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> The BBC report, citing a UK-based price comparison site, said that 1 gigabyte (GB) of mobile data cost $0.26 in India (£0.20), compared with $12.37 in the US,

> The BBC report, citing a UK-based price comparison site, said that 1 gigabyte (GB) of mobile data cost $0.26 in India (£0.20), compared with $12.37 in the US, $6.66 in the UK, and a global average of $8.53. According to OECD, the Purchasing Power Parities (PPP) for India is 17.729 , UK is 0.691 and US is 1.0 [0]. That's a huge difference and hence, ignoring the purchasing power will not give you a full picture about the "cost". [0] https://data.oecd.org/conversion/purchasing-power-parities-ppp.htm https://data.oecd.org/conversion/purchasing-power-parities-p...

chrismeller 8y ago
Exactly. Lower income = lower labor cost = lower consumer cost. Who knows if that accounts for all of the difference, but excluding that factor makes the whole thing useless.
- chewz 8y ago
  Labor cost is insignificant. More so the cost of building infrastructure - BTS towers.
  - chrismeller 8y ago
    And how is building infrastructure not impacted by labor costs?
    - chewz 8y ago
      Lease, monitoring, insurance, real estate taxes, site maintenance. From the report [1]: Tower cost in India (40-60k$) due to low land rent cost. Tower in Latin America (120-180k$) Tower in UK - 200-400k£ [2] [1] http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MTEwMDI2fENoaWxkSUQ9LTF8VHlwZT0z&t=1 http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9M... [2] https://www.ft.com/content/981f7084-c515-11e5-b3b1-7b2481276e45 https://www.ft.com/content/981f7084-c515-11e5-b3b1-7b2481276...
      - chrismeller 8y ago
        If anything that is supporting my argument. Yes, all of those costs are less in India. Why would that possibly be?
        chewz 8y ago
        Because land lease and related cost are significantly lower in India. Not due to labor costs.
  - abbe_k 8y ago
    And labor cost are significant when building the towers. The actual cost for the equipment is much smaller than the tower installation cost.
- mruts 8y ago
  See my above comment on why this is a fallacy. PPP isn’t magic, it only affects goods that are difficult to arbitrage. This is why oil is the same price pretty much everywhere in the oil. Because if oil was cheaper (including taxes and transport) in one place, someone would buy it and sell it somewhere else. When everyone is doing this, it equalizes the prices. This is because arbitrage drives up the price of cheaper oil and drives down the price of the expensive
  - chrismeller 8y ago
    Difficult to arbitrage? You just proved the opposite of your own argument. Oil is the same price for many reasons (least of them being OPEC), but largely because of your point - there is a global market. How exactly is the US or UK supposed to export cheap data from India?
    - mruts 8y ago
      The point is that the cell towers are going to be the same price regardless of location. So PPP isn’t a good justification for why data is cheaper in India. That is all I’m saying.
- monksy 8y ago
  It's also a cultural thing. The consumers won't pay a huge amount. They are very used to negotiating for nearly everything and anything.
  - Scoundreller 8y ago
    They may be used to it, but they also hate it. Consumers would rather go to a big box store where they know they’ll pay an okay price all the time instead of a market where they’re expected to mentally calculate the actual value of every good and negotiate down to a magic number. Even EBay couldn’t keep the auction concept alive. Auctions (effectively what these negotiations are) are great for one thing: unique and expensive objects. It’s a pain to have to spend hours a year negotiating every $50/month that goes out of my pocket. That’s a lot of unproductive hours against a machine with thousands of employees working against me.
    - monksy 8y ago
      When you say they, who are you talking about? Western or Indian consumers? Auctions aren't the same as bargaining. Auctions have a lower price that is constantly going up. It just helps to reveal the max that a buyer will pay.
      - Scoundreller 8y ago
        Both groups. Bargaining is a waste of time if you have alternatives that don’t require it to get a good price. Auctions has buyers that are willing to pay more up until a point. Negotiating at the market has a seller that is willing to pay less up until a point. The same rules largely apply.
  - gowld 8y ago
    Isn't India data cheap because one person who owns one giant telecom decided he wanted data to be cheap in India? Similar to the original Google Fiber philosophy. Ah, per other comments: Jio
    - 8y ago
