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Before the FEDERAL COMMUNICATIONS COMMISSION Washington, DC 20554

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Before the FEDERAL COMMUNICATIONS COMMISSION Washington, DC 20554 Before the FEDERAL COMMUNICATIONS COMMISSION Washington, DC 20554 ) In the Matter of ) ) Implementation of Section 6002(b) of the ) Omnibus Budget Reconciliation Act of 1993 ) ) WT Docket No. 09-66 Annual Report and Analysis of Competitive ) Market Conditions with Respect to Mobile ) Wireless Including Commercial Mobile ) Services ) ) COMMENTS OF AT&T INC. Michael K. Kellogg Michael P. Goggin Colin S. Stretch Jack S. Zinman Evan T. Leo Gary L. Phillips Kelly P. Dunbar Paul K. Mancini KELLOGG, HUBER, HANSEN, TODD, Wayne Watts EVANS & FIGEL, PLLC AT&T Inc. 1615 M Street, N.W., Suite 400 1120 20th Street, N.W. Washington, D.C. 20036 Washington, D.C. 20036 202-326-7900 202-457-2055 September 30, 2009 Comments of AT&T Inc. WT Docket No. 09-66 September 30, 2009 TABLE OF CONTENTS INTRODUCTION AND SUMMARY ............................................................................................1 I. EACH RETAIL SEGMENT IN THE WIRELESS “ECOSYSTEM” IS CHARACTERIZED BY COMPETITION, CONSUMER CHOICE, AND ROBUST INVESTMENT ....................................................................................................................8 A. The Wireless Industry As a Whole Is Thriving by Giving Consumers Unparalleled and Unprecedented Choice .............................................................. 10 B. Every Consumer Segment Is Characterized by Robust Competition ................... 19 1. Retail Service Market Segments Are Highly Competitive ........................21 2. Device Market Segments Are Highly Competitive ...................................41 3. Additional “Edge” Market Segments Are Highly Competitive .................61 C. Wireless Competition Extends Across All Geographic Market Segments, Urban and Rural Alike ..................................................................................................... 70 II. THE SPECTRUM AND NON-SPECTRUM INPUTS IN THE MOBILE VALUE CHAIN ARE HIGHLY COMPETITIVE ..........................................................................75 A. The Commission Should Take Aggressive Steps To Make More Spectrum Available Under a Regime That Encourages Its Efficient Use ............................. 76 B. The Commission Should Encourage the Competitive Supply of Backhaul ......... 83 C. The Current Roaming Framework Facilitates Effective Competition .................. 89 CONCLUSION ..............................................................................................................................94 ATTACHMENT: Declaration of Robert D. Willig Comments of AT&T Inc. WT Docket No. 09-66 September 30, 2009 Before the FEDERAL COMMUNICATIONS COMMISSION Washington, DC 20554 ) In the Matter of ) ) Implementation of Section 6002(b) of the ) Omnibus Budget Reconciliation Act of 1993 ) ) WT Docket No. 09-66 Annual Report and Analysis of Competitive ) Market Conditions with Respect to Mobile ) Wireless Including Commercial Mobile ) Services ) COMMENTS OF AT&T INC. Pursuant to the Notice of Inquiry (“NOI”) released by the Commission on August 27, 2009,1 AT&T Inc. (“AT&T”) submits the following comments. INTRODUCTION AND SUMMARY The Commission issued the NOI to expand the record developed in this proceeding several months ago, in order “to increase [its] understanding of the various segments that are part of the mobile wireless ‘ecosystem’” and “to understand the ways in which competition in the provision of mobile wireless services affects adjacent markets.” NOI ¶ 7. Just as AT&T’s earlier comments demonstrated that competition for mobile wireless services themselves is intense, the same is true of competition for each link in the so-called “mobile ‘value chain.’” Id. ¶ 9. U.S. wireless consumers enjoy choice at every level, from wireless providers, to service plans, to handsets and other devices, to operating systems, to applications. The U.S. wireless industry is leading the world in the deployment of next-generation broadband wireless networks, 1 Notice of Inquiry, Implementation of Section 6002(b) of the Omnibus Budget Reconciliation Act of 1993; Annual Report and Analysis of Competitive Market Conditions With Respect to Mobile Wireless including Commercial Mobile Services, WT Docket No. 09-66, FCC 09-67 (rel. Aug. 27, 2009) (“NOI”). Comments of AT&T Inc. WT Docket No. 09-66 September 30, 2009 in smartphones and other devices that take advantage of these networks, and in other types of innovation, all of which has propelled massive investment and growth at a time when other industries are struggling to remain afloat. This array of new products and services, in turn, has generated unprecedented and ever increasing usage, necessitating still more network capacity and, hence, still