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Consumers in more counties across the United States have more choices of wireless-phone carriers than ever before, helping drive down pricing and drive up penetration, the Federal Communications Commission (FCC) determined in its 7th annual report on wireless-industry competition.
Last year, the report concluded, "wireless operators continued to fill in gaps in their national coverage through mergers, acquisitions, license swaps and joint ventures. Parallel to this process of footprint building, mobile telephone operators continued to deploy their networks in an increasing number of markets, expand their digital networks and develop innovative pricing plans."
In summarizing research from multiple sources, the FCC said in its report that:
45 percent of the U.S. population, or 128 million people, owned a wireless phone by the end of 2001.
58 percent of Americans age 12 and older owned a wireless phone.
and 61 percent of U.S. households owned at least one wireless phone.
The 30-34-year-old group, the FCC also found, had the highest penetration rate at 69 percent (see Fig. 1).
In its own research, the FCC determined that consumers' carrier choices grew again last year (see Fig. 2). For example, 268 million people, or 94 percent of the total U.S. population, live in counties with access to three or more different operators. More than 229million people, or 80 percent of the U.S. population, live in counties with five or more operators. And 151 million people, or 53 percent of the population, live in counties in which six different operators provide service.
Despite the advances, the percentage growth in net new subscribers has fallen over the years (see Fig. 3), in part because of already high penetration rates, the FCC found in citing CTIA statistics. The percentage in 2001 fell to 17 percent from 2000's 27 percent, which itself is down significantly from 1994's 51 percent.
A major reason for high penetration rates is the declining cost of talking (see Fig. 4). In 2001, the FCC found that the average revenue per minute of service fell to 12 cents from 2000's 18 cents. The cost of talk fell every year since 1994, when the cost was 47 cents per minute.
Not surprisingly, the amount of time spent talking went up during that time from a monthly average of 140 minutes per subscriber in 1993 to 385 minutes in 2001. All of that growth came in the past three years, with average usage rising from 1998's 126 minutes to 185 minutes in 1999, 255 minutes in 2000, and 385 in 2001.
In other findings, the FCC said:
digital phones are dominant in the wireless industry. At the end of 2001, digital customers made up almost 80 percent of the industry total, up from 72 percent at the end of 2000.
mobile Internet use is growing at a quick pace. Estimates of the number of mobile Internet users at the end of 2001 range from 8 to 10 million, up from 2 to 2.5 million at the end of 2000, the FCC said.
In these numbers, the FCC includes consumers using the Web and e-mail capabilities of wireless phones, wireless-equipped PDAs and laptops, and paging carriers' pagers and two-way messaging devices.
The mobile Internet continued to evolve, the FCC said. Several phone carriers began upgrading their networks with advanced wireless network technologies, such as CDMA 2000 1xRTT and General Packet Radio Service, to offer mobile Internet access at speeds generally ranging from 25-60Kbps with maximum bursting rates up to 144Kbps.
As of March 2002, these technologies were available in U.S. counties covering about 181 million people, the FCC said.
"These developments contributed to the further convergence of mobile voice and mobile data services, which was marked by the emergence of smartphone devices that combine the organizations and data-centric features of PDAs with the voice capabilities of mobile telephones," the FCC said.
Wireline competition: Wireless is also competing increasingly with landline service, the FCC said. Data collected by a variety of analysts and polls, the FCC said, show that:
3-5 percent of wireless-phone subscribers rely on their wireless phone as their only phone.
a recent survey found 18 percent of wireless users regard their wireless phone as their primary phone.
The number of residential access lines of the three largest regional Bell companies dropped 3 percent, "in part due to wireless substitution."
and at least eight wireless carriers offer flat-rate, unlimited local calling plans in locations across 30 states.
Carrier Leap estimates that 32 percent of its subscribers use wireless as their only phone, the FCC said.
In the future, however, the rosy picture might not smell so sweet. FCC commissioner Michael Copps pointed to two dark clouds on the horizon.
First, he said, "our report shows that this competition is not uniform across the country."
Second, he continued "mergers, some of them far-reaching, are altogether likely in the wireless industry. The competition we have seen develop could yet be lost if we are not vigilant."
In highlighting inequality in competition, Copp noted that rural consumers have far less choice than urban consumers. "In 50% of the country, consumers have a choice of two or fewer wireless companies," he said. The majority or near-majority in Alaska, Arizona, Colorado, Kentucky, Missouri, Montana, Nebraska, Nevada, New Hampshire, North Dakota, South Dakota, Vermont, and West Virginia are served by two or fewer carriers, he said.
The FCC annual report, he explained, also overstates the competitive picture because it "continues to define an entire county as being served by a carrier if any part of the county is served. This means we count an entire county as served even though only a highway that runs through it is actually served. And we find competition in a county even where two apparent competitors do not venture into each other's territory to actually compete."
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