Well… of course not but some seem to think so.
The government’s latest annual report on the state of mobile wireless competition is out, and its conclusions are not what the wireless sector wanted to hear. Over the last half-decade, concentration in the industry has gone up—way up, in fact. The Federal Communications Commission says that the two dominant providers, AT&T and Verizon, now enjoy a 60 percent chunk of revenue and subscribers, “and continue to gain share.”
Their nearest rivals, T-Mobile and Sprint, serve most of that remaining 40 percent. T-Mobile enjoyed some growth over the last two years. Sprint lost subscribers.
As a consequence, the antitrust measurement gauge that the FCC uses, the Herfindahl-Hirschman Index, has jumped by almost 700 points since the agency first began using it in 2003. That’s a 32 percent increase. Some of this newer concentration is a consequence of mergers over the last few years: AT&T/Aloha, T-Mobile/Suncom, Verizon Wireless/Rural Cellular, and Verizon Wireless/Alltel.
So the wireless sector HHI is now at 2848, the agency says, which doesn’t mean diddly until you know that the Department of Justice regards a market to be “highly concentrated” if, following a merger, the HHI in a given industry throttles past 1800. The FCC typically starts to eyeball the situation after a post-merger calculation of 2880.
The cell phone industry is quite heavily regulated as are most ‘utilities.’ There are some issues that can’t really be dealt with such as the momentum of the old AT&T monopoly (which was created by the federal government). Those entities which came from it continue to hold huge amounts of capital and I don’t see any reasonable way to deal with that. It could be argued that they should be broken up I believe simply removing the existing intervention would cut them down to size should they be unable to compete with new comers.
How can we get some improved competition and therefore truly fulfill the customers desires?
- Scrap the FCC. They increase the barrier to entry to entering the field within the current technological structure, stifle technological advancement and time to market by requiring devices to undergo special testing and limiting the frequencies that can be used. The limiting of frequencies reduces the supply and therefore increases costs. It limits the reasons to research in new technologies with different frequencies since they can’t be used without great lobbying. They in effect create a cartel which normalizes service not only from a technological perspective but also their general service.
- Stop any intellectual property abuse. Don’t allow the government to proactively go after individuals on behalf of the hardware and software providers. Only enforce those terms that are clearly agreed to in the contract. This is not any different from game consoles. The owners of the console have the right to modify the hardware and it’s software as they see fit just as the service provider has the right to attempt to discover such changes and stop servicing that individual.
- Remove any service requirements, taxes, etc. that rise the barrier to entry and normalize service. If the customer is fine without the ability to make emergency calls, for example, that’s between them and the provider.
I’m sure there are other issues that could be addressed but as far as I can see the first one, the FCC, is the biggest. Removing restrictions on all forms of wireless technologies would go a long way in opening up the floor to new technologies and entrepreneur wishing to exploit those technologies to provide a better service for the customer.