chewz 8y ago
Mobile telecom prices are just a pure licence to print money. The cost base (infrastructure and regulatory costs) is insignificant and the asking price maxed out - depending on the market. Prices could be mitigated by competition but usualy we have oligopoly, by regulators (EU and roaming charges) or by taxation (licences to operate). I always laugh when similar company with similar shareholders charge 15 times more in one country then in another. Digi Malaysia extending prepaid for 1 year 68 ringit 15$, dtac Thailand 1$. Both owned by Telenor.
- mcv 8y ago
  In many countries, mobile bandwidth licenses were auctioned for ridiculous sums, which were probably bid based on what they expected the market to be able to bear. That made the expected profit part of the cost. There was a bit of a scandal back then because of the way the Dutch government handled that auction and tried to squeeze as much money as possible out of the various bidding companies.
  - chewz 8y ago
    True. But it is just the government trying to get a slice of a pie. regulatory cost.
    - jandrese 8y ago
      It makes sense that the government wants to only hand out this extremely limited resource to organizations that will actually use it. And there is some sense that if someone pays a half a trillion dollars for the spectrum that they'll be highly motivated to use it to recover those costs, but in the end it basically guarantees that the service will be expensive because they have to make back that investment. But the only other solution I can see is to have the government just pick a company and hand them the license, and that's effectively guaranteed to be breathtakingly corrupt since the incentives to cheat are overwhelming. At least with the market solution the money goes into the government's general fund instead of into the pockets of the party official in charge of making the decision.
mruts 8y ago
That’s true, but the cell towers are probably going to be of a similiar cost in India vs US. Lower (because wages are lower) but similar because the actual equipment is going to be the same price. PPP is only relevent for things that have different prices in different countries (housing, food, etc). There are many things that cost roughly the same wherever you are: oil, macbooks, cell towers, etc. As a general rule, the easier something is to arbitrage, the less PPP matters. The cost of arbitrage includes transport costs, taxes, and depreciation schedules (vegetables would be cheaper in India vs US because they are hard to transport, for example). Of course this is only relevent if the US companies aren’t making crazy margins (I don’t personally know, but I suspect it’s possible).
- AlotOfReading 8y ago
  Is the bulk of cell tower cost going towards equipment? My understanding was that a significant chunk went towards labor/construction costs and land rent, both of which are probably much cheaper in India.
- denzil_correa 8y ago
  You are missing the core point - the income for an average person in India is significantly lower than the US or UK. Therefore, you can not directly compare prices of products across countries regardless of the costs of the product itself. Some metrics to look at GNI(PPP) Per Capita in Int$ : India - 6,980 / UK - 42,560 / USA - 60,200 [0] GDP (nominal) per capita in US$ (World Bank) : India - 1,940 / UK - 39.720 / USA - 59,532 [1] One of those countries, is not like the other two. [0] https://en.wikipedia.org/wiki/List_of_countries_by_GNI_(PPP)_per_capita https://en.wikipedia.org/wiki/List_of_countries_by_GNI_(PPP)... [1] https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)_per_capita https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nomi...
  - mruts 8y ago
    Are you suggesting that someone would sell a product for a lower price than what it costs just because people are poor where he sells it? PPP isn’t magic and you have to understand why some products are cheaper in 3rd world countries and why some products are the same price or even more expensive. It’s about arbitrage. Just quoting some PPP stat from wikipedia is irrelevent and missing the point. Why do you think PPP is different in different places? It’s not some magic wand you can just wave around.
Tsubasachan 8y ago
This. I pay €35 for T-mobile unlimited. Cheap enough for me but not the average Indian citizen I'm sure. Companies can only price what the market can bear.
PeakShot 8y ago
However, This was not always true. Mobile data used to cost 5$ a GB. It was made possible by a company called Jio with a vision to provide internet for everyone. Then other companies followed their concept. Purchasing power alone didn't bring this change. India had expensive internet like all other countries.

