Providers'ervice Report Analyzes Competitive Rivalry in Non-Price Factors, Such As Coverage, Service Quality and Speed of Offerings

Federal Communications Commission DA 14-1862 competition policy authorities such as the U.S. Department of Justice (DOJ)." The approach taken in this Report is consistent with the policy of the DOJ. 7. This Report first provides an analysis of the overall competitive dynamics of the industry, describing the various types of entities and their positions vis a vis one another across indices such as market sharc and various financial indicators.'" The Report then presents a broad overview of trends and developments in the mobile marlretplacc that have taken place since the Sixteenth Report, such as subscribership growth, adoption and deployment of technologies, and usage trends. While most of the developments have been along a continuum of previously noted trends, the ongoing deployment and adoption nfl,TF, networks and the technologies they have enabled, has had a particularly profound effect throughout the mobile wireless marketplace during the period under review, 8. The Report then turns to an analysis of key inputs necessary for provision of mobile service, such as spectrum resources and network infrastructure. Spectrum, in pmticular, is the single most important input that wireless providers need for the provision of service and is a finite and scarce resource. The Repr&t t examines how the distribution of spectrum in the various bands affects competition. The Report next examines developments in the ways providers compete for and attract subscribers through pricing innovations, such as the decreased reliance on traditional handset. subsidies and term contracts. As part of this analysis, the analysis looks at the differences betwccn prc and postpaid market segments as well as ways in which those segments mc Finally„ the converging. providers'ervice Report analyzes competitive rivalry in non-price factors, such as coverage, service quality and speed of offerings. 9. In addition to providing analysis of market conditions, various sections of the Report highlight Commission policies and actions designed to enhance competition — for example, by making more spectrum available to existing mobile service providers and potential ncw entrants through competitive bidding such as the upcoming AWS-3 and incentive auctions. Wc also revised our transaction review process and spectrum screen to ensure that multiple providers in each market have access to sufficient spectrum to compete effectively." The Commission's policies have been guided by the goal of promoting and prcscrving competition, which in turn has facilitated the ability of consumers to make choices among numerous service providers and leads to lower prices, improved quality, and increased innovation. 16 ll. COMPETITIVE DYNAMICS WITHIN TIIE INDIJSTRY 10. As part of our analysis of competition in the mobile wireless services industry, we begin by discussing some of the various competitive dynamics within the industry." Providers of mobile wireless services " See Px Parte Subtnission ofthe United States Department of Justice, GN Docket No. 09-51 at 11 (iiiod Jan. 4, 2010). The DOJ states, "[tjhc operative question in competition policy is whcthcr there are policy levers that can be used to produce superior outcomes, not whether the market. resembles thc textbook model ofperfect competition." , Doflar figures stated in this Report have uot been adjusted for inflation (I e., they are nominal dollars) unless stated otherwise. See In The Matter OfPolicies Regarding Mobile Spectrum 1loldings Fxpanding The Lconomic And Innovation Oppottuuities Of Spectrum Through Incentive Auctions, WT Docket No. 12 269, Report and Order (Jr(vt&tie Spectrum Holdings Report and Order), 29 FCC Rcd 6133 See Mobde Spectrum Holdings Report and Order, 29 I'CC Rcd at 6144]l 17, and at 6193$ 143. Our public interest evaluation necessarily encompasses the "broad aims of the Communications Act," which include, among otiter things, a deeply rooted preference for presetviug aud enhancing competition in relevant markets, accelerating private sector deployment of advanced services, aud generally managing the spectrum in the public interest. See, e g., A? 0'CS Order, 1 ttx 27 FCC R cd at 6464 I( 11; A Tr2 Centennfai 0& der, 24 1'CC Rcd at 13928 1( 280 We discuss in more detail in Sections fV aud V below addttioual aspects in the competitive dynamics ofthc industry when we discuss clcmcuts of price and uon-price rivalry. FRONTIER PREFILED TESTIMONY OF SUSAN A. MILLER — 26- Federal Communications Commission DA 14-1862 offer an array of mobile voice and data services, including interconnected mobile voice services, text and multimedia messaging, and mobile broadband Internet access services. Mobile wireless services also include machine-to-machine connections for