WASHINGTON-The Federal Communications Commission last week declared that commercial wireless competition is developing, despite growing indications that funding problems, consolidation, operational snags and regulatory delay may be undermining the robust marketplace envisioned by policymakers.
“Our examination of the commercial mobile radio services industry indicates competition in the mobile market place is emerging,” stated the FCC in the second annual CMRS competition report to Congress.
The report is required by 1993 legislation that realigned the wireless regulatory landscape with the creation of CMRS and that authorized auctions for CMRS licensing.
Overall, the FCC said more than 1,500 CMRS licenses have been issued during the past year. During that period, the agency said commercial wireless subscribership grew 30 percent, cumulative capital investment grew by 35 percent and wireless industry employment increased by 24 percent.
In the mobile telephone sector, the commission said broadband personal communications services systems were turned on in 29 major markets. Eight cities have two PCS systems on the air competing against the two cellular carriers in each locale.
Last year, in its first report, the FCC said the mobile telephone market-which is dominated by the duopoly cellular business that serves 44 million subscribers-was not fully competitive.
But all is not well in the rollout of PCS.
There are increasing signs that PCS carriers-large and small-are running into problems from Wall Street to Main Street. Public offerings are on hold for PCS carriers like NextWave Telecom Inc.-which paid nearly $5 billion to become the largest C-block auction winner-and GWI Inc.-the third largest C-block license holder.
Meanwhile, the third biggest C-block PCS winner, Pocket Communications Inc., is reportedly having big financial problems and facing a major restructuring.
The FCC, having taken notice of the money problems, is expected shortly to waive quarterly license interest payments for C-block PCS carriers and allow licensees to make one interest payment at year’s end.
But for even large A- and B-block PCS licensees, the ability to compete with cellular is being hindered by system build-out delays caused by antenna siting problems, financing and other reasons.
The blockbuster start in Washington, D.C.-Baltimore by American Personal Communications, a Sprint Spectrum affiliate, has been tempered recently by billing complications.
And, despite the entry of PCS carriers that have made it to market, the FCC reports their presence has not driven down cellular service prices but has led to economical service packages.
The paging market, which is historically the most competitive wireless sector, is still that way. But consolidation is continuing unabated. Paging Network Inc. is by far the largest paging carrier.
MobileMedia Corp., until recently the No. 2 paging firm in the United States, has filed for Chapter 11 bankruptcy. A combination of management, billing and operational problems caused MobileMedia’s downfall.
Analysts tell RCR that paging will likely end up in the hands of around four players in the future. Today, there are 34 million paging subscribers.