chrismeller 8y ago

Exactly. Lower income = lower labor cost = lower consumer cost. Who knows if that accounts for all of the difference, but excluding that factor makes the whole thing useless.

chewz 8y ago
Labor cost is insignificant. More so the cost of building infrastructure - BTS towers.
- chrismeller 8y ago
  And how is building infrastructure not impacted by labor costs?
  - chewz 8y ago
    Lease, monitoring, insurance, real estate taxes, site maintenance. From the report [1]: Tower cost in India (40-60k$) due to low land rent cost. Tower in Latin America (120-180k$) Tower in UK - 200-400k£ [2] [1] http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MTEwMDI2fENoaWxkSUQ9LTF8VHlwZT0z&t=1 http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9M... [2] https://www.ft.com/content/981f7084-c515-11e5-b3b1-7b2481276e45 https://www.ft.com/content/981f7084-c515-11e5-b3b1-7b2481276...
    - chrismeller 8y ago
      If anything that is supporting my argument. Yes, all of those costs are less in India. Why would that possibly be?
      - chewz 8y ago
        Because land lease and related cost are significantly lower in India. Not due to labor costs.
- abbe_k 8y ago
  And labor cost are significant when building the towers. The actual cost for the equipment is much smaller than the tower installation cost.
mruts 8y ago
See my above comment on why this is a fallacy. PPP isn’t magic, it only affects goods that are difficult to arbitrage. This is why oil is the same price pretty much everywhere in the oil. Because if oil was cheaper (including taxes and transport) in one place, someone would buy it and sell it somewhere else. When everyone is doing this, it equalizes the prices. This is because arbitrage drives up the price of cheaper oil and drives down the price of the expensive
- chrismeller 8y ago
  Difficult to arbitrage? You just proved the opposite of your own argument. Oil is the same price for many reasons (least of them being OPEC), but largely because of your point - there is a global market. How exactly is the US or UK supposed to export cheap data from India?
  - mruts 8y ago
    The point is that the cell towers are going to be the same price regardless of location. So PPP isn’t a good justification for why data is cheaper in India. That is all I’m saying.
monksy 8y ago
It's also a cultural thing. The consumers won't pay a huge amount. They are very used to negotiating for nearly everything and anything.
- Scoundreller 8y ago
  They may be used to it, but they also hate it. Consumers would rather go to a big box store where they know they’ll pay an okay price all the time instead of a market where they’re expected to mentally calculate the actual value of every good and negotiate down to a magic number. Even EBay couldn’t keep the auction concept alive. Auctions (effectively what these negotiations are) are great for one thing: unique and expensive objects. It’s a pain to have to spend hours a year negotiating every $50/month that goes out of my pocket. That’s a lot of unproductive hours against a machine with thousands of employees working against me.
  - monksy 8y ago
    When you say they, who are you talking about? Western or Indian consumers? Auctions aren't the same as bargaining. Auctions have a lower price that is constantly going up. It just helps to reveal the max that a buyer will pay.
    - Scoundreller 8y ago
      Both groups. Bargaining is a waste of time if you have alternatives that don’t require it to get a good price. Auctions has buyers that are willing to pay more up until a point. Negotiating at the market has a seller that is willing to pay less up until a point. The same rules largely apply.
- gowld 8y ago
  Isn't India data cheap because one person who owns one giant telecom decided he wanted data to be cheap in India? Similar to the original Google Fiber philosophy. Ah, per other comments: Jio
  - 8y ago

chewz 8y ago

Mobile telecom prices are just a pure licence to print money. The cost base (infrastructure and regulatory costs) is insignificant and the asking price maxed out - depending on the market. Prices could be mitigated by competition but usualy we have oligopoly, by regulators (EU and roaming charges) or by taxation (licences to operate). I always laugh when similar company with similar shareholders charge 15 times more in one country then in another. Digi Malaysia extending prepaid for 1 year 68 ringit 15$, dtac Thailand 1$. Both owned by Telenor.

