June 29, 2011 2:01 PM

How I Learned to Stop Worrying and [Like?] the Wireless Competition Report

Earlier this week, the FCC released its annual Wireless Competition Report to Congress. Like last year, the Commission noted the overall complexity of the mobile wireless market, and the adjacent markets in the supply chain for wireless services.  Based on this complexity, the Commission again decided not to make any conclusions as to whether the mobile wireless market was effectively competitive.  Commissioner McDowell fairly expressed criticism that the Commission shouldn't shy away from its directive simply because it is difficult.

I couldn't agree more with Commissioner McDowell.  The FCC's failure to sift through all that complex data and reach a well-supported conclusion means that I had to read the report.  This was, to say the least, tedious--yet informative.  Regardless of what one might think about the Commission's indecision, the Report was obviously the result of a lot of hard work, and the Commission staff certainly deserved the compliments included in the Commissioners' separate statements.

Once you accept that the Commission wasn't going to reach any conclusions regarding the state of wireless competition in its Wireless Competition Report, you cannot help but be impressed by both the (perhaps unnecessary?) ambitiousness of the report, and the conclusion that--by just about any relevant measure--the mobile services market became more competitive over the time period measured.  

Network capacity increased (in terms of network deployment and upgrades), output (as measured by consumer demand/subscribership) increased for both voice and data services, as did consumer choice for rural and urban consumers in terms of number of service providers and services/devices from which consumers could choose.  The number of wireless Internet data subscribers more than doubled between 2008 and 2009.  Through this time period, prices remained low (as measured by the Cellular CPI-Table 19), or declined (for most data users--see discussion at para. 90).

Like last year, the FCC chose to provide a lot of information on the mobile wireless "ecosystem."  So the Commission collected and presented data not only for the  mobile wireless service market,  but also adjacent markets in the service supply chain--including the markets for wireless service inputs, the complementary markets for wireless devices/operating systems/applications--and, for good measure, comparison data from international markets. Unlike last year, though, the FCC's Report seemed to make an honest effort to present the facts in an objective manner, without any (obvious) implied conclusions.  

In particular, I thought the Commission's discussion of the wireless data market, and data pricing trends, in paras. 85-92 of the Report was remarkably thorough and restrained.  It was especially informative for the Commission to explain that the "net effects" of data pricing plan changes were, according to research on actual consumer bills by Nielsen, to reduce wireless Internet data rates for 98% of customers.  

It would have been easy enough for the Commission to have simply stated that the elimination of the original $30/month unlimited data plan would increase rates for some users.  Instead, the Commission looked at the actual effects of the new pricing plans on the bills for most customers.

The Commission, to its credit, also honestly discussed consumer's purchasing patterns in attempting to define HHI numbers for discrete geographic markets, noting that consumers generally buy service from providers that sell service where they live, work or travel. Report, para. 50.  It would have been tempting for the Commission to have hedged on that fact, as well, but the Commission did not.

This is not to say that the Report is perfect.  As the title says, I've learned to stop worrying and . . . like (maybe, sort of) . . . the Wireless Competition Report.  There are aspects of the Report that I still find bothersome, like the lack of a framework that would give meaning to a narrative.  And, for that matter, the lack of a narrative that explains how all the data points are related, or even if they are related.  But, I'll save those criticisms for another day . . . .

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