“Report Finds Cell-Phone Domination, Lowered Prices” |
| Report Finds Cell-Phone Domination, Lowered Prices Posted: 27 Aug 2010 02:05 PM PDT With cell-phone use skyrocketing in the United States, consumers enjoy prices that are 50 percent lower than a decade ago, but smaller carriers face severe obstacles to gaining a foothold in the market, says a government report made public on Thursday. The General Accounting Office study of the wireless industry for the House and Senate commerce committees looked at changes in the wireless industry since 2000, the perception of stakeholders about regulatory policies and industry practices, and how the Federal Communications Commission can better carry out its mandate to foster a more competitive market. Forty Percent Have Cell Phones There were 285 million cell subscribers in the U.S. in 2009, up from only 3.5 million in 2000. Forty percent of Americans now use wireless phones as their primary home telephone. Meanwhile, four top wireless carriers control 90 percent of the industry due to consolidation, news that should boost those in Congress who argue that the FCC should crack down on that dominance to avoid higher prices and worse service. The report's authors analyzed data from a commercial database as well as from the Bureau of Labor Statistics, UBS Investment Research's March 2010 Wireless 411 report, and the year-end 2009 CTIA semiannual survey of wireless carriers. To assess the impact of industry changes on consumers and competition, they interviewed FCC Wireless Telecommunications, Wireline Competition, and Enforcement Bureau officials, device manufacturers, tower companies, industry associations, consumer groups, and academic and industry experts. Interviews were also conducted with smaller carriers. The conclusion is that smaller carriers face obstacles gaining subscribers, investing in their networks, and offering the latest handsets to compete with the industry leaders. The Big Four "Members of Congress and public-interest groups have raised concerns about the competitiveness of the wireless industry in recent years," the report says. "Consolidation through mergers and acquisitions has created a market for wireless services in which four companies -- AT&T, Sprint Nextel, T-Mobile USA, and Verizon Wireless -- have the vast majority of subscribers. Such consolidation has created concerns that there may be a lack of competitiveness, which could lead to deteriorating service and higher prices for consumers." The report notes that while the FCC's mandate is to foster competition and issue an annual report on the wireless industry, it has lately taken a "deregulatory approach." The report recommends that the FCC "assess whether expanding its original data collection of wireless-industry inputs and outputs -- such as prices, special access rates, capital expenditures, and equipment costs -- would help it better satisfy its requirement to review competitive market conditions with respect to commercial mobile services." Avi Greengart of Current Analysis said it's not clear what the government can do to increase competition. "If you are a small telecom provider with limited geography, yes, you will have a difficult time raising capital to buy expensive spectrum, you will have a difficult time meeting minimum order requirements for handsets, and you'll have a difficult time competing with national players for consumers who want products that can be used around the country," Greengart said. "I don't necessarily think deregulation or regulation would make it easier for them. These are the simple dynamics of large vs small markets." This entry passed through the Full-Text RSS service — if this is your content and you're reading it on someone else's site, please read our FAQ page at fivefilters.org/content-only/faq.php |
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