By a partisan vote of 3-2, the FCC approved the agency’s twentieth annual report to Congress on the status of competition in the U.S. wireless market, concluding for the first time in eight years that effective competition exists in the national mobile service marketplace. Adopted on Tuesday at the FCC’s September open meeting, the 2017 report is the first since 2009 to make an affirmative finding in favor of competition. During each of the past eight years, the FCC declined to reach a conclusion as to whether the U.S. market was (or was not) effectively competitive, and the last three reports prepared under the leadership of former FCC Chairman Tom Wheeler were approved under delegated authority by the FCC’s Wireless Telecommunications Bureau instead of by the five-member FCC panel. Also, unlike reports from the past few years, the 2017 report focuses primarily on the market for mobile wireless services and not on the broader mobile wireless ecosystem which includes upstream and downstream segments such as network equipment, operating systems and wireless applications.
Based on what the agency described as “a variety of data from 2016 and certain information from early 2017” which includes “an analysis of those data based on various generally-accepted metrics of competition,” the FCC concluded that “competition continues to play an essential role in the mobile wireless marketplace, driving innovation and investment to the benefit of the American people and economy.” In support of that finding, the report contends that “consumer demand and output continue to increase, average prices have been falling, and service providers have enhanced the performance, coverage and capacity of their networks.” FCC Chairman Ajit Pai also remarked that, since 2016, “all four national carriers have rolled out new or improved unlimited plans” which provides additional “strong, incontrovertible evidence” of competition. As FCC Commissioner Brendan Carr agreed that these and other facts “make it abundantly clear that this is a competitive market,” FCC Commissioner Michael O’Rielly added that “more than 98 percent of Americans have a choice of three or more providers, and almost 97 percent have a choice of three or more LTE options.” Acknowledging, “the situation can be even better, and there is room for improvement,” O’Rielly pledged that the FCC will continue “to create an environment that promotes innovation and investment.”
However, both of the FCC’s Democrats—Commissioners Mignon Clyburn and Jessica Rosenworcel—disagreed vigorously with the agency’s Republican majority in casting dissenting votes against the item. Objecting to the majority’s decision to take “a decidedly myopic view of the ecosystem and instead [focus] only on ‘competition in the provision of mobile wireless services,’” Clyburn compared the decision to “a doctor looking at one organ and pronouncing a patient fit as a fiddle.” Rosenworcel faulted the majority for failing to define “effective competition”—an omission which she characterized as a “fatal flaw.” Declaring that, as part of any affirmative finding, the FCC is required by statute to define “effective competition,” Rosenworcel lamented: “we are told there is no single definition used by economists or policy authorities, we are told that upstream and downstream market segments . . . are outside the scope, and yet the core of what is ‘effective competition’ remains undefined.” Wireless industry officials welcomed the FCC’s findings, although representatives of public interest groups and rural carriers claimed that the report ignores market concentration and a lack of competitive choice in rural and other underserved areas.