PISC Comments on Competitive Market Conditions in Mobile Wireless

The mobile wireless marketplace is not effectively competitive. Public interest groups Consumer Federation of America, Consumers Union, Free Press, Media Access Project, New America Foundation, and Public Knowledge (together, the "Public Interest Commenters"), demonstrated the lack of effective competition in that marketplace earlier this year when the Commission sought comment for the preparation of its annual CMRS report. The Commission now seeks to expand the scope of its review to account for the dynamic operation of the entire mobile wireless ecosystem. The Public Interest Commenters welcome this broadening of the Commission's evaluation processes to include new data, new methodologies, and new frameworks for assessing both mobile service offerings themselves and the workings of upstream and downstream markets in the mobile value chain.

Proper application of the traditional framework for assessing competition in the mobile wireless space shows a lack of real competition in that market. Readily apparent competitive failings stem from fundamental flaws in the market structure of an ever-more-concentrated industry, and are a direct result of the incomplete information that carriers make available to customers and regulators alike about their prices and terms of service. Skewed market results and performance are an easily detectable symptom of these ills, which the Commission will need to address and resolve if it is to solve underlying problems that lead to higher prices and fewer options for consumers - all while carrier revenues increase, marginal costs fall, profits rise, and relative investment levels dip.

Despite the wireless industry's incantation each year during this evaluative process of the (always dwindling) number of service providers doing business in different swaths of the United States, traditional merger analysis shows that the market is highly concentrated. The trend towards consolidation and vertical integration has intensified with the introduction of smartphones and other mobile broadband devices, as dominant carriers project their power from the wireline and special access spheres into the markets for mobile data services, applications, and content. Barriers to entry and growth remain high, and present evidence shows that carriers do not compete with each other on price or non-price terms - preferring instead to raise their prices in parallel fashion while shrouding the true costs of services sold to their customers.

The Public Interest Commenters join the Commission in calling for better data on a host of topics, and will endeavor to provide additional information during the course of this proceeding - especially with respect to consumer behavior and attitudes. Yet, it is the Commission itself that is best-placed to gather relevant granular data from carriers, on topics such as price and non-price terms at the census block group level. The Commission can and should compile relevant, carrier-supplied data on service offerings across a range of markets and service plan levels. It also should collect data on overage fees, subscriber churn broken down by service and device type, carriers' spectrum holdings and buildout timetables, and other topics concerning the operation of upstream and downstream markets.

To read the full comments, download the PDF below.