Research: Mobily Competitive
Looking for Trouble: The FCC’s Mobile Competition Report
Richard Bennett
The Information Technology & Innovation Foundation
June 2, 2010
In Bennett’s latest work he investigates the FCC’s Mobile Competition Report. Bennett believes that the U.S. cellular market appears healthy. He points out that Americans pay the lowest price for minutes in the world and have access to the latest and greatest phones that cost less than European alternatives that are not quite as stellar. But he points out that the FCC’s latest report paints a dire picture of the marketplace that is in need of regulation.
Bennett analyzes three key issues relevant in the report:
- Market Concentration – This looks at the size of companies compared to the industry they reside in to determine the competition among those companies and is based on the Hefindahl-Hirschman Index.
- Decreased Investment – This section reviews the FCC’s claim that investment is decreasing in the mobile industry.
- Excess Profitability – Finally, an examination of the FCC’s suggestion that two particular players in the mobile industry are seeing record profits while others are showing decreasing profits.
Bennett concludes that the FCC is reluctant to indicate that the mobile marketplace is a competitive marketplace and feels that the report in inconclusive and leaves out key analysis of the subject matter.
You can find the paper here.
My only thoughts on regulation is the exclusivity contracts between companies such as AT&T and Apple which limit the competitive nature of the phone networks. This remains especially true for my recent professional dealings with AT&T to which I have had a business line had to be taken down for service several times in the last two weeks. This is a dedicated T1 which is purchase by a multinational company which lives off of communication.
This is not the first time, but many times over the last year. And when I go to renew a cellphone contract, I am limited by who I get to pick just based on the availability of a specific phone.
That is anti-competitive behavior that I can’t agree with.
What do you mean Crash? Every cell phone company tries to give incentives to their customers to stay with them, yet the market is competitive enough that Verizon and AT&T are forced to spend tens of billions of dollars a year to upgrade the wireless infrastructure to keep their customers from leaving. AT&T has to spend around $19 billion this year to upgrade. If that’s not a sure sign of a competitive market, I don’t know what is.
As for T1 lines, that it must have annoyed you to no end (understandably) but I’m not sure how that’s relevant to the current discussion on wireless competitiveness.
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