The FCC said it chose to focus on providing a detailed analysis of market conditions in the mobile wireless ecosystem rather than reaching any overarching industry-wide conclusion about competition because of the sector's growing complexity.
While voting to approve the report, however, the FCC's two Republican commissioners, Robert McDowell and Meredith Attwell-Baker, issued statements objecting to the agency's neutral stance and expressing support for finding the industry competitive.
The 300-page report adopted by the FCC found increasing concentration in the wireless market, with consolidation among carriers increasing 32% since 2003 and 6.5% since 2008, according to one widely used measure. Last August, the FCC opened a broad-based probe of the wireless industry covering competition, innovation, and user access to accurate information.
But with the 14th version of the wireless competition report mandated by Congress, FCC Chairman Julius Genachowski said that the commission was not trying to "reach an overly simplistic 'yes-or-no' conclusion" about the industry's level of competition. Instead, it complies with its mandate "to assess market conditions by providing data on trends in competition and choice over time," he wrote in a statement accompanying the report.
Genachowski also noted that the FCC's analysis this year went beyond traditional like voice service, spectrum holdings and the number of subscribers to cover a wider range of newer topics such as the deployment of 4G networks and the "explosion" of smartphones.
Among its key findings, the FCC found that the four major U.S. carriers launched 67 new smartphones between 2008 and 2009 across platforms including the iPhone and BlackBerry, Palm and Windows Mobile-based devices. The proliferation of high-devices has also significantly increased mobile data traffic, with revenue from newer data services supplanting those from traditional voice service.
To help meet growing demand, the national broadband plan introduced by the FCC in March included recommendations for speeding up and expanding mobile broadband deployment including encouraging TV broadcasters to give back spectrum that could be used for wireless computing.
The broadband plan also proposed new rules to help ensure competition in fixed and mobile broadband services as well as rules requiring increased transparency in performance.
In terms of investment, the new report on wireless competition said providers continued to spend significant amounts on network upgrades despite the economic downturn. But because industry revenue has continued to grow, capital investment has declined as a portion of industry revenue from 2005 to 2008, from 20% to 14%. Verizon Wireless, AT&T, Sprint Nextel and T-Mobile USA have all undertaken efforts to roll out 4G networks.
When it comes to competition among carriers, the FCC said wireless service has become more concentrated over the last five years, with AT&T and Verizon Wireless together accounting for 60% of revenue and subscribers, and continuing to gain share. The two next largest providers, T-Mobile and Sprint, had a combined 1.7 million net loss in subscribers during 2008 and added 827,000 subscribers last year.
The FCC reported that 95.8% of the population is served by at least three mobile voice providers, and 99.6% by one or more. Coverage for mobile broadband was lower, with 76.1% served by at least three providers, and 98.1% by one or more.
Despite endorsing the report, the two Republican commissioners -- Robert McDowell and Meredith Attwell-Baker -- took issue with the neutral position adopted by the FCC in assessing wireless competition. McDowell pointed out that 74% of American consumers have access to five or more mobile wireless service providers, up nine percentage points from the last wireless competition report.
"If nothing else, the report shows that the wireless sector is dynamic, ever-improving and responsive to consumer demand," he wrote. But he expressed concern that the report instead could lay the foundation for further regulation.
Likewise, Baker said the data presented should have led the FCC to conclude there was "effective competition" in the industry.
But Michael Copps, one of the three Democrats among the commissioners including Genachowski, said some of the findings were "downright sobering -- and worrying, too." In particular, he voiced concern about competition being seriously endangered by "continuing consolidation and concentration in our wireless markets."