GAO: Wireless consolidation creates challenges for rural carriers

Concerns of rural wireless carriers have captured the attention of the Government Accounting Office, which issued a report yesterday recommending that the Federal Communications Commission broaden the types of data it collects to monitor wireless competition.

The report authors expressed concern that industry consolidation has created a situation where four carriers — AT&T, Verizon, Sprint and T-Mobile — increasingly dominate the market. As of 2009, those four carriers had 90.3% of all wireless subscribers, up from 85% in 2006.

“Industry consolidation has created some challenges for small and regional carriers to remain competitive,” the GAO wrote. “These challenges include securing subscribers, making network investments and accessing handsets.”

The report, which drew upon government and industry data as well as interviews with industry sources and consumer groups, also pointed to rural carrier concerns about spectrum auction policies. “According to some small carriers and other stakeholders with whom we spoke, the size of spectrum blocks has had the effect of pricing small and regional carriers out of recent auctions, making it difficult for these carriers to enter into new markets or expand their services,” the report said.

In order to better monitor wireless competition, the GAO recommended that the FCC collect four additional types of data. These include pricing, special access rates, capital expenditures, and data about device and equipment costs.

Not surprisingly, the Rural Cellular Association issued a release praising the new report. “RCA has urged the FCC to take immediate action on three policy issues that will help enhance and preserve competition in the wireless marketplace,” said Steven K. Berry, president and CEO of the RCA, in the statement. These three actions include ending handset exclusivity, mandating data roaming and mandating interoperability across all paired bands of 700 MHz broadband spectrum.

CTIA, the wireless association representing larger wireless carriers, put its own spin on the report, honing in on the finding that wireless consumers are seeing “lower prices and better coverage.” In a statement, Steve Largent, president and CEO of CTIA, said, “It is significant that the GAO reports that the cost of wireless service in 2009,adjusted for inflation, is about 50% less than in 1999.”

Largent also took the opportunity to urge policymakers to follow through on the National Broadband Plan’s recommendation to allocate an additional 500 MHz of spectrum for commercial use within the next 10 years. 

The FCC “took no position” on GAO’s recommendations, the GAO report said.