Local Tech Wire and From Wire Reports

WASHINGTON, D.C. – The Federal Communications Commission (FCC) on Thursday released its annual report on mobile competition, but rather than drawing any firm conclusions about the industry, the commission chose instead to highlight trends in mobile wireless.

Federal regulators did describe the market as more concentrated, possibly laying the groundwork for new regulations that could aid smaller cell phone carriers, but the report falls short of declaring the market uncompetitive.

"Rather than reaching an overarching, industry-wide determination with respect to whether there is ‘effective competition’, the report complies with the statutory requirement by providing a detailed analysis of the state of competition," according to the report.

The FCC is required by Congress to deliver an annual report examining competition in the mobile industry.

For the past 13 years, the commission has found that sufficient competition exists. But, this year’s report was a little different because it also included analysis on newer technologies like messaging and wireless broadband.

Unlike previous reports, which examined competition in the provision of Commercial Mobile Radio Services (CMRS), this year’s report integrates CMRS into the broader mobile ecosystem, including mobile voice, messaging, and broadband services. The report includes data on the many interrelated “upstream” and “downstream” market segments of the mobile ecosystem – including spectrum, infrastructure, and devices – each of which has the potential to affect competition.

The report reflects market conditions existing in 2008 and much of 2009, and identifies the following key trends, among others, in the mobile wireless industry:

  • Innovation in and around devices and applications: Handset manufacturers have introduced a growing number of new smartphones – 67 in 2008 and 2009 – that provide mobile Internet access and other data services, and provide many of the functionalities of personal computers.
  • Transition to a data-centric market: Data traffic has grown significantly, with the increased adoption of smartphones and data consumption per device.
  • Role of spectrum for mobile broadband: Especially as mobile wireless broadband usage grows, access to spectrum becomes increasingly important for competition. While many wireless service providers have access to significant amounts of mobile spectrum, most of the spectrum below 1 GHz, in both the cellular band and the 700 MHz band, is not widely held.
  • Maturation of the mobile voice segment: As of the end of 2008, 90 percent of Americans had a mobile wireless device.
  • Continued industry concentration: There appears to be increasing concentration in the mobile wireless market. One widely-used measure of industry concentration indicates that concentration has increased 32 percent since 2003 and 6.5 percent in 2008.
  • Robust capital investment but declining relative to industry size: Providers continue to invest significant capital in networks, despite the recent economic downturn. One source reports capital investment at around $25 billion in both 2005 and 2008, while another shows that capital investment declined from around $25 billion to around $20 billion during the same period. Because industry revenue has continued to grow, both sources show that capital investment has declined as a percentage of industry revenue over the same period (from 20 percent to 14 percent).

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