Why do Western countries pay stupendously more for prepaid wireless service?

While Canada is home to latest developments in wireless technology (Blackberry is headquartered in Canada), wireless service in Canada features a huge price disparity compared to developing countries.

For example, Rogers Wireless, the biggest mobile phone service provider in Canada, has several prepaid plans. The prepaid plan that requires the minimum top-up ($10/month) charges 40 cents a minute for incoming and outgoing calls.

On the other hand, Vodafone India minimum top up for a prepaid plan is $1.42/Month (66 Indian Rupees) and the rate offered is $0.01297 cents a minute for outgoing calls. Incoming is free. Interestingly, Vodafone UK offers 33 cents a minute (21p) for outgoing calls.

We are told that this disparity is the result of economies of scale, given that it is impossible for Canadian wireless service providers to find as many subscribers as they would find in India. But there are many more reasons to think otherwise. The wireless service industry in North America is concentrated among a few players, just like Big Tobacco and Big Sugar. There maybe more at work here than economies of scale.

Why do we pay more?

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