The Cellular Telephone Industry Provides Service at Prices the Market Is Willing to Bear
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The comments made by Los Angeles Assemblywoman Gwen Moore in “Cellular Telephone Blues” (June 10) may be well intended, but she seems to be either mis- or uninformed.
Cellular telephone service is anything but a fixed-cost business. For every subscriber added to a cellular system, additional radios in each cell, more telephone lines (for which operators pay a hefty fee to Pacific Bell), more microwave equipment to link the cells to the central computer and ultimately more cells (each at about $1 million) are required. And with the increasing shift toward portable phones, there must be an investment in even more cells with no reciprocal increase in revenue.
Cellular service is a premium product. There are a variety of cheaper mobile communications alternatives; those who subscribe to cellular service do so out of choice. Since when are we in the business of regulating what the market will bear for a premium product? Should we regulate the price of a new Mercedes simply because it has access to the public roads?
Let’s also not forget that the street price of a cellular phone has dropped from about $3,500 just six years ago to about $350 today. Would that have ever happened in a regulated environment? And how many more people can now afford this service as a result?
SCOTT GOLDMAN
Goldman Group--International
Cellular Consultants
Calabasas