more investment and innovation in network infrastructure. As explained in detail in AT&T’s comments in response to the Wireless Innovation NOI,2 AT&T is at the forefront of this virtuous cycle of innovation and investment that has led to unparalleled and unprecedented competition and choice for consumers. AT&T has made massive investments – in 2008, more than any other public company in America – to deliver consumers next-generation communications services, and much of this investment has focused on wireless services. Thus, AT&T is expanding the availability and quality of its 3G mobile broadband network, while at the same time investing heavily in 4G Long-Term Evolution (“LTE”) technology. With the introduction of the iPhone, AT&T led the smartphone revolution that has given consumers a greater mobile experience than ever before and that is rapidly transforming the industry as well as the lives of Americans of every variety from coast to coast. More recently, AT&T introduced netbooks, which are extending the industry and consumers to yet another frontier, and it continues to pioneer the use of wireless technologies in industries such as health and energy. AT&T now offers consumers more than 100 different devices, and it has been a leader in creating a robust platform for the development of applications for these devices. AT&T also continues to be a leader in traditional wireless services, offering consumers 2 Notice of Inquiry, Fostering Innovation and Investment in the Wireless Communications Market; A National Broadband Plan for Our Future, GN Docket Nos. 09-157, 09-51, FCC 09-66 (rel. Aug. 27, 2009) (“Wireless Innovation NOI”). 2 Comments of AT&T Inc. WT Docket No. 09-66 September 30, 2009 competitive pricing plans and flexible service arrangements. In sum, AT&T’s conduct alone is overwhelming proof that there is intense rivalry in the industry, which is forcing carriers to invest, innovate, and respond rapidly to the needs of consumers. But, of course, the Commission need not and should not look just at AT&T. Over the last two decades, this Commission, marching in lock step with Congress, has taken aggressive steps to ensure a pro-competitive, de-regulatory environment for wireless that has facilitated investment and enabled competitive forces to drive innovation and consumer welfare throughout the entire industry. And the results have been outstanding. Each year since 1993 – since the Commission was first tasked by Congress with reviewing, on an annual basis, “competitive market conditions with respect to commercial mobile services”3 – the Commission has carefully examined market structure, provider conduct, consumer behavior, and market performance, and each year it has found escalating growth, declining prices, breakneck innovation, ever-increasing capital investment, and enormous contributions to consumer welfare. The record compiled earlier this year in this proceeding, moreover, again demonstrated that in every respect the wireless industry in the United States remains the most competitive segment in the U.S. telecommunications industry and the envy of the world. Now, the Commission seeks to broaden its inquiry beyond its traditional framework, to investigate not just competition in wireless service itself, but also the conditions in the edge markets (such as devices, operating systems, and applications) that rely on wireless service, as well as in the inputs (such as spectrum and special access) necessary to provide wireless service. This broader review – albeit unnecessary to fulfill the Commission’s statutory mandate – 3 47 U.S.C. § 332(c)(1)(C). 3 Comments of AT&T Inc. WT Docket No. 09-66 September 30, 2009 underscores the vibrantly competitive nature of the wireless industry and highlights the enormous consumer welfare gains that this competition generates. Most Americans can choose from among at least five facilities-based carriers, and almost all can choose from among at least three. The U.S. wireless industry is the least concentrated of the 26 major industrialized countries that make up the Organization for Economic Co-Operation and Development (“OECD”), and a recent study by the U.K.’s telecommunications regulator, which touts the U.K as the most competitive wireless market in Europe, uses metrics that demonstrate the U.S. is far more competitive. Consumer choice is likewise the defining feature of wireless “edge” markets: U.S. consumers can choose from over 600 handsets from more than 30 manufacturers, from feature phones used primarily for voice and texting, to “qwerty” devices for heavy texting and email, to smartphones for more varied broadband applications. Consumers can pick phones that run the operating system of their choice, and they have access to tens of thousands of applications from a range of “application stores.” The volume of applications consumers have downloaded
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