This is the world’s most precious resource, we need to control as much of it as we can. — Quantum of Solace
Consolidation over the past decade has left just four big carriers in control of 90 percent of the wireless market, making it harder for small and regional companies to compete, according to a government report released Thursday.
The study by the Government Accountability Office (pdf), the investigative arm of Congress, could help fuel the FCC’s recent efforts to increase oversight of the wireless industry. The FCC is currently considering rules that would require wireless phone companies to alert consumers before they reach roaming or data usage limits. It has also been looking into common industry practices such as charging consumers early termination fees to break a service contract before it expires.
The GAO study found that despite the industry consolidation, consumers are benefiting from better wireless coverage and prices that are half what they were in 1999. The report says the number of cell phone subscribers in the U.S. stood at 285 million at the end of 2009, up from 3.5 million in 1989. It also says that nearly 40 percent of U.S. households rely on a cell phone as a primary phone.
Although the GAO reached no firm conclusion on the causes of limited competition in the wireless sector, it does list a number of factors regularly cited by smaller carriers and consumer groups. Those include early termination fees and handset exclusivity deals such as AT&T Inc.’s contract with Apple Inc. to serve as the sole U.S. carrier for the iPhone.
The average monthly revenue for U.S. cellular service has averaged near $45/month for the last 10 years, as voice revenue decreased and data revenue increased. The GAO concludes that – when inflation is factored in – 2008 prices were half that of 1999.
The report discusses:
- How the wireless industry has changed since 2000 and the implications of those changes on competition and consumers
- Stakeholders’ perceptions of the effect of various regulatory policies and industry practices on the wireless industry and consumers
- Strategies FCC has employed to monitor and oversee competition in the wireless industry.
Three senior Democratic members of the U.S. House Energy and Commerce Committee — Representatives Ed Markey of Massachusetts, Rick Boucher of Virginia, and Henry Waxman of California — praised the report.
The CTIA responded, “In finding that wireless consumers are seeing ‘lower prices and better coverage,’ today’s GAO report confirms what we’ve been saying for a long time – that the U.S. wireless industry is extremely competitive and continues to respond to increasing consumer demand by delivering real benefits for American consumers.”
The Computer & Communications Industry Association (CCIA) agreed with the GAO’s report. “All other wireless carriers are critically dependent on the big two carriers (AT&T & Verizon) for wireline broadband access and transport, and their largely deregulated rates are just too high — especially in rural areas,” said Ed Black, president of CCIA.
The GAO report, which was requested by members of the Senate and House Commerce Committees, urges the FCC to collect better data on special access rates and other issues.
