June 29, 2011 2:01 PM
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).
Continue reading How I Learned to Stop Worrying and [Like?] the Wireless Competition Report
May 25, 2011 12:37 PM
Since 1997, Congress has required the Federal Communications Commission to file annual reports that measure whether certain industries, such as mobile wireless services, are "effectively competitive." Every report the FCC has issued since 1997 has found the wireless market "effectively competitive," until 2010, when the Commission failed to make any finding at all for calendar year 2009. See 2010 Report
While it is not difficult to understand a bureaucracy's fear of commitment--making no judgment on one matter in the present seems to preserve all options for future matters. There are now news reports
, though, that the FCC might take the same "neutral" stance with respect to wireless competition that it took last year. This time, though, that course destroys, rather than preserves, options, and the Commission must reconsider its fear of commitment.
The article notes
that the Commission may be afraid of finding the wireless market to be "effectively competitive" for fear of limiting its options in reviewing the proposed AT&T/T-Mobile merger. If this report is correct, the Commission's reasoning is both specious, and dangerous to its present agenda regarding spectrum policy and incentive auctions--an issue that Chairman Genachowski has been aggressively, and correctly, pursuing since the beginning of the year.
Continue reading The Commission's Wireless Competition Conundrum: "Neutral" Is Not an Option
May 25, 2010 12:59 PM
Last Thursday, at its May Open Meeting, the FCC adopted its annual Wireless Competition Report
. The adoption of the Report
caused something of a stir, because the Commission departed from the statutory directive requiring the Report
include an identification of the number of competitors in various commercial mobile services, an analysis of whether or not there is effective competition, an analysis of whether any of such competitors have a dominant share of the market for such services, and a statement of whether additional providers or classes of providers in those services would be likely to enhance competition.
47 U.S.C. § 332 (c)(1)(C) (emphasis added). The report, notably, reached no conclusions about anything required by Congress, except identifying the number of competitors in various mobile services markets.
At the meeting, Wireless Telecommunications Bureau Chief, Ruth Milkman, by the account in Friday's Communications Daily
'What we set out to do when we started drafting this report was to collect the facts and to analyze them and to collect facts about a broader expanse of the mobile wireless ecosystem,' she said. 'We were focusing on the data and the analysis rather than conclusions. We thought we would just lay out for the commissioners all the data and the analysis and stop there and that's what we did.'
So far, so good (I guess
)--except for the cringe-inducing "ecosystem" malapropism (which seems to be pervasive over at the Commission, when referring to service supply chains). I mean, I guess what the Bureau did was OK--laying out facts for the Commission to draw the conclusions required by law. But, no one on the 8th floor ever bothered to render these conclusions. Nonetheless, sloppy language breeds sloppy analysis. In this case, if there was a logical analytic framework for the Report
, it wasn't stated explicitly, nor was it possible to discern intuitively. In the next few posts, I'll provide my take on the Report
overall--the Good, the Bad, and the Ugly.
The Good: lots of information . . . a whole lot--maybe even too much information on too many "markets", but not enough information on the relevant market--the market for mobile wireless services
. For example, the Commission seems eager to divide the supply chain into multiple submarkets--either on the input side, or with respect to adjacent, or "complementary" markets (which, except possibly for mobile applications, the Commission conflates with the term "downstream" markets). The report may have been more accurate if the Commission divided the "mobile services market" into "upstream" and "downstream" components (an exercise that would have enabled the Commission to accurately describe the vigorous wholesale market, through which unaffiliated "MVNOs", purchase service to be packaged with unique handsets and offered to the consumer at retail).
Nonetheless, one of the things I really kind of liked was the attempt to provide information on the input markets facing the mobile service providers. Unfortunately, this effort was probably too ambitious and, on deeper thought, it would have been impossible to execute on a meaningful basis. Also, with respect to this portion of the Report
, the Commission may have been better off leaving the sections out. It is better to exclude incomplete data, than to include partial data, and then create a misleading narrative based on that data.
Another interesting, and novel, feature of the Report
is the Commission's effort to disaggregate service revenue, consumption, and growth trends by the differentiated service--like voice, texting, and data--notwithstanding whether the services were sold
in the same way (i.e.
, text only, etc
.). This information was interesting, but not presented in a competitively meaningful way. While the Report
helpfully explains changes in mobile wireless service consumption trends, it only suggests, but does not attempt to demonstrate or quantify, probable positive cross-elasticity of demand (substitutability) between voice and text messaging, and possibly data.
theorizes that average voice consumption per user may have declined in the past year as a result of "per text" prices precipitously declining from 2 ½ cents per text to around a penny per text over the same period. If voice and texting are indeed "close substitutes", then the Commission may want to refine its analysis in the next Report
to include voice/texting as a single product market category. This would suggest a more competitive market, as voice plan prices and per text prices continue to fall, pari passu
On the data side, the Report
notes that data revenue--as a percent of total revenue per customer--is expanding at an accelerating rate. It is difficult to draw inferences regarding the competitive nature of the wireless mobile data market, because it appears to still be in its incipiency.
Finally, on the "Good" side of the Report
, one cannot deny the work that went into collecting the information. The professional staff of the Commission is truly to be commended. One might disagree with the information the Commission chose to present, how the information was presented, and the conclusions the Commission would have the reader infer based on the information--but this is a Commission policy concern, and does not diminish my respect for the work that went into this Report
Telecomsense Presents Real Staff of Genius
[italics are to be sung in your cheesiest '80's band voice . . . think "Survivor"]
So, here's to you, Mr. and Ms. Wireless Competition Report Writers . . . for the past year, you've spent about 360, 000 minutes each to tell us that we've all been talking on the wireless phone for about about 8,500 minutes and sent about 4500 text messages--each, on average.
Here's to hoping--for your sake--the Commission can reel in its appetite for the
minutiae of minutes, messages, and handsets in next years' Report.
Hungry, hungry, beaureaucrats . . . can we get a list of "exclusive"co-lors? Pink's my favorite!
And take heart . . . At least this year, they didn't require you to compile numbers on the "sexting" segment of the mobile data market . . . naughty, naughty sexters . . .
So, here's to you, oh collectors and crunchers of the numbers . . . it's time to turn off those pretty little smart phones . . . this one has a Disco Inferno Radio Alarm Clock App! . . .,
Close down the Word "Table Wizard" and crack open a cold Bud Light, because without your massive minutes of dedication, we wouldn't know how many minutes "unlimited" truly meant.
Mr. and Ms. Wireless Competition Report Writer . . .