Recent visits from my folks, who live in India, and Dave's commentary on the broadband plan got me thinking about this post. Although my family has visited me a dozen times in the US they are always shocked at the cost and relatively inefficient process involved in getting a cell phone here. The process, even with the advent (finally) of pay-as-you-go service is always excruciatingly long, and ridiculously expensive. Why and at what cost?

The attached graphic from the OECD says it all; those of us living in the US are getting the short end of the stick as far as cost is concerned! For the curious, I have it on good authority that the rates in India and China (not shown on the graphic) are some of the cheapest in the world, e.g. India has rental charges closer to $5 per month!

Observers have complained for a long time that players in the emerging as well as European economies have driven a large portion of innovation and usability in the cell phone field in recent years. However, with the emergence of the iPhone and the Droid in recent times smug mobile techies are claiming that the action has shifted American companies and innovators back to the forefront.

Given my limited experience, I’d like to posit a theory that innovation is driven by the rate of adoption of a complementary technology/device and the adoption rate of such technology/device is in turn driven by its price and accessibility.

The meteoric pace of cell phone adoption in India and the emerging economies has to be in part due to the affordable rate structures adopted by the carriers there. Yes, yes there are several other reasons for this, for example no legacy infrastructure, lack of other established institutions, etc., but you have to agree that price is at the very least a contributing factor. When you have such a huge adoption rate (India has 600 million plus subscribers, with close to 2 million subscribers added every month), you create a huge incentive for people to innovate and develop new programs and technologies to use with such an ubiquitous device/technology. We saw the same thing happen in the US after the rapid adoption of the iPhone and iPad which overnight gave rise to the App industry.

However, even with the advent of the iPhone, the iPad and the Droid, I can't but help thinking it's a race we have run before and got beaten at pretty badly. Different day, different technology, but the same approach and yes the same high prices.

See attached a report on broadband costs around the world. No prizes for guessing who’s paying a lot more for Broadband (relative to speed)! We in the US. If my (admittedly not fully baked) theory on “Price Driving Adoption Driving Innovation” has any truth to it then this race is not going to end well for the innovators in the US unless we give some serious thought to this pricing issue.