International price comparisons: An area of further research

The keen interest by politicians, regulators, and competition authorities in international price rankings has sparked a series of management consultancies to produce regularly studies that purport to compare and rank prices for mobile wireless services across the world. These rankings, so they claim, are the Swiss Army knife of competition analysis. A country that ranks lower on a list is declared a laggard or noncompetitive and thus supposedly is in need of regulatory intervention. Such claims require scrutiny and further analysis. An accurate price comparison should follow the scientific method and include a testable hypothesis, a properly designed study methodology, and accurate data collection and interpretation. One such ranking exercise is produced biannually by Finnish management consultancy Rewheel. The present review fills a void with its analysis of the Rewheel study and suggests that it is a highly simplistic international price comparison exercise. The methodology of Rewheel assumes an unrealistic world where consumers only care about how much data they can get for a certain budget (i.e., price), and all other competitive differentiators (i.e., plan and quality differences) and costs differences (e.g., size of network built) are irrelevant.