The Cellular Telephone Industry Provides Service at Prices the Market Is Willing to Bear

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