FCC Refuses to Say Wireless Industry is Competitive (Again)

Once again, the Federal Communications Commission this week declined to say whether or not there is effective competition in the wireless industry.

As a result, this non-conclusion provides few clues as to what the FCC will do regarding the pending merger of AT&T and T-Mobile.

The 15th annual report, which the commission is required to present to Congress each year, "makes no formal finding as to whether there is, or is not, effective competition in the industry," the FCC said.

In the first 13 years it was required to produce the report, the FCC consistently found that sufficient competition existed. But to the chagrin of wireless supporters and detractors alike, the commission last year opted . Instead, FCC chairman Julius Genachowski said that the commission would "assess market conditions by providing data on trends in competition and choice over time."

The FCC took a similar approach this year. "Given the complexity of the various inter-related segments and services within the mobile wireless ecosystem, the report focuses on presenting the best data available on competition throughout this sector of the economy and highlighting several key trends in the mobile wireless industry," the commission said.

CTIA, which represents the wireless industry, said it was pleased the report appears to reflect the "tremendous innovation and investment" in the industry, but "CTIA again wishes [the FCC] would have concluded effective competition existed in 2009."

Free Press, which has been critical of the wireless industry and the AT&T/T-Mobile merger, was also disappointed—that the FCC did not "state clearly and conclusively that the wireless market is not effectively competitive."

"This conclusion should be glaringly obvious, and the commission's willingness to stick its head in the sand is not going to make the problem go away," Free Press policy director Matt Wood said in a statement.

In its report, the FCC referenced the Herfindahl-Hirschman Index (HHI), which measures market concentration. Roughly speaking, a market with with a score lower than 1,500 is considered unconcentrated while a market with a score higher than 2,500 is highly concentrated. In the mobile space, the industry's HHI was 2,811 at the end of 2009 and 2,848 by mid-2010.

The FCC its investigation of the AT&T/T-Mobile merger in April. It will work with the Department of Justice to determine if the merger is in the public interest.

Some other stats from the report include:

• The number of mobile wireless connections grew 4 percent from 279.6 million at the end of 2008 to 290.7 million at the end of 2009.
• Industry-wide, net new mobile wireless subscriber/connection additions (or "net adds") for 2009 totaled 11.1 million (CTIA said 15.3 million).
• At the end of 2009, there were 274.3 million subscribers to mobile telephone, or voice, service, up nearly 5 percent from 261.3 million at the end of 2008.
• At the end of 2009, there were 55.8 million subscribers to mobile Internet access services at speeds exceeding 200 kbps in at least one direction, which is more than double the number at the end of 2008.
• Limited estimates find that mobile data traffic in North America averaged 16,022TB per month in 2009, two and a half times larger than the 2008 average of 6,282TB per month.
• Price level remained generally flat during 2009.