Sleeping Beauty or Lost?

Posted by: Carl Povelites on May 27, 2010 at 2:13 pm

I have now been in the wireless industry for more than 20 years.  With the release of the FCC’s 14th Annual Wireless Competition Report, I’ve begun to wonder whether I have been sleeping the last couple of years or whether I am on the show Lost (maybe living in an alternative universe?).   For those who know me, I am no beauty and I certainly don’t get enough sleep (although I do enjoy my naps), I have come to conclude that it is the latter and the smoke monster is very disconcerting.

Having been around awhile, I lived through the early days when the states and the FCC were grappling with how they were going to regulate this thing called wireless (actually, we called it cellular then – yes, I’m that old).  Remember, the wireless sector was conceived as competitive with two licenses being awarded in each market.  In these early days, we were busy running from state to state, filing Certificates of Public Convenience and Necessity (CPCNs) in order to get approval to build facilities and start offering services to customers.  In many states, we filed tariffs and even had to file tariff changes 30 days in advance for any promotion that we wanted to offer (this made it so much simpler to find out what your competitor was up to ahead of time –  now all we have are rumors in the blogosphere).   Eventually, the industry was deregulated in many states.

With the passage of the Omnibus Budget Reconciliation Act in 1993, Congress authorized spectrum auctions and set forth a National Framework for the regulation of wireless, preempting states on entry and rate regulation.  It also set forth the requirement for the FCC to produce its annual competition report.   With the PCS spectrum auctions, competition and the competitive nature of wireless were cemented. 

Additional spectrum auctions, significant investment, new technologies and services, the explosion of  text messaging and data services,  new operating systems, applications, application stores, decreasing prices, increased coverage – all this in the 15 short years since the PCS auctions.  As an industry, there have certainly been numerous growing pains, but the goal has always been the same – grow the customer base and provide services that consumers need and desire.

Reading through the FCC’s Competition Report last weekend, I was struck by all the key data which demonstrate the competitiveness of the wireless market.  Only in an alternative universe, or in a situation where there are ulterior motives, could one draw a different or, in this case, no conclusion.  Analysts with UBS Securities, Concept Capital, and others speculated the latter.  I hope that we are currently stuck in the former.

After all, stuck in paragraph 86 of the FCC’s report is this:

“During 2008 and 2009, mobile wireless service providers continued to compete on the basis of pricing plans as well as on various non-price factors, such as network upgrades; product information and perception, which include advertising and marketing; and downstream product differentiation, which includes handset/device and application offerings.”

In a series of blogs to come, we will highlight the competitiveness of the wireless marketplace, while pointing out polar bears, hatches and smoke monsters along the way.  Stay tuned.

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