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FCC Evaluates U.S. Wireless Competition

While the Federal Communications Commission's latest report on wireless competition in the United States shows that more Americans have access to multiple carrier options than ever before, it also shows that competition for services is still more highly concentrated than it was two years ago.

According to the report, 98% of Americans in 2006 had three or more carriers offering services in their counties, while nearly 94% had four or more carriers offering services in their counties. However, the number of Americans who had access to five or more carriers in their county in 2006 remained relatively low compared with recent years, with roughly 59% having five or more carriers offering service.

The percentage of Americans who had access to five or more carriers in their counties stood at about 87% in 2004, before plummeting down to around 51% in 2005. Three major telecom mergers occurred between the start of 2004 and the end of 2005, including the Sprint-Nextel merger, the Verizon-MCI merger and the AT&T-Cingular merger.

FCC Chair Pleased

But even with competition more highly concentrated, FCC chairman Kevin Martin said that he was pleased to see more Americans than ever had access to multiple carrier options in 2006. He also praised many carriers for voluntarily offering to give their customers open-access options to that would let them connect to their networks using any device of their choosing. These options, he said, would foster more competition and would further benefit consumers.

"As I noted when we adopted open network rules for the ongoing 700MHz spectrum auction, wireless customers should be able to use the device of their choice and download whatever software they want onto it," he said. "I continue to believe that more openness -- at the network, device and application level -- helps foster innovation and enhances consumers' freedom and choice in purchasing wireless service."

Commissioner Michael Copps said that although FCC's latest wireless competition report was more helpful than past reports, he was still concerned about how well the FCC defines "effective competition." Although Copps didn't say specifically what his concerns were with the report's methodology, the FCC's report does contain several caveats in its data.

For instance, the report says that in order to be considered "covering" a particular county, "an operator need only be offering any service in a portion of that county." The report also notes that different operators that are counted as serving a particular county may not serve every part of that county, meaning that a provider could be counted as serving a county with only a small amount of coverage.

Overall, the report found that there were 242 million wireless subscribers in the United States in 2006, up from 213 million in 2005. The cost of mobile voice calls remained steady through 2006, with subscribers paying an average of 7 cents per minute, the same as in 2005. The average price per minute of mobile voice calls has steadily declined for the past five years, declining by a total of 4 cents between 2002 and 2006, the FCC reports.

Minutes Used Per Month

Additionally, the number of minutes used per month by subscriber in 2006 remained virtually unchanged from in 2005, increasing from 708 to 714. The increase in monthly subscriber minutes between 2005 and 2006 markets the smallest yearly increase in monthly minutes for the past five years: between 2004 and 2005, for instance, the average monthly minutes used by subscribers went from 584 to 708. The report also found that the use of text messages has continued to grow rapidly, as the 18.71 billion text messages sent in 2006 are nearly double the 9.76 billion sent in 2005.

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