FCC is Losing the Wireless Future

March 14, 2011

It will be surprising if the Republican FCC Commissioners and a bipartisan majority of Congress do not oppose the FCC’s unwarranted war on wireless competition policy.

  • The FCC appears to be itching to start another political battle over competition policy with its upcoming fifteenth wireless competition report to Congress, by making another political decision devoid of supporting evidence or merit, that the wireless market does not have “effective competition.”
    • Such a fantastical political finding, helps the FCC to ignore Congress and the law yet again, and also to unilaterally impose new sweeping economic regulations on wireless, including net neutrality.

The linchpin of the FCC’s de-competition policy to restore the FCC to its pre-1996 monopoly regulation glory days, and to put the FCC in more control of the communications sector going forward, is to politically define away the existence of “effective competition,” in order to justify FCC regulation of the mobile Internet.

  • In order to justify imposing net neutrality in its December Open Internet order, the FCC stretched credulity by assuming that wireless broadband is not a competitor to wireline broadband, despite their obvious functional equivalence and the way consumers routinely substitute the services. Moreover, one quarter of households have cut the cord and substituted wireless for voice.
  • In order to justify imposing new economic regulations on wireless, it looks like the FCC may be laying the groundwork to ignore the facts that:
    • The U.S. has a more competitive wireless market than most any nation in the world with four large national wireless broadband providers: AT&T, Verizon, Sprint, T-Mobile — and a fifth, Clearwire, building out nationally;
    • The U.S. wireless market continues to grow subscribers and the U.S. wireless market has penetration of ~93%;
    • The average U.S. monthly wireless bill is falling;
    • There are more inexpensive entry point offerings for new wireless consumers than ever before;
    • Consumers have the choice of over 600 handsets; and
    • Much of the world’s wireless innovation springs from American soil.

If the FCC would only take a moment of their time and look online, read a newspaper, listen to the radio, or watch TV, they would find overwhelming and undeniable, empirical, marketing and advertising evidence of how robustly U.S. wireless providers compete for consumer’s business on price, choice, and innovation.

  • Only communications hermits could not be aware of the fierce and effective competition for consumers wireless and wireline broadband business in the U.S.
  • In addition, why would U.S. wireless companies spend more in absolute dollars than most any industry in the world to advertise to keep existing customers and to win new ones, if they were not effectively competing?

So why does the FCC apparently view competition policy as its enemy?

  • Under longstanding bipartisan competition policy;
    • Consumers, not the FCC, are in the driver’s seat picking market winners and losers and the technologies that best work for them;
    • The FCC can’t unilaterally redistribute economic growth, opportunity, market share and spectrum to Silicon Valley special interests; and
    • The FCC can’t tilt the regulatory playing field to favor free ad-based business models that undermine property rights over fee or subscription-based business models that protect property rights.

What does the FCC want to do when it defeats competition policy by politically defining competition as ineffective?

The FCC is on path to impose:

  • Full Open Internet net neutrality on wireless;
  • New data roaming price regulation where the FCC effectively sets the price of key broadband inputs; and
  • The redistribution of wireless spectrum, away from the providers that have most need for it, that can put it to highest utilization, and that are most willing and able to pay top dollar for it to lower the deficit, in order to give it for free to Silicon Valley special interests seeking government subsidies.

In sum, the FCC’s attempt to assert that the U.S. wireless market is not effectively competitive is preposterous on its face, and it is obviously not a fact-driven decision, but a politically driven decision.

Make no mistake, the real endgame behind the FCC declaring that wireless is not effectively competitive is this FCC’s apparent desire to effectively reinstitute spectrum caps to redistribute the new spectrum coming available in the future, away from those who are willing to pay for it in full at a public auction, to Silicon Valley interests who don’t want to pay for it and want FCC rules and actions that will effectively yield them multi-billion dollar subsidies of free or greatly reduced-cost spectrum.

  • Taxpayers beware. Silicon Valley interests are using the FCC to pick your pocket.
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