FCC Doesn't Call Mobile Wireless Industry Competitive
The Federal Communications Commission adopted its 14th annual report
on the state of competition in the mobile wireless industry, omitting a
statement that would have described the industry as effectively
competitive. It is the first time since the FCC's 2002 report that the
commission has failed to describe the industry as competitive. Unlike
previous reports, which examined competition in the provision of CMRS
(Commercial Mobile Radio Services), this year's report integrates CMRS
into the broader mobile ecosystem, including mobile voice, messaging
and broadband services.
For the first time, the report also includes data on the many
interrelated "upstream" and "downstream" market segments of the mobile
ecosystem -- including spectrum, infrastructure and devices -- each of
which has the potential to affect competition. The report, which
reflects market conditions existing in 2008 and much of 2009,
identifies key trends in the mobile wireless industry. The report found
handset manufacturers have introduced a growing number of new
smartphones -- 67 in 2008 and 2009 -- that provide mobile Internet
access and other data services, and provide many of the functionalities
of personal computers.
Data traffic has grown significantly, with the increased adoption of
smartphones and data consumption per device. Especially as mobile
wireless broadband usage grows, access to spectrum becomes increasingly
important for competition. While many wireless service providers have
access to significant amounts of mobile spectrum, most of the spectrum
below 1 GHz, in both the cellular band and the 700 MHz band, is not
widely held, the report noted. The FCC also noted there appears to be
increasing concentration in the mobile wireless market. One widely used
measure of industry concentration indicates that concentration has
increased 32 percent since 2003 and 6.5 percent in 2008.
"In so many ways, this explosion of mobile innovation is great news for
American consumers. Perhaps no sector of our economy holds more promise
for 21st century U.S. leadership in innovation and investment than
wireless broadband," said FCC chairman Julius Genachowski. "The new
trends do also present real challenges for busy American families when
it comes to selecting the mix of mobile devices and services that
matches their needs and budgets. Indeed, in difficult economic times
such as these, the importance of empowering consumers and promoting
competition is especially great."
The report also noted providers continue to invest "significant capital" in networks, despite the recent economic downturn. One source reports capital investment at around $25 billion in both 2005 and 2008, while another shows that capital investment declined from around $25 billion to around $20 billion during the same period. Because industry revenue has continued to grow, both sources show that capital investment has declined as a percentage of industry revenue over the same period (from 20 percent to 14 percent).