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Politically Divided FCC finds Wireless Market Competitive

Posted by Andrew Regitsky

Sep 29, 2017 10:00:00 AM

iphone_questionmark.jpgI can't be the only one to miss the days when one had confidence that a key FCC decision would be based on facts and analysis rather than political payback and subterfuge, can I? Because these constantly flawed 3-2 FCC decisions are getting old and extremely annoying.

This week in its latest partisan decision the Commission approved its 20th Annual Mobile Wireless Competition Report by concluding that the wireless market is competitive. This decision bothered me in several ways. First, it is clear that in reaching its conclusion, the current FCC was paying back the previous FCC for refusing to make such a finding. Second, by refusing to define "effective competition," and failing to conduct an extensive analysis of the market it is obvious that the outcome of this "investigation" was pre-ordained. Third, and most significantly, by concluding that the wireless market is working so well that it does not need onerous regulation, this Report could pave the way for the FCC supporting the rumored merger between Sprint and T-Mobile. It could also be used as justification for a rollback of the net neutrality rules. Thus, this Report instead of being a true snapshot of the wireless market, should mostly be seen as a stepping stone for the Commission to reach its deregulatory goals in other proceedings.

That being said, it is a good thing that the Commission was permitted to make any finding regarding the wireless market. For some inexplicable reason, the Obama-era FCC refused to allow Commissioners to vote on this issue at all by pawning responsibility for the Report on the Wireless Telecommunications Bureau.

According to FCC Chairman Pai,

[W]e return to following the law—and by that, I mean the specific direction set out for us by Congress to include in this report an analysis of whether there is effective competition in the wireless marketplace. Unfortunately, the prior six reports have dodged this question. Indeed, the last time this report included a finding of whether the wireless market was competitive was our 13th Report, way back in 2009...It’s been eight long years since the FCC has done what Congress directed us to do. Today, we are finally getting back on track. (FCC Docket 17-69, 20th Annual Report, Statement of Ajit Pai).

While a return to law is much appreciated, the two Democrats on the Commission are correct in their criticisms of this Report.

Commissioner Jessica Rosenworcel ripped into the Republican Commissioners for their failure to define effective competition as a way of ensuring ensure their pre-ordained outcome:

In the Communications Act, Congress charged the Commission with reporting annually on the state of commercial mobile service markets. As part of this assessment, the agency is tasked with an analysis of whether or not there is “effective competition.” Simple enough. But to make this determination in the affirmative—as this report does—requires that the Commission define “effective competition.” On this account it fails. Instead of a definition of this essential threshold, we have all manner of apologies and admissions. We are told there is no single definition used by economists or policy authorities. We are told that upstream and downstream market segments involving network equipment, operating systems, and applications are outside the scope, and yet the core of what is “effective competition” remains undefined. In short, it’s hard. Well, tough. Congress creates new terms in legislation all the time and it’s up to expert agencies like this one to define them. But our failure to do so is inexcusable if the Commission wants desperately to conclude, as it does here, that “effective competition” exists. (Dissenting Statement of Jessica Rosenworcel).

Commissioner Mignon Clyburn is also correct when she noted that this Report will be used as justification for the elimination of the existing net neutrality rules:

 [T]he discussion of investment in the mobile wireless services industry is fundamentally flawed. By highlighting a decrease in investment between 2015 and 2016, this section was clearly written to support the false narrative that the 2015 Open Internet Order deterred wireless carriers from investing in their networks. Despite my office’s request, this Report does not include data from the 19th, 18th, and 16th Competition Reports, which showed investment from all commercial wireless companies declined from $33.1 billion in 2013 to $30.9 billion in 2015. In case you missed it, those reports predated the 2015 Order. Also, despite my request, this report does not include CTIA’s investment data indicating that investment per consumer measurements declined from 2006 to 2009.  Just in case you missed it again, that predates the 2015 and 2010 Open Internet Orders. These statistics demonstrate that there must be other factors, other than the Open Internet Orders, that account for why wireless carriers decreased their investment in their networks. (Dissenting Statement of Mignon Clyburn).

This Report is illustrative of what bothers me most about this FCC. Its constant use of incomplete and selective data to "prove" an outcome it intends to find. That was obvious in the Business Data Services proceeding when it used a laughable "competitive market" test to find most markets competitive in order to deregulate ILEC special access services. The agency did it again in its Net Neutrality Notice of Proposed Rulemaking when it used selective data to "demonstrate" investment has fallen since broadband Internet access service was classified as a telecommunications service in 2015. It does so in the instant proceeding by failing to conduct a thorough analysis of the wireless market before drawing its inevitable conclusion.

The Obama-era FCC was not to my taste because it depended too much on government regulations even markets were working well. However, this FCC is no improvement, and its decisions based on selective data will ensure years of litigation for our industry.

By Andy Regitsky, CCMI


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Topics: regulatory updates, FCC, Net Neutrality, wireless