FCC: Mobile Market Is Competitive

WASHINGTON — The mobile wireless marketplace is competitive again, according to the FCC, and that conclusion could have implications for both broadband buildouts in general and for consolidation in the mobile broadband market.

It could also signal future competitiveness findings for the fixed broadband and broadcast markets. For the past eight years, under Democratic Federal Communications Commission leadership, companies have heard that those markets lacked competition and needed regulation.

The FCC at its Sept. 26 public meeting voted on party lines to endorse the 20th Mobile Wireless Competition Report’s conclusion that the mobile broadband marketplace is competitive.

FCC chairman Ajit Pai made it clear the agency was narrowing its focus to look at competition and not the wider “ecosystem.” The previous FCC, under chair Tom Wheeler, looked at that wider view and decided that the competitive picture was too complicated to reach a conclusion.

For one change, the new report was voted on by the commissioners. Though the Democrats dissented, newly returned Democratic commissioner Jessica Rosenworcel applauded that change and said it had been a mistake to release the report at the bureau level, as had been Wheeler’s modus operandi.

But the main difference was in the conclusion. Pai made it clear he thought previous findings were motivated by the desire to justify regulation, rather than on an accurate measure of the competitiveness of providing mobile wireless service.

Effective competition in the mobile wireless market had been an “inconvenient truth” discounted or ignored by those wishing to impose those new regulations, the chairman said at the Sept. 26 meeting.

Democratic and Republican commissioners talked about what the effects of the decision could be. For one, it could make it easier for a merger of wireless firms Sprint and T-Mobile to pass muster from an antitrust perspective.

The FCC did not define what effective competition requires, beyond that it meant consumers were getting better service for less money and that innovators were innovating to beat the band.

Passing the Voices Test

But a key standard in merger reviews is how many voices will remain in the market. If mobile broadband is generally competitive — which means the big national wireless carriers AT&T, Verizon, T-Mobile and Sprint are all competing — then a T-Mobile-Sprint merger would arguably create a stronger No. 3 to go up against the Big Two.

That was a concern for Rosenworcel. She suggested the FCC could use the finding in an upcoming transaction that “may be announced” among two of the four nationwide carriers.

“While the commission should not prejudge what is not yet before it, I think the agency sticks its collective head in the sand by issuing this report and implying, ‘Move along, nothing to see here.’ ”

Another possible outcome is that the finding removes some of the pressure to build out broadband networks and close the vaunted digital divide.

Republican commissioner Michael O’Rielly took aim at the suggestion that the FCC would no longer have the impetus to promote broadband expansion if it finds that mobile is competitive or that, in the context of this report, “broadband is being deployed in a reasonable and timely manner.”

Just because a report concludes that there is competition — which, he said, there obviously is — or that the industry is doing a good job, doesn’t mean “we all get to go home.” He said he didn’t see that being the case with the findings in this or any other competition-related report.

O’Rielly’s use of the “reasonable and timely” language was telling.

One other consequence of the decision is it sends a signal that another key report, the Section 706 report on deployment of advanced telecommunications, could reach a different conclusion.

Under Democratic chairs, that report has concluded that broadband was not being built out in a reasonable and timely fashion. That finding had irked cable operators and other ISPs, as well as O’Rielly and Pai, and could be used by the FCC to justify added regulation on broadband service providers — including rate regulation.

“We shouldn’t ignore how four-firm competition, data roaming rules, spectrum screens and other regulations adopted by previous administrations continue to benefit consumers,” public-interest group Public Knowledge said of the report.

John Eggerton

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.