AT&T, Verizon Say Data Show Wireless Industry’s Competitive
AT&T, Verizon Wireless and the CTIA went on the attack against the Consumer Federation of America “and other like-minded groups” in reply comments on the notice of inquiry on the FCC’s report about mobile-wireless competition. Smaller carriers took on AT&T, arguing for rule changes that they said would make the wireless industry more competitive. Public interest groups said the record shows that only the largest carriers are satisfied with the state of competition.
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The Consumer Federation “never tries to answer the question” it raises - whether wireless is competitive enough -- “and for good reason,” AT&T said. “The industry certainly is ‘competitive enough’ to deliver unprecedented levels of investment -- upwards of $20 billion this year alone, at a time when other industries are dramatically scaling back. It is ‘competitive enough’ for device manufacturers to team with providers to develop strikingly innovative smartphones that in turn drive broadband penetration and necessitate still more network investment. It is ‘competitive enough’ to generate record numbers of subscribers (more than 270 million and counting) and usage (in 2008, approximately seven billion minutes of use and 3.5 billion text messages, every single day). It is ‘competitive enough’ to generate near weekly price wars that cause investors heartburn even as they save consumers millions.”
Verizon Wireless said the FCC needs to separate “facts and data from bald assertions and empty rhetoric” from industry critics. “What emerges from a data-driven assessment of the record is a remarkable picture of a dynamic U.S. industry sector -- a hotly contested mobile wireless market teeming with innovation and investment,” the carrier said. “For American wireless consumers, these are the ‘best of times.’ Consumers enjoy a range of choices, with multiple providers offering diverse service plans reflecting intensive price and non-price competition.”
“The record confirms what CTIA detailed in its initial comments: namely, that during the past two years, the wireless market has transformed into a multi-faceted ecosystem, made up of service providers, infrastructure suppliers, device manufacturers, operating system developers, and applications developers,” CTIA said in its reply comments. “CTIA has provided specific evidence -- based on every major market indicator -- of the vibrant and highly dynamic nature of the mobile wireless ecosystem.” The association said “certain public interest critics” offer no hard facts to support their contention that the market isn’t competitive. “In the face of overwhelming data to the contrary, these criticisms of the wireless marketplace (whether regarding price, service offerings, investment, or the need for new mandatory data collection regimes) amount to little more than an irresistible urge to insist that no glass can be anything but half empty,” it said.
But most agree the market isn’t competitive, said the Consumer Federation, Consumers Union, Free Press, the Media Access Project, the New America Foundation and Public Knowledge in a joint reply. “CTIA joined with AT&T and Verizon Wireless -- the two largest wireless carriers -- to sing the praises of the marketplace they dominate in the initial round of comments,” the filing said. “Other providers filing initial comments in this proceeding sang a different tune. Those who provide services in competition with these two largest incumbents uniformly recognized that there are at least some major impediments to effective competition throughout the mobile value chain. … CTIA and the largest carriers apparently speak for very few wireless providers when it comes to the topic of the barriers to entry and growth that exist up and down the mobile value chain.”
The wireless market is competitive overall, said Sprint Nextel, the No. 3 U.S. wireless carrier. “The same cannot be said about the market for another part of the wireless ecosystem: special access backhaul facilities used to transport traffic from cell sites to the Internet backbone network,” Sprint said. “The market for special access backhaul is overwhelmingly dominated by incumbent local exchange carriers such as AT&T and Verizon (in their respective service territories), who continue to extract monopoly rents from their provision of this critical input.”
The FCC needs to take up roaming rules to spur broader competition, said Columbia Capital and M/C Venture Partners, which have investments in Revol Wireless and Coral Wireless. “There is a fundamental competitive problem when a national carrier charges a roaming rate that is multiples of its own retail rate and the rate it charges to MVNOs,” the investment firms said. “Such anticompetitive pricing has had a material impact on existing market competition and will continue absent Commission intervention.”
MetroPCS also said roaming rules need “reform.” “It has become increasingly apparent that wireless customers expect their wireless services to follow them on the road, to wherever they may travel,” the provider said. “MetroPCS advocates that automatic access to nationwide voice and data roaming at just and reasonable rates on a non-discriminatory basis is an absolutely essential input for any new entrant or small, rural or mid-tier carrier that seeks to compete in any meaningful way with the nationwide footprint of the Big-4” carriers. Two of the big four, Sprint and T-Mobile, agree that the in-market roaming exception in the FCC’s automatic roaming rules should be dropped, the carrier said.