My friend Konrad and I occasionally compare our living costs in German and Austria. Communication costs are particular interesting. Since years, we find broadband internet to be cheaper in German, while mobile telephony is cheaper in Austria. Why that?

Let's try some back-of-the-envelope calculations:

• Population density and broadband internet: Wiring a highly populated area is cheaper (per head) than wiring a low populated area. Population density turns out to be more than double in Germany than in Austria. 231 people/km² in Germany vs. 99 people/km² in Austria.
• Competition and mobile telephony: Higher competition means lower prices. Austria has a 12 times higher ratio of mobile phone companies per people. 4/82m in Germany vs. 5/8m in Austria.

If we follow the Voice-over-Internet trend, it's save to say that telephony is moving online. So cheaper internet, gives Germany an edge. But new technologies like HSDPA offer broadband on a mobile device. So, Austria with cheaper mobile communication, may have the better deal after all.

Labels: Economics