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FCC Denies the Effective Wireless Competition Staring it in the Face -- Internet Competition Series Part III

In another blow to its competition policy credibility and objectivity, the FCC's 308 page, 15th Wireless Competition Report, amazingly reached no conclusion about whether the wireless market was effectively competitive, despite overwhelming evidence of effective competition throughout the report and a dearth of evidence in the report of any discernible anti-competitive issues that would suggest the wireless market was somehow not effectively competitive.

 

  • The stark incongruity between the overwhelming evidence in the report, and the absence of what should have been an easy report conclusion that the wireless market is effectively competitive, is certainly not "data-driven policy making at work.
  • It appears to be politics at work to support and provide political cover for the FCC's maverick policy desire to promote de-competition policy and more expansive FCC economic regulation and common carrier-like duties a la net neutrality and data roaming -- in the face of strong opposition from Congress and the Courts that the FCC is over-reaching its statutory authority.

 

If only the FCC absorbed the significance of the data compiled in their own report, the FCC would conclude that the wireless market was effectively competitive.

 

  • The report stated that in comparison to other countries, U.S. consumers enjoy much lower average prices and hence are able to afford dramatically more wireless usage than other nations.
  • All of the report's big measurements indicated effective competition:
    • More deployment and more coverage by more competitors;
    • Growing subscriber-ship and connections;
    • Rapid growth in data usage;
    • Dynamic mobile data innovation and new applications;
    • Pricing slightly down, and markedly down for texting (which is facing free Internet IM alternatives;)
    • Overall industry revenue growth despite quickly falling voice revenues;
    • ARPU, the monthly cost per user, fell 3% showing increasing consumer value capture; and
    • Infrastructure investment remains high and up slightly as wireless providers must continually invest to stay competitive.
  • The report also did not include the data that most strongly shows how effectively competitive the wireless market is: advertising expenditures.
    • Non-rivalrous markets don't need lots of advertising because there is little real risk of competitive churn.
    • The billions the wireless industry spends on advertising every year is incontrovertible evidence of how fiercely competitive the wireless market is.

 

In sum, the copious evidence of effective competition in the FCC's own 15th Wireless Competition Report puts the FCC in the untenable position of denying the success of fifteen years of competition policy and de-regulation.

 

  • No amount of conclusory gerrymandering and smoke and mirrors by the FCC will fool Congress or the Courts, who can plainly see for themselves what the "expert" agency cannot see: effective wireless competition.

The FCC's unwillingness to acknowledge the obvious conclusion that flows from their 300+ pages of effective competition evidence, underscores the need for Congress to reform the FCC's competition report process by eliminating all silo-driven competition reports (Like this wireless report) and do one periodic broad Internet competition report that captures the multi-dimensional nature of Internet competition, which includes, but is not limited to:

  • Intra-modal competition within a technology;
  • Inter-modal competition between technologies;
  • Inter-industry/sector competition amidst different industries/sectors that previously did not compete;
  • Multi-model competition amongst all of the above; and
  • More.

Simply, Congress needs to define up competition to counter-balance the FCC's natural bureaucratic bias to define down competitive markets to the point that self-justifies their need to economically regulate.

 

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Previous Parts of Internet Competition Series:

 

  • Part I:  "Denying Competitive Substitution is the Weakest Link of FCC's De-Competition Policy"
  • Part II: "A Critical FCC Reform Needed to Keep the FCC Current"

 

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