Here are four things to keep in mind:

1. Both lines show cents per minute. The line showing actual prices had to start leveling out sometime, because we wouldn't expect the price to fall to zero (unless most of the companies adopted some kind of advertising-supported business model, which seems unlikely for wireless voice). That doesn't explain why there's an inflection in 2001 rather than a smoother path, but it does explain why the absolute size of the price reductions eventually had to fall as the price fell.

2. Does industry consolidation after the tech bubble explain the inflection point? I don't know if it was caused by industry consolidation, some other effect related to the popping of the bubble, or something unrelated to the bubble. But keep in mind that if the tech bubble was fueling wireless price reductions, then some of those price reductions were not sustainable over the long term. (Just as free dialup service was not sustainable over the long term.) Post-bubble pricing is closer to normal and efficient, precisely because the bubble is gone. Perhaps the inflection point was caused by some bubble-fueled unsustainable price cutting between 1997 and 2001; a more “normal” path of prices without the bubble would have given us a smoother line. But again, I don't know for sure.

3. I re-ran the numbers assuming price regulation had been imposed in 2001. Between 2001 and 2007, average revenue per minute fell from 12 cents to 6 cents — a 50 percent reduction. (These figures are from the FCC's most recent wireless competition report and are reproduced in our FCC comment, both of which are linked in my original post.) If incentive regulation with a draconian 7 percent productivity adjustment had been imposed starting in 2001, average revenue per minute would have fallen to 9.7 cents in 2007 — a 19 percent reduction. Even since 2001, actual market performance handily beats hypothetical perfect regulation.

4. This little calculation is not the only reason Jerry B. and I think regulation aimed at wireless profits or prices is unwise; it's just one little nugget of information. The full discussion is in our filing with the FCC.

Roughly speaking, pre-2001 was when the technology was still getting established, and I think that there is a clear case that price controls would have been a bad thing.

What happened is 2001? Well, for one thing, market penetration reached near saturation levels – everyone who was going to buy a cell phone had already bought one. Secondly, and more significantly. I think, there was major industry consolidation after the tech bubble burst. Its no surprise that reduced competition in the marketplace resulted in an enhanced ability for the surviving companies to put the breaks on dropping prices.

However, given that cell phone service is now far more of a standard utility than a new, up-and-coming technology, and given that there are few enough incumbent carriers that they apparently have the ability to bend the curve on price reductions, I think you need to do a better job of making the case that regulation would not be beneficial on the post-2001 portion of that graph.