GAO: FCC Needs To Drill Down On Wireless Competition Data

Recommendation driven by concerns over effect of consolidation
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The Government Accountability Office has recommended that the FCC
start collecting more and more detailed information about the wireless industry
so it can better determine how competitive it is.

The FCC apparently agrees and has signaled it will adopt many of the report's recommendations.

In a copy of the report released Thursday, GAO framed its
recommendation as more of a suggestion than a directive, saying the FCC should
"assess whether expanding original data collection of wireless industry
inputs and outputs-such as prices, special access rates, capital expenditures,
and equipment costs-would help the Commission better satisfy its requirement to
review competitive market conditions with respect to commercial mobile
services."

That conclusion was driven in part by concerns about better
understanding the impacts of consolidation, both positive and negative. The
report found, for example, that the four largest carriers, AT&T, Sprint
Nextel, T-Mobile and Verizon Wireless, have more than 90% of the wireless
customers. It also found that since 2000, consumers have seen lower prices and
better coverage.

According to GAO, the FCC took no official position on the
recommendations in the report, which was requested by Senate Commerce Committee
Chairman Jay Rockefeller (D-W.Va.), and committee members Senators Dan Inouye
(D-Hawaii), Amy Klobuchar (D-Minn.) and Ron Wyden (D-Ore.).

In a statement released midday Thursday, Rick Kaplan, chief counsel to FCC Chairman Julius Genachowski, said: "We're pleased that GAO has recognized the need for the FCC to collect more comprehensive data on special access and will soon be taking steps to address many of the issues raised in the report."

In some ways, Kaplan suggested, GAO was preaching to the choir. "Wireless connectivity is a key economic driver that creates enormous opportunities for consumers, innovators, and businesses," he said. "We agree with GAO that data-driven analysis of the wireless marketplace is essential for pro-innovation, pro-competition policies. The FCC has taken proactive steps to improve our data and analysis, including collecting new and better data for this year's Mobile Wireless Competition Report."

In his statement on the report, Rockefeller gave a shout-out to
those benefits but said he was still concerned about access to rural areas and
early termination fees he said "unfairly" prevent customers from
switching providers.

"This report will help Congress reevaluate the wireless
impact on Internet access and the impact of the current regulatory framework on
wireless services," Wyden added.

For its part, the FCC has already created a consumer task force,
whose first action last January was to seek information from those top carriers
on how they inform consumers about the fees, which wireless companies point out
are tied to term contracts whose lower equipment and access prices are based on
a commitment to a long-term rather than a month-to-month contract. Those term
contracts promote broadband deployment, Verizon for one has argued, by lowering
the up-front costs to consumers.

"In finding that wireless consumers are seeing ‘lower prices and better coverage,' today's GAO report confirms what we've been saying for a long time--that the U.S. wireless industry is extremely competitive and continues to respond to increasing consumer demand by delivering real benefits for American consumers," CTIA-The Wireless Association President Steve Largent said in a statement.

Spotlighting the finding that prices had gone down in the last 10 years, Largent said CTIA agreed with GAO that cost is an indicator of competition in the marketplace.

He also said that GAO's note that spectrum was an "essential input" added impetus to the FCC's plan to reclaim 500 Mhz of spectrum from broadcasters and others for wireless broadband over the next 10 years.

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