San Antonio — The Progressive Retailers Organization was at the Westin La Cantera Hill Coun
Cellular competition grew in late 2005 and the first half of 2006 despite carrier consolidation, the FCC contends in a report attributing continued competition to such factors as wireless number portability, a growing number of MVNOs (mobile virtual network operators), and the use of multiple cellular-network standards.
The competition generated a continued decline in per-minute costs to consumers, a rise in the use of wireless phones as a consumer's main phone, improved call quality, and an increasing focus by carriers on pursuing the prepaid market, the FCC said in its 11th annual report on the state of wireless competition.
“Even with one less nationwide mobile telephone carrier to choose from, U.S. consumers continue to benefit from robust competition,” the FCC said. Although the market “has become more concentrated as a result of these mergers, none of the remaining competitors has a dominant share of the market, and the market continues to behave and perform in a competitive manner,” the FCC said.
The FCC also contended that “diversified and heterogeneous services make it more difficult for carriers to coordinate their behavior so as to restrict competition with regard to pricing.”
Here are some additional observations that the FCC marshaled to reach its conclusions:
Carriers per market: The percentage of the U.S. population living in counties with three or more carriers went up by the end of 2005, but mergers dramatically reduced the percentage of the population with access to five or more carriers, the FCC found.
About 280 million people, or 98 percent of the population, live in counties with three or more operators, slightly higher than the previous year's 97 percent and higher than the 88 percent in the FCC's 2000 report, the first year for which the FCC kept these statistics. The percentage of the population living in counties with access to four or more different mobile telephone operators also rose slightly to 94 percent.
The percentage in areas with five or more competitors fell to almost 51 percent at the end of 2005 from 87 percent at the end of 2004.
Porting: The FCC called wireless number porting activity “significant” since porting's late-2003 debut, contributing to increased carrier competitiveness. About 20.4 million wireless subscribers ported their numbers to another wireless carrier between December 2003 and December 2005 at an average monthly rate of 812,000 ports.
Despite the advent of local number portability, carriers' churn rates fell slightly in 2005, largely because carriers improved service as a defensive move, the FCC said. Carriers improved subscriber-retention efforts by offering better deals on upgrade handsets, providing incentives for signing longer contracts, offering better customer service, and spending more to improve network quality, the FCC said.
Between 2004 and 2005, wireless-to-wireless porting rose only slightly from 8.9 million ports (or a monthly average of nearly 743,000) in 2004 to 10.6 million ports (or a monthly average of nearly 887,000) in 2005.
During that time, the number of consumers porting their landline number to a wireless phone went down. In 2005, the number of landline-to-wireless ports averaged 59,500 in the first half and 37,000 per month in the second half, down from first-half 2004's 76,000 and second-half 2004's 99,000.
Landline substitution: Price competition and improved call quality have led consumers to rely more on their cellular phones as their main phone, the FCC said.
A National Health Interview Survey (NHIS) found that 7.8 percent of adults lived in households with only wireless phones in the second half of 2005, up from 5.5 percent in the second half of 2004 and 3.5 percent in the second half of 2003. A separate fourth-quarter 2005 survey found that about 8 percent of U.S. households that subscribe to cellphone service had given up their landline phones, up from 5 percent in 2004 and 4 percent in 2003.
Another survey conducted in early 2006 found that 12 percent of cellphone users use cellphones as their only phone and that an additional 42 percent said they had a landline phone but used their cellphones "most."
One analyst estimates that customers in almost a third of U.S. households make at least half their long-distance calls at home from cell phones rather than from landlines.
Service costs: Thanks to pricing competition, carriers' average revenue per minute is falling. The FCC estimates that revenue per minute fell 22 percent to seven cents in the second half of 2005 from the year-ago period and by 86 percent from second-half 1994's 47 cents per minute.
Call quality: The J.D. Power and Associates 2006 Wireless Call Quality Study found the overall rate of customers experiencing a wireless call quality problem declined for a second consecutive year, with reported problems per 100 calls reaching the lowest level since the inaugural study in 2003.
The percentage of wireless calls with at least one problem declined 8 percent from 26 per 100 calls in the 2005 study to 24 per 100 calls in the 2006 study.
The number of dropped/disconnected calls decreased by 15 percent in the 2006 study, and the number of calls experiencing voice distortion decreased 25 percent.
Prepaid: As carriers scramble to make their numbers, they've increasingly turned to prepaid subscribers, the FCC said. As a result, the percentage of wireless users who subscribe to prepaid plans grew to 11 percent at the end of 2005 from 9.5 percent at the end of 2004 and 8.1 percent at the end of 2003, the FCC said in quoting one analyst.
MVNOs: More than two dozen MVNOs have sprouted up to focusing on groups of individuals who lack traditional wireless service, such as people who are credit-challenged, teenagers and those who want a cellphone for limited use, the FCC said. The resale sector accounted for approximately 6 percent of all mobile telephone subscribers at the end of June 2005.FCC's Cellular Competition Checklist*
|2000 Report||2005 Report||2006 Report|
|% population with 3 or more carrier choices||87.8%||96.9%||98%|
|% population with 4 or more carrier choices||79.8%||93.2%||93.8%|
|% population with 5 or more carrier choices||68.5%||87.3%||50.8%|
|% population with 6 or more carrier choices||34.6%||41.3%||17.6%|
|**% adults with only wireless phone and no landline*||5.5%||7.8%|
|***% cellphone users who use cellphone more than landline||NA||42%|
|+Average monthly number of landline-to-wireless ports||99,000||37,000|
|+Cellular revenue per minute||9 cents||7 cents|
|++percentage of calls with at least one problem||26 per 100||24 per 100|
|+++% of wireless users with prepaid plans||9.5%||11%|
|*Carriers per county based on FCC research in first half of each year|
** Health Interview Survey (NHIS) by National Center for Health Statistics for final six months of 2004, 2005
*** Early 2006 survey of cellular users by NPD Group, Port Washington, N.Y.
+FCC statistics for final six months of 2004 and 2005
++J.D. Power surveys. 2006 survey based on wireless-user polls conducted in October 2005 and Feb. 2006
+++Year-end statistics by Merrill Lynch Equity Research, March 24, 2006.
Source: Federal Communications Commission ©TWICE 2006