FCC report questions wireless competitiveness

Consolidation, exclusive deals erode U.S. wireless competition

The FCC's recently released report on the state of wireless competition questions whether the industry is adequately competitive. One reason is the finding that carrier consolidation has increased 32% since 2003.

However, the latest report also expanded its perspective to include not only mobile network operators and services, but others in the mobile ecosystem, too, such as network equipment vendors, backhaul and tower providers, handset makers, mobile software makers and content providers. Taken together, the FCC has adopted a neutral stance -- the first time the agency's annual probe hasn't expressly found the wireless industry to be adequately competitive since 2002.

FCC cites industry consolidation in mobile reportAt issue isn't so much per-minute voice-service pricing for consumer mobile access services. Rather, the FCC is hesitating when it comes to exclusive relationships between operators and handset makers and/or content providers, which forces consumers to use specific combinations of products and network services.

Predictably, those on the side of industry -- most notably, the CTIA, a large wireless industry association -- found fault with the FCC's approving the report, even though the FCC has not said whether it intends to take any action based on its findings. For example, CTIA President Steve Largent said in a statement: "While we understand that the Commission is not making any conclusion about the state of competition in the market…we nonetheless are disappointed and confused as to why they've chosen not to make a finding of ‘effective competition…' "

Anytime the FCC -- or Capitol Hill -- examines network issues, the CTIA and most U.S. carriers issue a Pavlovian response that innovation will be stifled and user choice will be diminished if any type of policy or regulation should result. Similar rhetoric from these camps emerged earlier this month when FCC Chairman Julius Genachowski proposed reclassifying broadband transmissions as a Title II, or "common carrier," service so that Internet transmissions would fall under the FCC's purview. That status would give the FCC the authority to make and enforce net neutrality rules.

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