GAO report: Wireless prices dropping, consolidation rising

Prices in the wireless industry are half of what they were a decade ago, a new government report found, but that trend has been coupled with increasing consolidation in the market.

The report, released by the Government Accountability Office, also said that coverage has improved. However, the report noted that the four Tier-1 carriers--Verizon Wireless (NYSE:VZ), AT&T Mobility (NYSE:T), Sprint Nextel (NYSE:S) and T-Mobile USA--now control 90 percent of the market.

Prices have dropped by 50 percent since 1999, the report from Congress's investigative arm said, and penetration has increased dramatically to more than 285 million Americans. Nevertheless, the report said, the FCC has to do a better job of monitoring competition in the market. The GAO said there are several factors cited by smaller carriers that inhibit competition, including exclusive deals for handsets and the state of the special-access market for backhaul.

"While views differed among stakeholders, some carriers and consumer groups perceive certain FCC wireless policies as having prevented the entry and growth of small and regional carriers, though it is difficult to assess some of these issues without better data," the report said. "In particular, many stakeholders outside of the top national carriers who we spoke with noted that policies for making spectrum available for commercial use, as well as policies governing some essential elements of wireless networks, favor large national carriers, potentially jeopardizing the competitiveness of the wireless industry."

Last December, the GAO dinged the FCC for its lack of oversight of the wireless industry.

For its part, the FCC insists it has taken proactive measures to address the GAO's concerns. Within the past year, the FCC has looked into early-termination fees, subscriber bill shock and wireless data roaming. The FCC, in its annual report on the state of wireless competition, did not say the industry is uncompetitive, but instead took a neutral stance. 

Wireless trade group CTIA argued the GAO report vindicated what it has been saying for years--that the industry is competitive. "The report also notes that rising penetration rates and a substantial increase in the number of wireless-only households means that 'carriers are now mainly competing for existing subscribers," CTIA president Steve Largent said in a statement. "With more than 91 percent of Americans being able to choose from four or more carriers, competition for subscribers is fierce."

For more:
- see the GAO report (PDF)
- see this AP article
- see this IDG News Service article
- see this PC Magazine article
- see this CTIA release

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