Two vastly different narratives on the state of competition in the U.S. wireless market emerge from various filings carriers and trade associations made with the FCC as it prepares its latest annual competition report. On the one hand, AT&T Mobility (NYSE: T) argues "competition has gone into overdrive." On the other, the Competitive Carriers Association wants the FCC to find that the industry is not effectively competitive, and take steps to remedy the state of the industry.
It's not surprising that there are disagreements between AT&T and Sprint (NYSE: S) or between CCA, which represents smaller carriers, and CTIA. What's notable is how starkly their visions of the industry contrast with each other.
"Mobile providers are competing fiercely on price, offering a wide variety of new data plans and promotions, such as shared data plans, equipment installment plans and offers aimed at providing incentives for customers to switch carriers," AT&T wrote in its filing. "Indeed, hardly a week goes by without a provider responding to the latest offers in the marketplace with new and better service plan options, lower prices and special promotions."
AT&T notes that price cuts are pushing down average revenue per user, and that CTIA's latest survey found a 4.4 percent decline in monthly service ARPU during 2014. "But even as consumers are paying less, they are getting more for their money," AT&T wrote. "All of the major providers are upgrading and expanding their LTE networks. Faster networks are, in turn, driving rapidly increasing usage. According to CTIA, consumers used an astonishing 4.06 trillion MB of data in 2014, up 26 percent from 2013."
The FCC "can no longer turn a blind eye to these developments in order to expand its regulatory powers," AT&T wrote. "The wireless marketplace is effectively competitive and, indeed, more fiercely competitive than ever. A candid Report to Congress would recognize that."
Meanwhile, CCA noted that smartphone adoption is increasing, and that consumers are relying more and more on wireless for breaking news, to find out about events in their community and get help in emergencies. Despite the benefits that competitive carriers bring to consumers, especially in rural areas, CCA said that consolidation has been rampant, and that Verizon Wireless (NYSE: VZ) and AT&T "have continued to acquire the spectrum of smaller rivals thereby strengthening their duopoly."
CCA thinks the FCC should "intervene on a targeted basis to facilitate opportunities to increase competition and prevent further harmful consolidation," first by determining that the "wireless marketplace is in fact not effectively competitive based on the facts before it."
CCA said the FCC should continue to ensure that smaller carriers have access to low-band and unlicensed spectrum and also take several other concrete steps. The group wants the FCC to, among other things, review competitive carriers' ability to access voice and data roaming agreements in light of the reclassification of broadband as Title II telecommunications service; move to help implement non-geographic number portability; monitor the evolution of standards as new wireless technologies emerge "to ensure that competitive carriers are not precluded from obtaining interoperable devices;" and acknowledge that carriers need assistance in efficiently deploying cell sites to more rapidly deploy new technologies.
Sprint, meanwhile, thinks the industry "currently is competitive," but that the FCC "must affirmatively pursue a pro-competitive regulatory strategy."
"Serious distortions exist at the wholesale level, particularly in the provision of special and broadband access, and continue to affect competition at the retail level," Sprint wrote. "ILEC-centric high-cost USF policies skew both intermodal and wireless competition. The lack of access to critical low-band spectrum threatens to undermine the ability of smaller carriers to continue to compete with the two dominant wireless providers."
The FCC should "promptly complete its open special access data investigation and adopt meaningful reforms to ensure that critical bottleneck access facilities are available on just and reasonable rates, terms and conditions," Sprint said. The agency should also "carefully craft and implement spectrum policies to ensure fair access to this vital resource, including by revising its flawed spectrum aggregation policies to reflect the Commission's well-developed record on the varying competitive impact of different spectrum bands."
Last year, the FCC added the vast majority of Sprint's 2.5 GHz spectrum to its "Spectrum screen" without weighting high-band spectrum differently from low-band spectrum. That could make it more difficult for Sprint to strike spectrum deals after next year's incentive auction of 600 MHz spectrum.
CTIA maintained its stance that the industry is "robustly competitive" and that in 2014 alone, carriers invested more than $32 billion in their networks, noting that 98 percent of Americans have access to LTE networks and there are 158 million LTE connections for the country's population of 318 million.
"As a result of this investment, mobile providers are offering faster and more efficient networks across more areas in the U.S," CTIA wrote. "In this competitive marketplace, consumers are the ultimate winners. As networks continue to advance, wireless carriers, equipment manufacturers and application developers are competing to bring the newest technologies for devices and applications into the hands of Americans."
- see this AT&T filing
- see this Sprint filing
- see this CCA filing
- see this CTIA filing
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