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The report suggests that the wireless market is more concentrated and less competitive than in recent years.

Esther Shein

May 21, 2010

3 Min Read

For the first time since 2002, the Federal Communications Commission in its federally mandated annual Mobile Wireless Competition Report did not conclude that the market is competitive, rather that it has become more concentrated over recent years.

The report, which reflects the state of the cell phone market for 2008 and 2009, determined that the mobile wireless ecosystem is "sufficiently complex" so that several factors need to be taken into consideration when doing an analysis of competitive market conditions. "Rather than reaching an overarching, industry-wide determination with respect to whether there is 'effective competition,' the report complies with the statutory requirement by providing a detailed analysis of the state of competition,'' the report said. FCC chairman Julius Genachowski said that the commission is not trying to draw a blanket conclusion about the level of competition in the industry, and applauded the granular approach the report took. "Instead, the report complies with Congress' mandate to assess market conditions by providing data on trends in competition and choice over time," he said in a statement. The report identified several key trends, including a maturation of the mobile voice segment, the need for mobile broadband spectrum, a transition to a more data-centric market, robust capital investment that is declining relative to industry size, and a proliferation of devices and applications. At the end of 2008, 90% of Americans had a mobile wireless device, and used these devices to talk for an average of 709 minutes each month, the report said. Contributing to the rise in data usage, handset makers released 67 new smartphones in 2008 and 2009, with the Android and iPhone platforms gaining significant traction. Since 2003, market concentration has increased 32% and 6.5% in the most recent year of available data, the FCC said. The report indicates that 60% of the nation's subscribers and revenue come from the country's two largest wireless providers: AT&T and Verizon Wireless. The FCC noted that these companies are continuing to gain customers while other national operators, Sprint Nextel and T-Mobile USA, have been losing subscribers. Despite the economic downturn, wireless services delivered close to $100 billion in "value added" contributions, according to CTIA, a Washington, D.C.-based trade group representing wireless companies. The report also said that wireless providers directly employ more than 268,000 people, a six percent increase year-over-year for the last four years. Capital investment for the first half of 2009 totaled $8.9 billion, a seven percent drop from the first half of 2008, according to data from the CTIA, and capital expenditures declined from 22% in 2005 to 14% in 2008. AT&T expressed concern over the results, saying that the FCC's reluctance to acknowledge the market's success may lead to more regulation, which would increase competition for consumers who are demanding more data plans on their mobile handsets. Sprint said that in order for competition to continue, changes must be made to the regulatory structure governing the universal service fund system, switched access, and special access. The CTIA said it was disappointed that the FCC chose not to find effective competition in the marketplace. The commissioners approved the report 5-0, with the two agency Republicans voting to "concur" to show their displeasure.

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About the Author(s)

Esther Shein


Esther Shein has extensive experience writing and editing for both print and the web with a focus on business and technology as well as education and general interest features.

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