Immediately below is the "Introduction and Summary" to the comments, without the footnotes.
These comments are submitted in response to the Commission's request for comments regarding the Communications Act Section 332(c)(1)(C)'s requirement that "[t]he Commission shall review competitive market conditions with respect to commercial mobile services and shall include in its annual report an analysis of those conditions." The focus of these comments is on the requirement that the Commission's analysis include "an analysis of whether or not there is effective competition" in the wireless market.
The purpose of the Wireless Report's analytical requirement is to keep the Commission's regulatory policies regarding wireless services in line with marketplace realities. Regulatory policy for monopolistic markets should differ dramatically from policy for vibrant competitive markets. Congress intended for the Commission's report to supply the factual foundation and analytical basis for proper regulatory policy - which, in this instance, means light-touch regulation that matches the demonstrably competitive conditions of the market.
Abundant evidence points to the dynamic state of today's wireless marketplace. For example, as of January 2014, 93.4% of the population was served by 3 or more wireless broadband providers and 82.1% of the population was served by 4 or more. As of that same date, 98.5% of the U.S. population lived in census blocks covered by a next-generation LTE wireless network, compared to just 67.5% two years before. In September 2014, 72% of all wireless subscribers had smartphones compared to just 5% two years earlier. And in 2013, per month data usage increased 50% from the year prior. These measures of advances in the wireless marketplace are unambiguous signs of effective competition.
In light of the strong evidence of wireless market competition and dynamism, the Commission's next wireless competition report should expressly affirm there is effective competition in the wireless market. Section 332(c)(1)(C) is best understood to require a yes-or-no conclusion as to "whether or not there is effective competition" for wireless services. And prior Commission reports, up to and including the Thirteenth Wireless Competition Report (2009), made such a finding of effective competition in the wireless market.
The Commission's Effective Competition Order (2015) regarding local cable markets offers an approach that should be applied in the wireless context. The next wireless competition report's analysis of whether or not there is effective competition in the market should be informed by a competing provider standard similar to that applied in the Effective Competition Order.
By analogous application of the competing provider test to the wireless market, effective competition exists where an area is: (1) served by at least two competing wireless providers, each of which offers wireless voice and broadband services to at least 50% of all households; and (2) the number of subscribers to other than the largest wireless provider in the area exceeds 15 percent of households. Needless to say, on a nationwide basis, competing wireless services far exceed the competing provider test thresholds for effective competition.
Application of the Commission's analytical approach in its Effective Competition Order to the wireless market would offer a consistent, objective basis for evaluating the market and thereby ensuring that regulatory policy matches actual market conditions. Application of that approach would also provide perspective on the strong competition that characterizes today's wireless market. Indeed the Commission's Ninth, Tenth and Eleventh Wireless Competition Reports pointed to population percentages living in counties with access to multiple providers as a key indicator of "effective competition" in the wireless market.
The Commission's analysis need not be limited to the competing provider test. To be sure, the Commission should also take a more rigorous approach to intermodal competition as part of its analysis of the wireless market. Substitute services and alternative platforms are indicators of dynamic markets. And the proper policy response to availability of substitute products and services and to intermodal competition in markets should be reductions in regulatory burdens and greater reliance on dynamic market forces to enhance consumer welfare.
Prima facie evidence of substitutability and cross-platform competition is demonstrated by consumer trends like cord-cutting for voice services and cord-shaving for video services. Over 45% of households are wireless-only. A majority of digital media consumption is now mobile-based rather than desktop-based. Yet, disturbingly, there is no evidence that the Commission's communications policy - whether involving wireless, wireline, or satellite platforms - is actually informed by wireless substitutability or cross-platform competition. The next wireless competition report should incorporate these developments into its assessment of effective competition in the wireless market and conduct future communications policymaking accordingly.
Publically available data offers strong supports for the conclusion that there is "effective competition" in the wireless market. In its Eighteenth Wireless Competition Report, the Commission should expressly affirm the existence of this effective competition for wireless services. The forthcoming report offers the Commission the opportunity to lay the groundwork for realignment of agency policy with marketplace realities.
