The FCC’s finding it can no longer conclude in annual...
The FCC’s finding it can no longer conclude in annual wireless competition reports that the U.S. wireless industry is “effectively competitive” makes little sense, concludes a new paper by Robert Hahn of the Georgetown Center for Business and Public Policy…
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and Hal Singer of Navigant Economics. In the last two reports, under Chairman Julius Genachowski, the FCC has declined to draw this conclusion. “For over a decade, as wireless prices fell and industry concentration inched upward, the FCC concluded that the wireless market was competitive,” the paper said. “Under new leadership but with the same fact pattern -- prices continued to fall, concentration continued to rise -- the Commission changed its tune. For the last two years, it retracted its stamp of competitiveness in favor of a ’too-close-to-call’ decision.” There are two “plausible explanations” for this change in direction, the paper said. “Under the first explanation, the FCC previously weighted direct evidence of competition such as falling prices more heavily than indirect evidence such as concentration, but it elected to place more weight on indirect evidence in the last two competition reports,” the paper said. “Under the second explanation, the FCC did not change the weights, but it instead felt that concentration reached some critical threshold such that the societal loss associated with any more concentration was unacceptable. We don’t find either explanation persuasive.”