to put up cell stations and they couldn't get them to budge on it.

I have no idea if she was telling the truth, and I haven't verified it, but it does make sense.

Posted by: John Constantine on May 30, 2003 01:28 PM

> After two days of touring Wales, a country that apparently has yet to discover the mixing faucet

Anally pedantic point - taps that mix hot and cold water within them are actually forbidden under British law. A full explanation of the strangeness of British plumbing regulations would take far too long...

Posted by: Richard Johnston on May 30, 2003 03:04 PM

PJ, I do not think so for the EU. The case for Brazil and other is rather that it is less expensive to set cell stations than to run a cable to every prospective customer in a territory of low density, and with an aggressive medium, wether due to nature or to man.

John C, that is part of the story. Here in Spain there is a lot of fear of EM contamination, so companies have a hard time to obtain authorisation to put a cell station. There is some pression to oblige the different companies to share the stations, which would be more economical.

DSW

Posted by: Antoni Jaume on May 30, 2003 03:11 PM

"A full explanation of the strangeness of British plumbing regulations would take far too long..."

Well, please provide a link or a clue because I, for one, am intrigued. Safety?

Posted by: Keith M Ellis on May 30, 2003 03:34 PM

"In Germany or Italy, the landline networks are even worse than in Britain, so cellphone ownership took off very quickly"

And the landline network in Britain is bad because?

In actual fact, cellphones took off in Britain for pretty much all the same reasons they are popular everywhere else. It has absolutely nothing whatsoever to do with the state of the landline network.

Geez, you Americans can be so incredibly parochial. You put me in mind of those hysterically funny Senators who announce at regular intervals that the Senate is the "best goddam debating chamber in the world."

Perhaps you were thinking of Africa.

Posted by: Pooh on May 30, 2003 03:35 PM

Keith, putting it simply, thanks to a Napoleonic-Wars era law (so I understand), all British homes, as a fire prevention measure, have to have a cold-water tank in the attic, from which almost all the cold-water outlets in the house are fed by gravity from this tank. This is why British showers are notoriously weak, & why one should only drink water from the kitchen tap, which is just about the only tap in the house which can be fed from the mains water supply. The mixer-tap prohibition is because there's no reverse flow valves in British plumbing, I believe. (Because of the cold-water tank thing, I'd guess.)

Posted by: Richard Johnston on May 30, 2003 03:48 PM

And even British mixer taps only actually mix the water once it's left the tap itself. This means one gets a central core of scalding water surrounded by a frigid cladding. Occasionally I do hate my country...

Posted by: Richard Johnston on May 30, 2003 03:59 PM

"And the landline network in Britain is bad because?"

Well, in the US we don't pay a toll for local calls. But we still do, almost without exception, pay a toll for local wireless calls. Thus, there's an economic disincentive against Americans switching to wireless that doesn't exist (or is not as strong) for most Europeans.

Posted by: Keith M Ellis on May 30, 2003 04:09 PM

I imagine population density has something to do with it also. Installing wireless coverage (digital especially) around Ontario where I live is a very expensive proposition. And while Ontario is the most populous province of Canada, outside of the southern strip its density is far less than most of the UK (N. Scotland excepted).

Posted by: Tom Slee on May 30, 2003 05:04 PM

I can confirm that in France in 1990 - three years after they basically rebuilt the national phone system - there were hardly any cellphones (none that I saw) and the pay phone in my dorm had line quality that was better than my home phone in Indiana. I also have the impression that cellphone service is cheaper in Europe than in the US, in part because most people seem to have cellphones without account fees, they only pay for the calls they make.

In the third world, cell service is exapanding because it's cheaper to set up than good landlines. I saw that in Cambodia, where cell service is going into many areas instead of land service. Furthermore, SMS/WAP/i-mode features give cellphone users indirect 'Net access. You can send e-mail and get realtime stock quotes in the middle of Cambodia on your cellphone, while direct Internet access is at best touch and go.

Posted by: Scott Martens on May 30, 2003 05:21 PM

[Reprinted with changes from a previous post of mine.] Instead of unified or interoperating national networks, as mandated in much of Europe, the USA has two complete mixed analog-digital networks (ATT and Verizon) and at least four partial digital networks (T-Mobile, Singular, Sprint, Nextel, ATT GSM (mlife)--there are probably others I can't think of.) So capital invested in the networks has been spent on building six competing networks, instead of finishing one modern one. In addition, pricing on the old US wireline network is largely flat-rate, as opposed to Europe, where telephone service has always been metered, as a kind of tax.

The has led to the following problems:

1. There is no complete digital coverage, not even within major metropolitan areas. T-Mobile has problems completing calls in New York City and Chicago. (Source: Consumer Reports.) I don't believe the Sprint network can offer thorough national coverage; the technology used is so short-range as to require a prohibitively expensive number of base stations. And so on.

