WASHINGTON-The Federal Communications Commission said the mobile-phone industry remains competitive and consumers continue to benefit, despite increased consolidation among wireless carriers and questions by a Democratic member of the commission on the methods used to collect data for the report.
The FCC said the 10th annual review of industry competition, required by Congress and reflecting prevailing conditions in the first half of 2005, is based on measures such as the number of competing carriers providing service in an area, the extent of service deployment, prices, technological and product innovations, subscriber growth, usage patterns, churn and investment.
“Although consolidation during the period covered by the report has reduced the number of nationwide mobile telephone carriers, the FCC found that none of the remaining carriers has a dominant share of the market, and that the market continues to behave and perform in a competitive manner,” the commission stated.
The FCC and Justice Department this year approved the merger of Sprint Corp. and Nextel Communications Inc. and last year, federal regulators agreed to the union of Cingular Wireless L.L.C. and AT&T Wireless Services Inc., winnowing down the number of national carriers from six to four.
FCC Commissioner Michael Copps, a Democrat, questioned whether government metrics accurately measure effective competition in urban areas and, in particular, rural markets.
“In requiring these reports, Congress tasked us with doing an `analysis of whether or not there is effective competition’ in commercial mobile services. Yet we still fail to define `effective competition,’ and this limits the ability of the commission and the Congress to rely on our results,” said Copps. “I also remain troubled by our inability truly to assess coverage for rural communities.”
Copps singled out for scrutiny an FCC finding that 97 percent of the U.S. population lives in counties with three or more different operators providing mobile telephone service. That is the same level as in the previous year, but up from 88 percent in 2000, when the statistics first were kept.
“The report states that 97 percent of Americans live in counties with three or more competitors-but that does not mean that all residents of a county actually have access to three or more competitors,” said Copps. “It could mean-and we lack the data to know-that access is focused along a highway that cuts through a county. Going forward, the commission needs to look for additional data sources so that we can more accurately assess rural coverage in future reports.”
Copps also said the FCC paints too rosy a picture of how consumers interface with wireless carriers. “The report … claims that consumers do not face difficulties obtaining the information they need. Why then do we continue to receive consumer complaints about wireless services, including complaints about confusing wireless bills, hidden and expensive fees, and service maps that do not adequately allow consumers to determine where they will get service?” asked Copps.
The FCC said the number of cellular subscribers grew in 2004 from 160.6 million to 184.7 million; the average number of minutes used per subscriber rose to more than 580 in the second half of 2004; and the price of mobile-phone services dropped last year. The agency said the ability of wireless consumers to keep their phone numbers when they switch carriers has pressured operators to improve service quality and to reduce defections of subscribers from their networks.
Carrier investment in third-generation wireless technology and new pricing schemes-such as family plans and prepaid programs-have been prompted by competitive pressures, according to the FCC. The FCC said the percentage of wireless users opting for prepaid plans substantially increased from 6 percent in 2003 to between 8 percent and 11 percent in 2004.
