Is it or isn't it competitive?

FCC mobile competition report once again dodges its key question

Another year, another report from the Federal Communications Commission on the state of competition in the U.S. mobile industry, and as has been the case in the last four years, the FCC didn’t actually reach any conclusion on whether that industry is competitive.

Instead the FCC just presented the facts it gathered over 2013 and the first half of 2014: More consolidation has eliminated big regional operators like MetroPCS and Leap Wireless as independent providers and put more subscribers and revenue into the hands of the Big Four (AT&T, Verizon, T-Mobile, and Sprint), which accounted for 96 percent of the U.S. market.

The report (pdf) noted that while 99.9 percent of the population lived in census blocks with at least one mobile carrier providing coverage, the number of overall service choices for consumers is in decline. The percentage of people with a choice beyond the Big Four was only 22.8 percent, though the report did find that 91.4 percent of the population did have access to at least four different carriers. While carrier choice may be shrinking, the report also found that new technologies like LTE are expanding to further corners of the country, giving consumers more service options.

The FCC claimed that it can’t draw any single conclusion about whether the overall wireless market is competitive or uncompetitive since there are so many other factors that go into such judgment beyond those it analyzes in its reports. That may be true, but it also means the report can mean anything anyone wants it to be.

For years consumer advocacy groups have want to the FCC to come down more strongly on the issue since its view on the state of competition would have a big impact on the big mergers and buyouts that wind up in front or regulators. Meanwhile, the mobile industry takes the FCC’s lack of conclusion as a sign that the market is plenty competitive after all. For instance, here’s the statement CTIA VP of Regulatory Affairs Scott Bergmann issued after the report was released:

“The FCC’s report yet again proves that America’s wireless users enjoy a variety of choices, from carriers to service plans to devices. According to both the FCC’s report released today and more recent figures on the competitive landscape of America’s wireless industry, 97 percent of Americans may choose from at least three different carriers while a previous report said only 15 percent of wired users may choose from at least three different providers. With more than 700 different smartphone plans offered by the four national carriers, and more than 790 unique handset models to choose from, it’s no surprise that the Department of Justice Assistant Attorney General for Antitrust Bill Baer said that when the agency looked ‘long and hard at the wireless industry,’ it found ‘the [wireless] market is thriving and consumers are benefiting from the current competitive dynamic.’”

 

3 Responses to “FCC mobile competition report once again dodges its key question”

  1. The government (FCC) auctions off massive chunks of spectrum with large price tags to an extremely limited number of companies whom can even attempt to place such bids. This spectrum regulatory framework, is similar to a king giving large swaths of land to his lords.

    It is a system that guarantees true competitive markets never exist in the wireless telcom market. Terrifically ironic that the government then thinks there is much real validity in assessing competition in this non-market. Corruption or incompetence (or both) I’m not sure.

    What we should be moving towards is a real wireless market, without these spectrum barons (and the government regulations that make them possible).

    We should be looking to a model where anyone can compete (allowing for technical compliance, like WiFi routers have). Wireless devices (phones) should be able to choose whatever wireless access point is offering the best conditions (price/speed/etc) at all times, allowing for every wireless access point to compete in an open market.

    I think all this “study” of competition is hogwash, it misses the underlying issue entirely. We need to recognize that open wireless can offer a truly competitive marketplace. It’s our overbearing spectrum allocation regulations that are keeping the industry from being competitive.

    We should start by making all new spectrum accessible to the open market, rather than auctioning it off to the king’s lords as has been done over and over again.

    • The AWS-3 auction currently underway includes 70 bidders. If that’s your concept of an “extremely limited number of companies”, I’d like to know what your notion of a properly competitive auction would be.

      I’m glad you love Wi-Fi, but why aren’t you aware than the FCC has assigned more spectrum to Wi-Fi than for all the cellular networks combined?

      I get that many geeks have a Dilbert Complex, but a little learning goes a long way.