Wednesday, May 19, 2010

FCC Releases Wireless Competition Report

Average monthly mobile voice usage in the U.S. has declined as data usage has soared, according to the FCC's newly released 14th annual report on the state of competition in the mobile wireless industry.

Industry concentration has increased over the past five years, with the two largest providers, AT&T and
Verizon Wireless, now controlling 60 percent of both subscribers and revenue and gaining share
(accounting for 12.3 million net additions in 2008 and 14.1 million during 2009).

The coverage analysis suggests that approximately 284 million people, or 99.6 percent of the U.S. population, are served by one or more mobile voice providers. Approximately 281 million people, or 98.6 percent of the population, are served by at least two mobile voice providers.

The study also indicates that U.S. consumers pay relatively more on a monthly basis than most other countries but also consume more airtime and enjoy lower unit rates.

Some additional trends highlighted in the report:

Innovation in and around devices and applications: 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.

Transition to a data-centric market: Data traffic has grown significantly, with the increased
adoption of smartphones and data consumption per device.

Role of spectrum for mobile broadband: 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.

Maturation of the mobile voice segment: As of the end of 2008, 90 percent of Americans had a mobile wireless device.

Continued industry concentration: 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.

Robust capital investment but declining relative to industry size: 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.

As noted by Commissioners Robert McDowell and Meredith Attwell Baker, for the first time since 2003, the report omitted the conclusion that the wireless marketplace is "effectively competitive." On this point, Kathleen Grillo, Verizon senior vice president of federal regulatory affairs, commented: "The U.S. has the most intensely competitive wireless market on the planet, and it's becoming more competitive by the day. New devices and new apps hit the market constantly. Prices keep falling and usage keeps rising."