A new report would seem to bolster T-Mobile’s plan to merge with Sprint, arguing that any analysis of the market conditions for wireless services by federal agencies should include Wi-Fi.
The report, authored by Harold Furchtgott-Roth of Furchtgott-Roth Economic Enterprises, director of the Hudson Institute’s Center for the Economics of the Internet and a former FCC commissioner, was underwritten by T-Mobile but states that the opinions are those of the author alone.
Furchtgott-Roth explained in an interview that he has been looking at the market for communications services for quite some time and over the years, people have come to use various communications services interchangeably. Yet antitrust authorities continue to use the same definitions that were created around 2008, which has implications not only in merger reviews but also for subjects like net neutrality and spectrum decisions.
“I think it’s something the antitrust authorities should revisit and think more carefully about what really is the right market definition,” he said.
When reviewing proposed mergers, for example, the FCC relies on a product definition—“mobile telephony/broadband services”—that doesn’t account for the heightened role of Wi-Fi in the competitive marketplace. Since the FCC adopted its market definition, Wi-Fi has become much more common. Cable providers are challenging wireless carriers with Wi-Fi and wireless services, and consumers often choose Wi-Fi in fixed public places when they want to use the internet.
Roughly 75% to 85% of wireless traffic now goes over Wi-Fi, and when consumers enter a hotel, airport or other public place, the first thing they typically do is ask for the Wi-Fi password, Furchtgott-Roth said.
The report notes that the current usage of the term “mobile” in the market definition of “mobile telephony/broadband services” is dated at best and quite likely inappropriate for most wireless devices. “Mobile” communications are constantly in competition with both fixed and nomadic communications services, and no one offers a purely “mobile” service that can’t be operated in a fixed location, the report states.
Even with 5G, consumers will still offload traffic onto Wi-Fi networks. The vast majority of mobile communications devices are both cellular and Wi-Fi capable. Cisco sees 5G technology requiring as much, if not more, offload than prior wireless technology generations, and cloud computing, IoT, satellite services and autonomous vehicles do not appear to lead to a reduction in demand for Wi-Fi. “If anything, increasing demand for communications services generally will likely lead to greater demand for services such as Wi-Fi,” the report says.