2. Not all the digital services are GSM, which means not all of them can offer a full range of additional services and what services they can offer are not compatible with each other and do not interoperate.

3. The terms on which one does business with cell phone companies are unpleasant--I actually dropped the one with the best coverage (Verizon) because I hated their customer service so much (every service change, they wanted to extend my debt to the firm for another year.)

Now, if we wanted, we could have a national co-op and offer universal digital wireless service for less than $5/month, everywhere. It might be less than $1/month--one of he things the wireless industry has managed to conceal is that it's much, much cheaper to offer wireless service than wireline. (Reason: pulling cable is expensive and in a universal wireline network it has to go everywhere. In 1980, underground cable cost $5/foot.) But I'm not holding my breath; the current US wireless situation is similar to the European wireline situation of some decades ago, when it was cheaper to run international satelite links between neighboring states than to get a land line.

By the way 400 MHz GSM service is on the boards. It is long-range and will therefore require fewer base stations; it's intended for countries that have never had a wireline network at all--I think South Africa will probably be the first nation to deploy this.

Posted by: Randolph Fritz on May 30, 2003 06:18 PM

Richard Johnston - I think that most of the more ridiculous plumbing regulations in Britain have been repealed in the last couple of decades. Certainly I and many of my neighbours have got rid of the cold water tanks, and any hardware store now stocks mixer taps. England is greatly overregulated in its product markets, but here is one at least that is going the right way.

Antoni Jaume - In Brazil, the awfulness of the landline network has to be experienced to be believed (at least in 1999, when I was there). You often have to make the same call ten times before getting through once. And you had to wait months for a line to be installed. The cheapness of cellphone networks may have been the dominant factor in rural Brazil, but in cities like Sao Paulo, I'm sure the awfulness of the fixed line provider played a part.

Pooh - the landline network in England isn't bad at the moment, but it wasn't as great as the American network five or ten years or so ago. As usual, England is somewhere between American and European levels of service and efficiency. I don't have detailed statistics to back this up - only casual empiricism from having used phone systems in England, across the United States and around Europe.

Posted by: PJ on May 31, 2003 01:27 AM

Doesn't the US military's control of certain parts of the spectrum have some part to do with it?

Posted by: M Ali Choudhury on May 31, 2003 03:35 AM

The landline phone network in Britain is perfectly decent, and I don't know anybody who went for a mobile phone because they found it unsatisfactory. People have mobile phones because they're cheap, convenient, and most of their friends have one, and at least the first two of those factors are to do with the regulatory and pricing structures over here.

Is it really so inconcievable that some other countries might simply do some things better than America?

Posted by: Iain J Coleman on May 31, 2003 03:42 AM

Another reason for mobile phone take-off (well at leats my reason back in '96) was the dreadful state of British public phone boxes. Having tried three in a row and found them all to be broken, I went into a shop and bought a mobile.

Richard -- do you live in Wales? Certainly mixing taps are common in London, as are power showers.

Posted by: Matthew on May 31, 2003 03:50 AM

Yep, power showers and mixing taps (of a sort) are getting more common, but most new houses still have a cold-water tank, as I discovered when I had to fix an overflowing one in my last place (in London, note) with a ballpoint pen cap.

Posted by: Richard Johnston on May 31, 2003 01:49 PM

"Most folks are familiar with the story: in Europe the governments mandated that all cell phone systems be built using the GSM standard. Thus you can make or receive a call any time that you're within range of any antenna from any provider In practice this means nearly 100 percent coverage of the land area of Europe."

This is not true. If the antenna does not belong to your provider and your provider has no roaming agreement with the owner of the antenna you can't make a call.

Posted by: Stephan on May 31, 2003 02:46 PM

"If the antenna does not belong to your provider and your provider has no roaming agreement with the owner of the antenna you can't make a call."

How often is that true in pratice within a single European country, Stephan? (No troll--I honestly don't know.)

If one is travelling, can one buy a prepaid ID chip for the local area?

Posted by: Randolph Fritz on May 31, 2003 08:00 PM

Randolph and Stephan - I don't know how it works in bigger countries like France and Germany, but in Belgium there are only two gsm providers and each covers essentially 100% of the territory. When I cross the border into the Netherlands, Luxembourg, France or Germany, there are actually several networks with roaming agreements with my provider (Mobistar, which is France Telecom if I recall correctly).

Now, because I have no GSM service plan, making and receiving calls when I'm outisde of Belgium is prohibitively expensive. All my calls have to be prepaid, and using my phone abroad quickly empties my account. I have never been anywhere in the neighbouring coutries where I did not have network access. There are mobility plans that make international roaming much cheaper, but they involve paying monthly minimums and the like, and for an intermittent cellphone user like me it's not cost effective.

