updated 03:45 pm EDT, Thu May 20, 2010
FCC annual report blames carriers
The FCC today criticized the US cellular industry in its Annual Report on Wireless Competition (PDF). Officials warned that the industry was rapidly consolidating around just two carriers, AT&T and Verizon, while even larger rivals like Sprint and T-Mobile were struggling. Combined, the top two have over 60 percent of subscribers and income where the third and fourth places were either losing subscribers or gaining relatively few.
"The Report confirms something I have been warning about for years -- that competition has been dramatically eroded and is seriously endangered by continuing consolidation and concentration in our wireless markets," FCC Commissioner Michael Copps said in his own statement. "We are going to need
an extra dose of vigilance going forward and use whatever policy levers we have available to ensure good outcomes."
Other parts of the study singled out an apparent stagnation of the business. AT&T and Verizon together own 91 percent of the regular cellular frequencies and just over two thirds of the 700MHz band to be used for 4G. Despite the market itself growing, investment either stayed the same or actually declined, the FCC said. Just 14 percent of carrier revenue is being spent on developing the network where it was 20 percent in 2005.
Some of the consolidation and slowdown came from the saturation of cellphones in the US, as 90 percent of those that can have cellphones already do; phone owners are also using more data than voice. However, the FCC also noted questionable practices meant to keep customers from switching, such as Verizon's doubled early cancel fee for smartphones. Most competition came through drops in unlimited access pricing as well as pricing at carriers like Sprint and Verizon, who repeatedly slashed smartphone prices to lure customers away from the iPhone.
Both individual carriers and the industry-controlled CTIA have already objected to the claims, making frequently repeated arguments that the industry is competitive and innovative.