fleet management systems, smart grid devices, vehicle tracking, home security systems, and other telematics services. This section presents information and data on all mobile wireless services as well as on individual services and segments where appropriate and when the data are available." A. Service Providers 1. Facilities-Based Providers 11. Facilities-based mobile wireless service providers offer mobile voice, messaging, and/or data services primarily using their own network facilities, although coverage areas usually are supplemented through roaming agreements.'acilities-based providers can operate nationwide, multi-regional, regional, or local networks. Some data and messaging services offered by facilities-based providers rely only on Internet Protocol (IP)-based, packet-switched networks, but most mobile voice services continue to connect to the Public Switched Telephone Network (PSTN) and rely on North American Numbering Plan telephone numbers. 12. Nationwide Service Providers. As of year-end 2013, there were four facilities-based mobile wireless service providers in the United States that industry observers typically describe as "nationwide." These proxdders include AT&T, 'print, '-Mobile, 'nd Verizon Wireless. Although none ofthese four providers has a network that covers the entire land area or population of the United States, each has a network that covers a significant portion of both, and therefore these four providers will be referred to as "nationwide providers" throughout this Report." Each of the four nationwide service providers has a mobile wireless network that covers in excess of 99 percent of the U.S, population." " See Sixteenth Report, 28 FCC Rcd at 3836 at I 20 - 22 'ixed wireless services are currently not included in our analysis of mobile wireless services. 'T8tT Mobility is the successor of Cingular, ajoint venture formed in October 2000 between Southwestern Bell (SWB) aud Bell South. In 2005, SWB subsidiary that included SWB's interest in Cingular merged with AT&T Corp. In 2006, AT&T acquired Bell South and therefore 100% ownership of Ciugular. As ofDecember 31, 2013, AT&T Mobility served more than 110 million subscribers." See AT&T Iuc., SEC Form 10-K, filed Feb. 21, 2014, at 2. 'print Nextel was created by the merger in 2005 of Sprint Corp. and Nextel Communications, Inc. See Tenth Report, 20 FCC Rcd at 15931 $ 60. On July 5, 2013, the FCC released an order approving the acquisition of Sprint by SoftBank Corp., aud Sprint's acquisition of 100 percent of Clearwire's stock, See Softban/t-Sprint-Cleatwires Order, 28 FCC Rcd at 9643-44 $ 1-4. T-Mobile traces its roots to May 2001,when Deutsche Telekom AG (DT) acquired in a deal worth $24 billion two US providers — VoiceStream Wireless (formerly a division of Western Wireless that had recently acquired regional GSM providers Aerial Communications in the Midwest and Omnipoiut in the Northeast), and Southern regional provider Powertel. In September 2002, they were re-branded nationally with the T-Mobile name, conforming to the brand under which DT provided mobile services overseas. See http;//www.celtnet.org.uk/telecos/T-mobile.php Most recently, on March 12, 2013, the FCC released an order approving the application of Deutsche Telekom, T-Mobile, and MetroPCS, which resulted in the creation ofT-Mobile USA as a wholly-owned subsidiary ofDeutsche Telekom . See T-Mobile-MetroPCS Order, 28 FCC Rcd at 2323-24 $ 1-2. 's ofDecember 31, 2013, Verizon owned a controlling 55% interest in Verizon Wireless aud Vodafone owned the remaining 45%. See Verizon Communications, Inc., SEC Form 10-K, filed Feb. 27, 2014, at 2. On February 21, 2014, Verizon completed its acquisition of Vodafone's 45 percent indirect interest in Verizon Wireless, so that Verizou now owns 100 percent of Verizou Wireless. See btt://neivscenter verizou com/cor orate/news-articles/2014/02-21-ac uisitiou-of- vodafoue-stake-in-vzw-com lete/ All four nationwide have spectrum in CONUS aud in HI and AK. Thus, a nationwide network covers a sufficiently large percentage of the population such that it would be inappropriate to categorize it as a regional network. FRONTIER PREF ILED TESTIMONY OF SUSAN A. MILLER -27- Federal Communications Commission DA 14-1862 13. All nationwide providers provide service directly to consumers and businesses and also provide machine-to-machine (M21vl) services. Later in the Report, detailed data and analysis are provided on the retail voice and broadband service provided by these companies. However, there are limited statistics on M2M communications. The research firm "Current Analysis" estimates that AT&T had approximately 14.7 million M2M connections, Verizon Wireless had between 7 and 9 million connections, and both Sprint and T-Mobile had 3.3 million connections. M2M has gained significant

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