FCC REPORT: WIRELESS SUBSCRIBERS AND REVENUE UP AS PRICES DROP
FCC at agenda meeting Wed. adopted agency’s annual report on wireless competition that indicated digital customers made up 62% of U.S. subscribers in 2000, compared with 51% year earlier. Meeting marked first attended by new Commissioners Copps and Abernathy. Report, approved unanimously, sounded now familiar theme of falling prices and increasing revenue and subscribership. While it contained few surprises, report that will be released in full in next few weeks documented accelerated growth in areas such as average monthly revenue and increased consumer interest in substituting wireless phone for 2nd or 3rd wireline phone. “Almost everything you want to see going up is going up, and what you want to see going down is going down,” Wireless Bureau Chief Thomas Sugrue said. Along with that growth is proportionate increase in consumer service complaints, issue that agency is working on tracking more closely, he said.
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Meeting, with short agenda of wireless report and Cable Bureau notice of inquiry (see separate story, this issue), was punctuated by staff introductions by Commissioners and first comments by Abernathy and Copps at open meeting. New elements extended down to Commission’s seating arrangement, with Tristani moving from her previous place at far left of dais. “I have moved Commissioner Tristani dramatically to the right,” FCC Chmn. Powell joked. In opening statement, Copps stressed his interest in hearing from wide breadth of stakeholders on pending policies. “I am here to contribute everything I possibly can to encourage the delivery of the world’s most technologically advanced and cost- effective telecommunications system to the American people. And I mean all of our people,” he said. Copps said he would like to hear from both traditional stakeholders such as think tanks, and nontraditional ones, as well: “I am a big believer in outreach.”
Among more pronounced trends in report are: (1) Average revenue per user (ARPU), which in 1999 rose slightly for first time to $41.24, jumped to $45.27 per month in 2000. Sugrue said: “This year there was a fairly dramatic increase, by about 10 percent.” In past years, although subscriber numbers were growing, this gauge didn’t increase as rapidly, as new users tended to sign on to cheaper entry plans, he said. (2) U.S. subscribership hit 110 million, for 39% penetration rate. (3) Min. of use rose dramatically, Sugrue said. “It’s almost doubled in 2 years from the end of 1998 to the end of 2000,” he said. Monthly average min. of use reached 255 in 2000, up nearly 38% from 1999. Sugrue attributed growth to overall lower prices and continued popularity of digital one-rate plans, noting he had signed on to national, single-rate plan for first time last year. (4) Wireless Web usage reached 2.5 million, based on figures from 4 of 7 carriers that have begun offering mobile Internet since late 1999. (5) Price of mobile phone service, based on Labor Dept. statistics, dropped 12.3% in 2000. Average price per min. of use fell to 21 cents from 28 cents in 1999 and 35 cents in 1998.
Report to Congress also said 3% of wireless subscribers relied on wireless phones as their only phone. But Sugrue said there appeared to be growing interest in relying on wireless phone instead of 2nd or 3rd landline phone. As expected, report found paging and 2-way messaging subscribers, which reached 45.3 million in 2000, were relatively stable. Dedicated data networks run by wireless carriers such Cingular Interactive, Metricom and Motient was 650,000 in 2000. Report said nearly 91% of U.S. population had access to at least 3 wireless carriers, with 75% to at least 5 and 47% had 6 or more.
FCC Chmn. Powell expressed interest in tracking information on how “vertical” wireless services such as short messaging services (SMS) were being used. Sugrue said min. of use data now typically focused on voice services, particularly because billing for services such as SMS frequently was done outside of buckets of voice min. and was charged based on messages. “I think we are going to have to start thinking about how we consider those things as the marketplaces become more converged and competitive,” Powell said.
“What should we be watching for?” asked Comr. Tristani concerning whether consumer complaints were changing as subscribers increased. While Sugrue said it didn’t appear consumer complaints were growing disproportionately to subscriber increases, he said his bureau had been working with Consumer Information Bureau (CIB) on finding ways to place informal complaints over issues such as dropped calls into categories so they could be tracked better. Part of what is being updated at CIB is intake and recording system, he said. “I think what’s happening is that people’s expectations for the service are getting much higher,” Sugrue said. “I think the bar has been raised substantially on the industry.” Wireless service quality has drawn attention on Capitol Hill this year, with Rep. Weiner (D-N.Y.) introducing bill (HR-1531) that would focus on consumer education, backing away from earlier version that would have imposed additional regulations (CD April 12 p5). Sugrue also referred to recent exhortations by Verizon Wireless CEO Dennis Strigl, who has urged industry to pay more attention to service issues to stave off regulatory intervention (CD June 5 p1).
Abernathy cited statistics in report as providing benchmark of how well Commission’s “proconsumer and deregulatory policies” had worked on wireless side to expand services and reduce prices. “This shows the impact of the deregulatory process,” said Abernathy, whose previous Washington experience included stint as lobbyist for AirTouch. “It allows us to learn a lot of lessons from this particular industry, which we should remember as we go forward and analyze other services.”