On June 27, the FCC released its annual Wireless Competition Report for 2011. The Report contains plenty of positive data points concerning wireless innovation, competition, and choice of service and price options. Numbers in the Report show that the wireless market is dynamic and highly competitive.
But the Commission passed up an opportunity to look more closely at the impact of intermodal competition and wireless substitution in the advanced telecommunications marketplace. And the Commission disregarded Congress's directive in Section 332(c)(1)(C) of the Communications Act that its Report "shall include…an analysis of whether or not there is effective competition" in the market."
This means another lost opportunity for the Commission to lay the groundwork for removing outdated, monopoly-era legacy wireline regulations. And the agency's agnosticism when it comes to effective competition gives it cover for a slate of proposals for imposing new wireless regulations that have been circulated in Congress and by the Commission itself.
Positive numbers from the Report include expanded coverage of the population by competing wireless voice providers. 99.2% of the population is served by two or more wireless voice providers, 97.2% is served by three or more providers, and 94.3% are served by four or more providers. Numbers for wireless broadband coverage and competition also stack up well. 91.9% of the population is served by two or more wireless broadband service providers, 81.7% is served by three or more providers, and 67.8% is served by four or more providers.
In addition, the Report indicates downward trends in prices. Average revenue per voice minute has continued to decline, lowering to $0.049 per minute in 2009, from $0.054 per minute in 2008 and $0.112 per minute in 2002. "[T]he unit price for text messages continued to fall in 2009" as "price per text yields dropped for the fifth consecutive year in 2009 to $0.009, a 25 percent decline from the previous year."
The Report also cites a survey indicating that a growing number of households – approximately 26.6% – are now wireless-only. And it also points out that "[a] Nielsen Company survey shows a similar rising trend in households who have 'cut the cord.'"
Given the Commission's goals for universal broadband access, shouldn't it be an agency imperative to gain better insight into the substitutability and competitive effects of wireless in delivering broadband services? Unfortunately, the Report's subsection on intermodal competition in voice services provides no analysis, no conclusions, nor any substantive insights regarding competitive pressures in the voice services market resulting from wireless and cross-platform competition.
Wireline telecommunications providers are in many instances still subject to legacy regulatory burdens premised on monopoly-era assumptions about competition in the market. On their face, those assumptions now appear unwarranted in light of competition from wireless and other competitors. But the lack of any such assessment in the Report suggests the Commission isn't much interested in better understanding what kind of competitive pressures wireless creates in the voice services market. The result is another missed opportunity for the Commission to reconsider the competitive underpinnings of its monopoly-era legacy regulation for wireline.
Repeating its approach to the 2010 Report, the Commission backs away from its statutory obligation to make an "effective competition" determination. In this year's Report the Commission again adopts an "effective competition" agnosticism regarding the wireless market, meaning no amount of positive data could satisfy the Commission that an effective competition finding is warranted. According to the Report,"[i]t would be overly simplistic to apply a binary conclusion or blanket label to this complex and multi-dimensional industry." But as Commissioner Robert McDowell responded in his concurring statement: "Nonetheless, this is what Congress asked us to do." The FCC effectively disregarded its statutory duty under Section 332(c)(1)(C).
For the FCC, the upshot to avoiding a finding of "effective competition" in the wireless market is that it renders new regulations more tenable. Over the last year, Congress and the Commission have proposals for wireless mandates includes: next generation wireless disclosure regulation, early-termination fee regulation, handset exclusivity regulation, bill shock regulation, text messaging and common short code regulation, smartphone app regulation and smartphone design regulation (such as FM chipset mandates). Not to mention the FCC's net neutrality regulation of wireless, adopted last year.
The Commission's agnosticism toward the existence of an "effectively competitive" wireless market gives such proposals for new wireless regulation a better chance of favorable reception in policymaking circles. And in the absence of any recognition of robust market competition, courts are more likely to subject regulation to less exacting scrutiny and to give greater deference to agency regulatory intervention.
Nonetheless, hard data in this year's Wireless Competition Report suggests a dynamic market that continues to be characterized by investment, innovation and competition. The numbers suggest that consumers of wireless voice and broadband services are benefitting from a wireless market that is effectively competitive. So while the Report's official glosses on that data might be pro-regulation, the data itself is strongly pro-consumer.
Posts
