The FCC released its 15th Annual Wireless Competition Report yesterday, and the Commission should be commended for the impressive body of work that the Report represents. The Report offers a rigorous analysis of competition within multiple sectors of the wireless marketplace and highlights several key trends. The results are impressive – and they clearly portray a competitive and innovative U.S. wireless marketplace that is delivering incredible value for U.S. wireless consumers.
Importantly, the Report relies as its bedrock on an impressive compendium of facts and hard data on various aspects of the wireless industry. And taken as whole, the Report offers a decisive factual rebuttal of much of the rhetoric that has filled the debate on AT&T’s acquisition of T-Mobile.
Let’s look at just a few of the Report’s many findings:
Estimated Mobile Voice Coverage by Census Block: The percentage of the US population that could, in 2010, choose from 5 or more providers of mobile voice services was 89.6%, trending up from 72.8% in 2009. Table 5. The percentage of the US population that could, in 2010, choose from 4 or more wireless broadband providers was 67.8%, trending up from 58% in 2009. Table 7. These facts wholly rebut the persistent claim by our opponents of the emerging U.S. wireless “duopoly.”
Just as importantly, these results are all drawn from a census block analysis – a very localized look that reflects the fact that consumers shop for service in the local areas where they live, work and travel. The Report’s findings clearly support that the relevant geographic market for consumers is the local/CMA market – not the national market that our opponents have been urging. fn 117.
Pricing: The Report unequivocally demonstrates that voice revenue per minute or RPM has consistently and dramatically declined for much of the last two decades. Chart 23. It declined another 9% from 2008 to 2009. Table 20. Price per text dropped for the fifth consecutive year, this time by 25% from the previous year. Para 193. And the price per megabit of data traffic dropped even more dramatically. Para 194. Overall ARPU is also down year over year. Chart 26.
Notably, these price decreases occurred during an extended period in which the average HHI, as calculated by the FCC, would be considered indicative of a “highly concentrated” industry. This is no surprise, because while merger opponents insist on equating a high HHI with a lack of competition, the FCC recognizes that “[s]hares of subscribers and measures of concentration are not synonymous with a non-competitive market or with market power.” Para 54.
Spectrum holdings: The Report makes very clear that, because of Sprint’s interests in Clearwire, the FCC attributes Clearwire’s spectrum holdings to Sprint — no ifs, ands or buts. Report, fn 19. The report also notes that Sprint and Clearwire together hold 47% of the MHz-POPs of the above-1 GHz bands, which include PCS, AWS, BRS and EBS. Perhaps now Sprint will stop trying to deny its attributable interest in the Clearwire spectrum and the combined Sprint/Clearwire spectrum holdings that Sprint’s CEO has called the best in the industry.
Mobile Broadband Subscribers and their Devices: Finally, the report is full of good news about mobile wireless internet access subscribers and the devices they use. Wireless connections are up; wireless internet access subscribers are up; devices in use capable of +200 kbps are up; and, most importantly, adoption rates across mobile data services are up. Consumers have greater access to mobile broadband devices and are doing more with those devices when they acquire them. This is great news for U.S. consumers and the U.S. economy, and these trends will only continue when AT&T deploys a 4G LTE network to over 97% of all Americans.
Our appreciation goes to the FCC’s Wireless Bureau for this exhaustive Report and the tremendous effort that must have gone into its publication. It paints a vibrant picture of wireless competition, but the story on 4G network deployment is only starting to emerge. The report finds that five carriers had deployed or announced plans to deploy a LTE or WiMAX network by year-end 2010 or early 2011: Verizon Wireless, AT&T, Sprint, Clearwire and MetroPCS. This does not include additional carriers with announced LTE plans, including Leap, U.S. Cellular, Cell South and LightSquared. As to T-Mobile, the Report’s finding on its path to LTE is also clear: “No U.S.-specific plans.”
AT&T’s acquisition of T-Mobile can change that fact. By combining the companies’ network and spectrum resources, AT&T will deploy a 4G LTE network that will offer service to its customers, to T-Mobile’s customers and to 55 million more Americans than would otherwise have been served by AT&T’s planned LTE deployment. And that is a fact we hope will be found in future FCC Reports on Wireless Competition.