I know people who travel a lot and just own two or more cellphones because it's cheaper that way.

Posted by: Scott Martens on June 1, 2003 03:00 AM

My point was just that the original argument doesn't hold (at least in part). The networks are technically compatible, nothing more. The providers still have to build up their network coverage on their own (they are of course free to enter roaming contracts). And there will be UMTS gaps for quite a while in Europe, for example.

Posted by: Stephan on June 1, 2003 11:55 AM

PJ wrote:

"Pooh - the landline network in England isn't bad at the moment, but it wasn't as great as the American network five or ten years or so ago."

This is complete twaddle on its face for one very good reason: There have been virtually no substantive changes to the landline network in that time. If you have discerned a change you have been hallucinating.

"Most folks are familiar with the story: in Europe the governments mandated that all cell phone systems be built using the GSM standard."

The British government mandated nothing of the kind. The analogue networks operated quite successfully for years (actually, until 1995), until the GSM systems were rolled out by the operators in search of higher profits; profits that the operators imagined would be stimulated by a much greater take-up of phones and services - which is indeed exactly what happened, until the bust that is.

To echo the poster above: Why is it that Americans so frequently believe they alone can do things well?

For some years after World War II American know-how was justifiably the envy of a world which was, at least in Europe, lying in ruins. By the early 90's, if anyone had talked of American know-how she would have been mocked mercilessly. A few years of a credit-induced bubble and living off the savings of others has restored their faith in themselves. They are about to learn that such faith has been almost entirely misplaced.

Posted by: Pooh on June 1, 2003 12:40 PM

(1) In my experience, mixer taps are WORSE than the other sort - given a certain view of what you are trying to achieve. I want two separate streams of reasonably constant temperature, so I can estimate by eye how much to adjust them when filling a bath or a basin. Mixer taps require me to risk scalding myself with frequent hand tests as temperature changes cause washer expansion to vary the proportions "endogenously". The monopoly of mixer taps here in Australia makes my life worse. I cannot get what I want - so much for market forces. (Interfered with by Australian regulations - we aren't allowed overflow holes in our baths, for instance.)

(2) The Horn of Africa is in the east. It is not something that constrained trade routes much. You may have meant the Cape of Good Hope, and become confused with Cape Horn (in South America).

Posted by: P.M.Lawrence on June 1, 2003 04:15 PM

(3) And, of course, the wireless reception is bound to be better for the BBC, which is almost axiomatically bound to be better than anything in the USA. You get a better class of weather on the BBC.

Posted by: P.M.Lawrence on June 1, 2003 10:15 PM

Stephan, what about pre-paid SIM cards when you're out of your regular area? Or are they incredibly expensive?

Posted by: Randolph Fritz on June 1, 2003 11:17 PM

Pooh - "This is complete twaddle on its face for one very good reason: There have been virtually no substantive changes to the landline network in that time. If you have discerned a change you have been hallucinating."

Service on Britain's landline network has improved enormously over the last ten years, whether or not the wires themselves have. See bt.com for a list of improvements made. If you think the service was better in 1993, then it was you who was hallucinating.

And when you write "For some years after World War II American know-how was justifiably the envy of a world which was, at least in Europe, lying in ruins. By the early 90's, if anyone had talked of American know-how she would have been mocked mercilessly. A few years of a credit-induced bubble and living off the savings of others has restored their faith in themselves. They are about to learn that such faith has been almost entirely misplaced." you are simply writing rubbish. American "know-how" was the envy of Europe long before WW2 (the highway network as coveted in Europe in the 1930's as the information superhighway was in the 90's), and American productivity growth has, according to this website, continued despite the cyclical downturn. American output per worker has been the highest amongst the industrial nations for decades, in the early 90's as now. Indeed, many papers on this very website seek to explain this very fact.

Posted by: PJ on June 2, 2003 02:44 AM

In Germany we had ISDN available almost everywhere before cell phones really took off, so the quality of land lines can't be the issue. (And there are only a few people who have substituted their landline phone with a mobile one, so costs can't be the issue too [calls from a cell phone always have been more expensive].)

@Randolph:
The network coverage of the 4 major providers in Germany is near 100% each.

Everything is more expensive with prepaid SIM cards. But besides their payment mode they act just like regular SIM cards from your provider (there is no "regular area").
Buying a SIM card in a country you travel to isn't easy because you still have to sign a contract and I'm not sure the providers accept foreigners. There have been countries were you hadn't but due to anti-terror legislation you now have to, I believe.

