WASHINGTON-Increased competition among commercial wireless carriers-owing to deregulation, more spectrum and technical flexibility-could lead to the formation of a single telecommunications market for “people on the move.”
The trend is cited in the Federal Communications Commission’s first competitive analysis of commercial mobile radio services.
The annual report, which Congress mandated in 1993 when CMRS was created to level the regulatory playing field, also predicts continued growth yet lower profits for commercial wireless firms, reduced consumer prices and fewer barriers to entry.
“The principal force driving this convergence,” the FCC said, is “the desire of carriers to meet the demand of their customers for one-stop-shopping,” the FCC said.
CMRS includes paging, cellular, specialized mobile radio, personal communications services, air-ground, maritime and mobile satellite services.
Firms offer those services to subscribers for a profit and allow customers on their wireless systems to connect to the public switched telephone network. CMRS companies are subject to deregulatory common carrier regulations.
The FCC said the fast-growing cellular industry of 25 million subscribers was more competitive than traditional telecommunications markets but, as a duopoly, still “not the model of perfect competition” and the least competitive among CMRS providers. That assessment is consistent with previous findings by the Justice Department and Government Accounting Office, the investigative arm of Congress. At the same time, the FCC said cellular prices vary across markets and are falling.
All commercial wireless sectors besides cellular were found to be competitive and lacking in market power. Federal regulators expect the introduction of next-generation digital wireless telephony, personal communications services, will provide new competition to the cellular business.
The 29-page report, which ends on a self-congratulatory note, is by no means definitive. The agency admitted more data is needed to better define markets and assess competition.
“The rise of competitive forces is now being achieved largely by the private sector,” the FCC said. And then added, “It has been made possible, however, by the Commission’s deliberate dismantling of an old regulatory structure which emphasized service classifications, and the creation of a new structure whose hallmark is flexibility, with regulation focused on protecting consumers by stimulating competitive forces.”
In addition to competing with each other, the FCC said commercial wireless carriers face potential competition from private mobile radio services, which operate under different regulations. Private wireless systems encompass 15 million transmitters and overall represent a $30 billion investment.
Wireless systems that operate for a profit but are not interconnected with the public telephone network can be regulated under private mobile radio rules.
“Competition may exist between commercial and private systems at the procurement stage,” according to the FCC, “when a business may have a mobile communications need that could be met either by subscribing to a commercial system or by investing in a private system of its own.”
United Parcel Service, it was pointed out, leased cellular frequencies rather than build a private network to provide its vehicular fleet and package delivers with data terminals.
A few FCC findings indicate the commercial wireless industry is still not the industry it sees itself becoming one day.
For example, the commission said wireless telephony is nowhere close to being competitive with landline telephone service. The wireline market is supposed to be a long-term target of PCS. Pocket phone service charges would have to drop 50 percent to be on par with landline telephone.
Despite the emphasis on regional and national markets, the FCC said most mobile communications services are provided on a local basis today.