mcv 8y ago
In many countries, mobile bandwidth licenses were auctioned for ridiculous sums, which were probably bid based on what they expected the market to be able to bear. That made the expected profit part of the cost. There was a bit of a scandal back then because of the way the Dutch government handled that auction and tried to squeeze as much money as possible out of the various bidding companies.
- chewz 8y ago
  True. But it is just the government trying to get a slice of a pie. regulatory cost.
  - jandrese 8y ago
    It makes sense that the government wants to only hand out this extremely limited resource to organizations that will actually use it. And there is some sense that if someone pays a half a trillion dollars for the spectrum that they'll be highly motivated to use it to recover those costs, but in the end it basically guarantees that the service will be expensive because they have to make back that investment. But the only other solution I can see is to have the government just pick a company and hand them the license, and that's effectively guaranteed to be breathtakingly corrupt since the incentives to cheat are overwhelming. At least with the market solution the money goes into the government's general fund instead of into the pockets of the party official in charge of making the decision.

mruts 8y ago

That’s true, but the cell towers are probably going to be of a similiar cost in India vs US. Lower (because wages are lower) but similar because the actual equipment is going to be the same price. PPP is only relevent for things that have different prices in different countries (housing, food, etc). There are many things that cost roughly the same wherever you are: oil, macbooks, cell towers, etc. As a general rule, the easier something is to arbitrage, the less PPP matters. The cost of arbitrage includes transport costs, taxes, and depreciation schedules (vegetables would be cheaper in India vs US because they are hard to transport, for example). Of course this is only relevent if the US companies aren’t making crazy margins (I don’t personally know, but I suspect it’s possible).

AlotOfReading 8y ago
Is the bulk of cell tower cost going towards equipment? My understanding was that a significant chunk went towards labor/construction costs and land rent, both of which are probably much cheaper in India.
denzil_correa 8y ago
You are missing the core point - the income for an average person in India is significantly lower than the US or UK. Therefore, you can not directly compare prices of products across countries regardless of the costs of the product itself. Some metrics to look at GNI(PPP) Per Capita in Int$ : India - 6,980 / UK - 42,560 / USA - 60,200 [0] GDP (nominal) per capita in US$ (World Bank) : India - 1,940 / UK - 39.720 / USA - 59,532 [1] One of those countries, is not like the other two. [0] https://en.wikipedia.org/wiki/List_of_countries_by_GNI_(PPP)_per_capita https://en.wikipedia.org/wiki/List_of_countries_by_GNI_(PPP)... [1] https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)_per_capita https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nomi...
- mruts 8y ago
  Are you suggesting that someone would sell a product for a lower price than what it costs just because people are poor where he sells it? PPP isn’t magic and you have to understand why some products are cheaper in 3rd world countries and why some products are the same price or even more expensive. It’s about arbitrage. Just quoting some PPP stat from wikipedia is irrelevent and missing the point. Why do you think PPP is different in different places? It’s not some magic wand you can just wave around.

Tsubasachan 8y ago

This. I pay €35 for T-mobile unlimited. Cheap enough for me but not the average Indian citizen I'm sure. Companies can only price what the market can bear.

PeakShot 8y ago

However, This was not always true. Mobile data used to cost 5$ a GB. It was made possible by a company called Jio with a vision to provide internet for everyone. Then other companies followed their concept. Purchasing power alone didn't bring this change. India had expensive internet like all other countries.