Posted by: Stephan on June 2, 2003 03:24 AM

This is getting a bit techy, but Stepan certainly in the UK if you have a contract with any of the large mobile operators they seem to have roaming agreements wih every country in Europe I've been to in the last three or four years -- off the top of my head Germany, France, Italy, Spain, Switzerland, Belgium, Hungary, Poland. You don't have to do anything -- it's automatic. Each operator sends you a nice little text message tellilng you that you are now in their region (this can be annoying in Belgium given the two operators, plus the French ones seem to cover a simlar area and so you get constant text messages). Furthermore in the last few years the costs have come down dramatically -- last time I was in France it seemed only a little more expensive than calling in the UK.

Posted by: Matthew on June 2, 2003 03:27 AM

To that I can add Serbia, Bosnia, Turkey and New York.

It also seems to be the case that most providers add discount long distance calls to the service so without setting up a discount service it is cheaper to make international calls from my cellphone than my landline.

Netwrok costs can't be the problem becuase most European countries have at least 4 and have rebuilt most of them. Fragmentation also seems less compelling because there were so many providers internationally.

No charge for local calls would make a big difference and might provide a rare example of a business succeeding better in Europe than the US because of less distorted incentives. I wonder if caller pays is also a more attractive charging model?

Posted by: Jack on June 2, 2003 04:22 AM

My provider also has roaming agreements with providers all over the world, I haven't debated that.

I really don't think flat rates for local calls in the US are the issue because - as I said - for example in Germany every call with a cell phone is more expensive than on a fixed line (due to "Call-by-Call" we can change the provider on the fixed line for every call).

The density of population in Europe is much higher than in the US. So it is cheaper (resp. more profitable) for European providers to build up network coverage. Mobile communication is a typical "network industry", the more people have a cell phone, the bigger the covered area is, the higher the value for the users is. Maybe mobile communication in the US still has to reach a critical mass of users/coverage to accelerate as in Europe?

Posted by: Stephan on June 2, 2003 06:17 AM

My experience with several European (Austria, Italy and Spain) and the Japanese landline phone monopolies was that start up costs were very high. To get a new line took months and service - on the human side - was slow and painful. People in these markets seeking new lines would have been likely pushed into buying cell phones in my estimation.

Conversely, in the U.S. the landline monopolies have managed to add a service price to cell phones that appears designed to slow ownership. Taken together I believe these two pieces would explain a great deal of the difference in penetration.

Posted by: Stan on June 2, 2003 09:11 AM

Stephan i agree with you on the direct price point but there are other effects that come into play. I have generally found it easier to borrow a phone in a bar or office to make a local call. I don't know if this is also true of hotel phones so lots of organisational calls of the sort that cellphones are great for were easier in America.

I also think that paying for calls received is a big turn off although not obviously unfair.

Posted by: Jack on June 2, 2003 09:27 AM

I have a question on the

>The government built roads from coast to coast and you could drive a truckload of goods from Virginia to California without paying a toll. True free marketeers will argue that it is better to charge road users every time they set their tires on pavement and this may indeed be the case in our congested cities. But most of the time the cost to society of an additional car on the road is too small to bother collecting and the road generates economic growth for all, thus justifying the role of government in paying for it...

Givent the greenhouse effect and the destruction of public transit in favor of the automabile, I wonder if the free marketeers might not have half a point - that is it might be worth the tranactions costs to make people pay full costs of automobile ownership - but only if public transit were subsidized as an alternative.

Posted by: Gar Lipow on June 2, 2003 02:00 PM

Er... in general, US style highways were NOT "as coveted in Europe in the 1930's" as the information superhighway, not in the sense meant (of course it is technically accurate, since both were considered ho-hum). Only Germany had a use for a highway network, for reasons I will not go into.

As for US productivity increases being a measure of US superiority, that just is not the case. It WOULD be, if only they translated into reliable increases elsewhere, say in employment and production. But as has also been noticed hereabouts, what happens these days is an outpacing of demand with not enough new jobs being created to absorb all those displaced, and similarly mixed production results (that is, production increases that are taking place outside the USA don't count as US gains). In these circumstances, productivity increase is a mixed blessing and no reliable indicator of gains.

As there appears to be no better proxy for results that also shows US superiority, you simply can't argue it. Or more precisely, you can't argue it simply.

Posted by: P.M.Lawrence on June 2, 2003 04:22 PM

- European visitors to America in the 1930's DID admire America's sparkling new highways. Few European nations had much use for them before WW2, but only because European standards of living, and in particular car ownership, were so much lower.
- read my post and the one I was replying to. I don't once use the word "superiority". I was using productivity as a proxy for "know-how", which I think is about as close as any macro statistic can come.

Posted by: PJ on June 4, 2003 04:10 AM
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