FCC: U.S. Wireless Competition Seriously Endangered

If you thought the U.S. wireless industry was competitive, the Julius Genachowski-led FCC says, think again.

For the first time in seven years, the agency has concluded that mobile competition in America is, as Commissioner Michael Copps put it, seriously endangered by consolidation. Several carriers since 2003 have gone through intense M&A, among them AT&T Inc. (T) and Verizon Communications Inc. (VZ). AT&T bought Cingular, for example, and Verizon snapped up Alltel, becoming the nations largest wireless service provider.

The FCC outlined its reasoning in the 14th annual report covering all of 2008 and much of 2009 on wireless market trends, to Congress. Commissioners on Thursday voted 5-0 to approve the findings and send them to Capitol Hill, much to the chagrin of AT&T and Verizon. Both companies had urged the FCC in various filings to dub the wireless sector competitive. Instead, the FCCs wireless bureau noted that operator concentration jumped 32 percent since 2003 and 6.5 percent in 2008.

Genachowski said the FCC should address the issue by opening up mobile broadband spectrum. This would allow our innovative companies and American consumers to seize and benefit from the full opportunities ahead, he said in a prepared statement.

The report further said providers capital investment has declined as revenue has increased.

Both Republican commissioners disagreed with parts of the document. Meredith Atwell-Baker said at the FCCs monthly meeting on Thursday she didnt see any reason to view the wireless industry as lacking in options, and Robert McDowell said he fears the assessment will lead to more government regulation.

The study comes as the agencys consumer bureau investigates wireless bill shock. The FCC has received a number of complaints about higher-than-expected mobile charges. Commissioners could impose European-like requirements on providers, such as forcing them to send text messages to customers when a plan nears its limits.

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