FCC to Examine Wireless Industry Competition

Posted by: Olga Kharif on August 21, 2009

On Aug. 27, the Federal Communications Commission will consider whether to examine the state of competition in the wireless industry. Chances are, the agency will decide to look more closely at the industry’s largest players, including Verizon Wireless and AT&T.

The inquiry would follow months of Congressional hearings and a barrage of letters from various members of Congress, including Sen. John Kerry, asking the FCC to examine the issue. The agency is expected to consider whether exclusive handset deals between carriers and cell-phone makers impede competition. It may also rule on whether various fees carriers charge consumers are excessive and not explained clearly enough.

An inquiry would create an overhang over the industry’s largest players. But proving that AT&T and Verizon Wireless have engaged in anti-competitive behavior won’t be easy. Multiple industry studies suggest that the U.S. wireless industry is one of the most competitive in the world, with three to four providers typically servicing a given market vs. one to two providers in Europe and Japan.

What’s more, carriers make huge investments into their networks, consumer equipment and marketing to make their exclusive handset deals pay off. And many of these deals don’t. So while an inquiry would create an overhang, a ruling against the industry’s giants is far from certain.

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Reader Comments

Snoz

August 22, 2009 04:04 AM

The FCC, like other federal regulatory agencies, are dominated and infiltrated by special interest. Instead of regulating an industry, the federal agency often aids and abets the fraud perpetrated by the industry. For example, the SEC supposed to regulate Wall St investment. By pretending to protect the public interest, SEC has lulled the gullible public investors into Madoff and other Ponzi schemes. Investors of the financial sector were told that the financials firms were monitored by the SEC. The financial market meltdown proved otherwise. In fact, SEC looked the other way when Big Banks gambled in high stake poker games called derivatives, default-swap, hedge fund, and toxic mortgage papers. Members of FCC and the telecom lobby are a close-knit bunch of boys whose action do not foster competition but rather preserves the several monopoly telecoms as status quo. Hence, wireless handset in America is at least one generation behind those found in Asia. Whereas telecom competition in Asia has forced several telecom to offer lower margin pay-as-you-go plan a decade ago instead of only the higher priced subscription plan, American telecoms reluctantly began offering such alternatives only in recent years and in a low key undertone. And it is the second tier telecoms such as Leap or Boost that markets them. Even where the big telecoms offer these pay-as-you-go plan these plans are either de-emphasized or hidden while the two year subscription plan is pushed upon the consumer. Today, the FCC allowed the big incumbent carriers to charge extra fees where a caller dials a number of its competitor or a "roaming" charge. Imposing these extra charges, the incumbents wanted to discourage competition and naturally, the FCC blessed it. Because of the unholy cozy relationship between the FCC and the telecom industry, only a limited number of Americans did not have to wait for the cable TV industry to revolutionize high speed internet while the incumbent telecom promised their pie-in-the-sky DSL or optic fiber. But for the same cozy relationship between the FCC and the wireless telecom, Americans would have true 3G or 4G five years ago instead of the fake 3G that barely transmit 64Kb/sec. Because of limited competition in the wireless telecom and FCC's sleeping in bed with the telecom industry, American consumers are forced to pay for each text message instead of unlimited text message as is offered in several Asian countries. The FCC and the telecoms know a text message transmitted by a packet occupies so little space within broadband and cost almost nothing to send. Despite this fact, the FCC allows the telecoms to charge exorbitant fee per text message. This alone is evidence of the fox and wolves guarding the hen.

Gorian

August 22, 2009 10:15 AM

I totally agree with you, Snoz. How could we EVER expect fair treatment and true representation by such regulators as the FCC (and SEC) when the very persons in those regulating bodies are so tightly connected to the organizations they are supposed to be regulating.

