Question

Why are cell phone data plans cheaper in Europe? Why might cell phone data plans have different prices across markets?

Answer 1

Cell phone data plans are cheaper in Europe, because of the different reasons. The first reason is the relatively lower level of regulations and higher competition in the market, making companies to offer plans at a cheaper rates to attract the customers. So, these plans are very cost effective. The second reason is the cost of entry into to the market that becomes a higher cost, but involving different players for different functions such as mobile infrastructure, distribution work and ownership of the spectrum as well as linkage with the cellphone companies, make the cell phone data operators to offer plans at a lower rate. The third reason is the advanced technological environment where one technology is getting obsolete with the introduction of new technologies. It makes firms to sell their data plan at lower rates, so that not to lose the customers to the new competitors.

For data plans to be sold at different prices in different markets, the first reason is the government regulations and policies. If the government restricts the price level, then it is at a lower price, or it is the market forces that decide the price of these plans. The second reason is the difference in a technological environment in the country. Advanced technological environment makes technology to have short lives and price to be lower and vice versa. The third reason is the competition in the market. A higher competition leads to lower price and vice versa. It makes prices of these plans to be different in different countries.