Yet another arm of the government is turning its attention to the wireless industry. Obviously, the Federal Communications Commission (FCC) has a long history with wireless carriers. But lately things have been a little tense with the FCC investigating carriers for their billing practices and, after Google decided to levy their own Equipment Recovery Fee on the now-defunct Nexus One, for exorbitant Early Termination Fees (ETFs). A little over a year ago, the Justice Department began a review of whether the four major carriers were abusing their power and making it more difficult for competition to enter the market, partly through exclusive handset deals. Now the Government Accountability Office (GAO) is getting involved. It’s not the first time the GAO has had something to say about the wireless industry, but their most recent concern was actually that the FCC wasn’t doing enough to protect consumers from the questionable practices of the wireless industry. Their criticism was two-pronged, saying that the FCC wasn’t doing enough to enforce consumer protection rules, or to educate consumers about available recourse when they encounter issues with their carriers. But now the GAO is turning its spotlight on the industry itself. The office released a report last week (you can read a summary here) that says wireless costs have decreased over the last decade, even as the number of wireless subscribers has grown exponentially, increasing from about 3.5 million in 1999, to 285 million by the end of 2009. The CTIA, a group that represents the wireless industry, took the report as good news. The group’s CEO, Steve Largent released a statement which said, in part:
“In finding that wireless consumers are seeing ‘lower prices and better coverage,’ today’s GAO report confirms what we’ve been saying for a long time—that the U.S. wireless industry is extremely competitive and continues to respond to increasing consumer demand by delivering real benefits for American consumers.”
But, the report didn’t say the wireless industry is competitive. In fact, it calls the industry “concentrated” because mobile phone users have fewer carriers to choose from today than they did ten years ago. According to the report, the four major carriers—Verizon, AT&T, Sprint, and T-Mobile—control approximately 90 percent of the wireless market, and make it difficult for smaller, regional companies to compete. So what happens now? Well, now it’s up to the FCC to use the data in the GAO’s report to investigate further, and possibly take action. What kind of action? That remains to be seen, but it will be quite a while before any real change comes about.
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