The american public has been taken advantage of and given so much crap for so long that any little step in the right direction is seen as a Great improvement when in fact that step is still decades behind those of Asian and European countries. It is like forcing people to take the bus and telling them you cannot have you own car. Then the regulators step in and say 'Great news, we fought for you and you can now own a car', and tells them but right now you can only have this 1996 civic...in a world where the Asians are driving cadillacs and BmW's. And where you know that they are.

Text messages, roaming, high speed internet - why are those costs still so high and why not available everywhere? The telecom industry is now talking about the revolutionary 3G network. Come on America. We're not ahead in the game. Who is holding us back? In Asis persons have make video calls on cell phones. And it does not bog down their networks (the way ATT feared skype and slingbox would theirs) and there are millions of persons on there. Why are we not there yet?

There is mention of this market being more competitive than Asian markets because there are about 4 main carriers here while Asia has about 2. Please, we still pay a lot more for less and are still far behind in the technology. So much for competitive behaviour.

Is the FCC really doing a good job anyways? They are doing a job, yes, but who's coming out the winner? Do not let them piss in your eye.

Gorian

August 22, 2009 07:50 PM

I totally agree with you, Snoz. How could we EVER expect fair treatment and true representation by such regulators as the FCC (and SEC) when the very persons in those regulating bodies are so tightly connected to the organizations they are supposed to be regulating.

The american public has been taken advantage of and given so much crap for so long that any little step in the right direction is seen as a Great improvement when in fact that step is still decades behind those of Asian and European countries. It is like forcing people to take the bus and telling them you cannot have you own car. Then the regulators step in and say 'Great news, we fought for you and you can now own a car', and tells them but right now you can only have this 1996 civic...in a world where the Asians are driving cadillacs and BmW's. And where you know that they are.

Text messages, roaming, high speed internet - why are those costs still so high and why not available everywhere? The telecom industry is now talking about the revolutionary 3G network. Come on America. We're not ahead in the game. Who is holding us back? In Asis persons have make video calls on cell phones. And it does not bog down their networks (the way ATT feared skype and slingbox would theirs) and there are millions of persons on there. Why are we not there yet?

There is mention of this market being more competitive than Asian markets because there are about 4 main carriers here while Asia has about 2. Please, we still pay a lot more for less and are still far behind in the technology. So much for competitive behaviour.

Is the FCC really doing a good job anyways? They are doing a job, yes, but who's coming out the winner? Do not let them piss in your eye.

Tom Gerber

August 23, 2009 12:49 PM

This is the typical game played between large corporations and the agencies supposed to regulate them. They bat the consumer back and forth, bruising the poor fools each time. So long as corporations are allowed to hire lobbyists, so long will we suffer.
Big business is the enemy of the public.

Tom Gerber

August 23, 2009 12:49 PM

This is the typical game played between large corporations and the agencies supposed to regulate them. They bat the consumer back and forth, bruising the poor fools each time. So long as corporations are allowed to hire lobbyists, so long will we suffer.
Big business is the enemy of the public.

Tom Mariner

August 23, 2009 06:42 PM

Are you guys kidding? The Telecommunications Act of 1996 redid the communications business by letting the local telcos into the long distance business in return for letting CLEC's run local lines out of Central Offices.

The RBOC's (Region Bells) thumbed their nose at Congress by letting the CLEC's spend all their capital selling new users and putting their equipment into special rooms at every CO in the country at the cost to the CLEC's of $billions. Then the order went out that under no circumstances would the equipment be connected into the "Bell System".

The result -- the RBOC's in the Long Distance business, the CLEC's out of business and Congress not doing a thing about it. And you think anything that the FCC will try to do to the wireless carriers will have any hope of of success? These guys blew off Congress and the first change to their business since 1934, and you think some temporary appointee is going to get them to do something that will get them to change their business model? Grow up!

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BusinessWeek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, Douglas MacMillan, and Spencer Ante dig behind the headlines to analyze what’s really happening throughout the world of technology. One of the first mainstream media tech blogs, Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.

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