FCC declines to call wireless market competitive for second year

Posted 6/28/11

WASHINGTON - The Federal Communications Commission for a second consecutive year didn’t conclude the U.S. wireless industry is effectively competitive.

In an annual report on the U.S. mobile-telephone market released Monday, the agency said it “makes no formal finding as to whether there is, or is not, effective competition in the industry” and focuses on presenting “the best data available.”

The agency is reviewing AT&T Inc.’s proposed purchase of T-Mobile USA Inc., a $39 billion deal that would combine the second- and fourth-largest U.S. wireless companies to create a new market leader, ahead of No. 1 Verizon Wireless. AT&T says buying the Deutsche-Telekom AG unit will bring more wireless high-speed Internet service and fewer dropped calls; merger opponents say the deal will lessen competition and raise prices.

Monday’s report reveals “ongoing trends of industry consolidation,” FCC Commissioner Michael Copps, a Democrat, said in a statement released by the agency. A “well-accepted metric for market concentration” remains above the threshold for a highly concentrated market, Copps said.

Commissioner Robert McDowell, a Republican on the Democrat-led agency, said the report “shows that the wireless sector is dynamic, ever-improving and responsive to consumer demand.”

The percentage of the population served by four or more providers of high-speed wireless Internet increased from 58 percent in November 2009 to 68 percent in August 2010, McDowell said in a statement released with the report.

Genachowski Silent

FCC Chairman Julius Genachowski was alone among four FCC members not to release a statement with the report. Mignon Clyburn, a Democrat, said the report shows “millions of Americans living in rural parts of our country do not enjoy the competitive choices available in metropolitan areas.”

“We are disappointed that the FCC failed again to state clearly and conclusively that the wireless market is not effectively competitive,” Matt Wood, policy director of Washington-based policy group Free Press, said in an email.

Verizon and AT&T dominate other providers and have nearly two-thirds of all subscribers, Wood said. “If AT&T’s takeover of T-Mobile is approved, all hope of real competition will be gone,” he said.

The U.S. “has the most innovative, dynamically competitive wireless market in the world” with competition from cable companies and satellite service providers, Kathleen Grillo, Verizon’s senior vice president of federal regulatory regulations, said in an e-mailed statement.

In July 2002, the FCC’s mobile telephone report said the industry had “increasing competition.” Subsequent reports released through Jan. 16, 2009, had found “effective competition.”

CTIA-the Wireless Association “wishes they would have concluded effective competition existed in 2009,” Steve Largent, president of the Washington-based trade group, with members including AT&T, Verizon and Sprint Nextel Corp., said in an emailed statement. Consumers got advanced phones, more service and better networks in 2009, Largent said.

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