Market Commentary

Cell Phones

In the last 10 years the average wireless phone bill has fallen from $50 to $39 which can be credited to free market competition. Cell phones themselves, while rising in average cost, are much cheaper than they used to be if they did not add the vast improvements over the same period. It is a mini computer held in your hand. That too is a result of healthy competition. If one wanted to study the results of a free and healthy competitive industry the phone industry is a good place to start. There are several major carriers and several very large phone manufacturers. The industry is dominated by larger players, but that scale helps to keep prices low and they are fiercely competitive. Therein lies the secret ‘fiercely competitive’.

Where costs have risen in the last decade is taxes. Over that same period, taxes have gone up on average from 15% to 19%. Some areas pay as much as 40% of their total bill in taxes. One could argue the necessity of many of these fees, sur charges and taxes but you can’t argue they are the source of the increase of cost of having a cell phone.

Cell phones have rapidly becoming a necessity and whenever that happens the government tax man is never far behind.

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