Today we learned in class examples of positive externalities, some examples being: vaccines, fax machines, ebay etc.   But I wanted to focus on cell phones, more precisely how they are considered a positive externality.  For one, people are not going to want to be a part of a plan that is not widely known.  This is because it is not wide spread, so you do not know who else has the phone and it might not seem like a reliable service.  The most well known carriers are: At&t (Cingular), T-mobile, Verizon, Sprint and Nextel.  But there are also many that most people, including myself, have never heard of.   After looking at all the carriers I learned these carriers exist: CellularOne, SunCom wireless, U.S Cellular, Centennial Wireless, Edge Wireless, nTelos, Qwest and Surewest.  There are also many other carriers that are not on this list, but the fact is that they are unknown.  So do they also fit into the category of a positive externality?

For a positive externality to occur an individual action must create a positive and uncompensated effect on others payoff.  So, in the instance of cell phones, the well known carriers are surely positive externality because when you purchase a cell phone, you create a network between the people you know, and their ability to reach you.  This is especially the case when, for example, you both have At&t; therefore whenever a call is placed between you two, it is always free because you both have the same carrier and that is one of the benefits of At&t.  This would be a positive externality because another is benefited by your purchase of the cell phone. 

But what about those carriers that are not well known?  You would think that they could not be considered a positive externality because no one has heard of them, so most people would not trust to purchase a plan from them. But to an extent, it could be a positive externality if you purchased a plan with one of these cell phone services, because then you are a form of advertisement.  If you like the carrier, you tell others about it, they then purchase the phone, and then you and the others benefit.  But as some say, sometimes this negative outlook on the specific service is ignored because of a positive benefit.  “While a case could be made that cell phone service does not measure up to this level of service, the fact remains that we seem to be willing to accept that trade off because the advantages that mobility provide outweigh the added expense and inconvenience inherent with today’s cell phone service” (http://www.ispplanet.com/perspectives/2005/ wireless_rant_p3.html).  In conclusion, I would agree that even if the cell phone carrier has never been heard of, it is still considered a positive externality because if you were to purchase a plan, then you would be sort of ‘advertising’ that phone carrier, and also others would be willing to purchase it more.  Also the fact that cell phones in general are a positive externality because once you get the phone, you open up a new network of people that can contact you.