The US Federal Communication Commission has laid the groundwork for possible further regulation of the mobile industry, suggesting in its latest sector report that the industry has grown more concentrated and less competitive in some areas. Previous FCC annual reports have classified the mobile wireless services industry as offering "effective competition", but the FCC stopped short of applying this determination in the latest report, which covers market conditions in 2008 and 2009. For the commercial voice services sector, the report says that since the last annual report, competition has grown stronger by some of the measures previously considered, but weaker by others. The FCC also expanded its analysis this time beyond services, to broadband services, mobile devices and infrastructure. In addition to an overview of the state of the industry, the report "provides data that can form the basis for inquiries into whether policy levers could produce superior outcomes", the regulator said.
In response to the report, mobile industry group CTIA said the FCC missed a chance to show how the US mobile sector is the "envy of the world", based on its high level of investment, innovation and consumer choice. CTIA said it was "disappointed and confused as to why" the regulator did not give the sector the "effective competition" stamp and "very concerned" about the potential use of the "policy levers" referred to by the FCC.
The report finds the two largest mobile operators AT&T and Verizon Wireless have 60 percent of subscribers and revenues, after together adding 26.4 million customers in the last two years. Meanwhile the next two operators, Sprint and T-Mobile USA, lost a net 1.7 million customers in 2008 and gained only 827,000 in 2009. As a result, concentration has increased 32 percent since 2003 and 6.5 percent in the most recent year for which data is available, according to the FCC. The report also found AT&T and Verizon were the only operators with EBITDA margins over 30 percent, as well as the highest operating cash flow in the sector. The FCC furthermore highlighted declining capital investment in the sector, to around 14 percent of revenues in 2008 from 20 percent in 2005. One source reported capital investment at around USD 25 billion in both 2005 and 2008, while another shows that capital investment declined from around USD 25 billion to around USD 20 billion during the same period.
In terms of pricing, the report found that consumers in the US pay relatively more on a monthly basis than most other countries but also consume more airtime and pay lower unit rates. While the report found that voice usage fell for the first time in 11 years in 2008, it also highlighted the growing use and availability of data services and smartphones to offset this. Voice revenues stayed relatively steady compared to past periods, with average revenue per user slightly decreasing but revenue per minute slightly increasing. As of the end of 2008, 90 percent of Americans had a mobile device, and Americans used these devices to talk for an average of 709 minutes each month.
