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Federal Communications Commission FCC 02-179 Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of ) ) Implementation of Section 6002(b) of the ) Omnibus Budget Reconciliation Act of 1993 ) ) Annual Report and Analysis of Competitive ) Market Conditions With Respect to Commercial ) Mobile Services ) ) SEVENTH REPORT Adopted: June 13, 2002 Released: July 3, 2002 By the Commission: Commissioner Copps issuing a statement. Table of Contents Page I. INTRODUCTION ........................................................................................................................... 3 A. Overview............................................................................................................................. 3 B. Status of Competition ......................................................................................................... 4 C. Industry Development......................................................................................................... 5 II. THE CMRS INDUSTRY ................................................................................................................ 9 A. Mobile Telephony............................................................................................................... 9 1. Mobile Telephone Overview and Analysis............................................................ 9 a. Market Structure ....................................................................................... 9 b. Market Performance ............................................................................... 19 c. Digital Deployment ................................................................................ 25 d. Pricing Data and Trends ......................................................................... 28 e. Wireless/Wireline Competition .............................................................. 32 f. Geographical Comparisons: Urban vs. Rural ......................................... 36 2. Other Competitors: Resellers and Satellite Operators ......................................... 41 a. Resellers.................................................................................................. 41 b. Satellite Operators................................................................................... 42 3. International Developments................................................................................. 44 a. International Investments........................................................................ 44 b. International Comparisons...................................................................... 48 B. Mobile Data ...................................................................................................................... 55 Federal Communications Commission FCC 02-179 1. Introduction.......................................................................................................... 55 a. Domestic Developments ......................................................................... 55 b. International Developments.................................................................... 58 2. Industry Structure and Performance .................................................................... 59 a. Mobile Telephone Sector........................................................................ 59 b. Handheld Devices................................................................................... 61 c. Paging Sector.......................................................................................... 66 3. Mobile Data Services........................................................................................... 68 a. Paging ..................................................................................................... 68 b. SMS and Instant Messaging ................................................................... 68 c. Web Content ........................................................................................... 70 d. E-mail and Corporate Server Access ...................................................... 73 e. Location-Based Services......................................................................... 75 f. Short Range Data Transmissions............................................................ 78 4. Telemetry and Telematics.................................................................................... 81 III. CONCLUSION.............................................................................................................................. 83 IV. ADMINISTRATIVE MATTERS.................................................................................................. 85 APPENDIX A: Fixed Wireless Voice and Data Services APPENDIX B: Spectrum Auctions Tables APPENDIX C: Mobile Telephony Tables APPENDIX D: Mobile Data Tables APPENDIX E: Maps Federal Communications Commission FCC 02-179 I. INTRODUCTION A. Overview In 1993, Congress created the statutory classification of Commercial Mobile Services1 to promote the consistent regulation of mobile radio services that are similar in nature.2 At the same time, Congress established the promotion of competition as a fundamental goal for CMRS policy formation and regulation. To measure progress toward this goal, Congress required the Federal Communications Commission (“FCC” or “Commission”) to submit annual reports that analyze competitive conditions in the industry.3 This report is the seventh of the Commission’s annual reports4 on the state of CMRS competition.5 CMRS includes a large number of terrestrial services and some mobile satellite services.6 As in the past, this report bases its analysis on a consumer-oriented view of wireless services by focusing on specific product categories, regardless of their regulatory classification. In some cases, this includes an analysis of offerings outside the umbrella of “services” specifically designated by the Commission as CMRS.7 However, because licensees of these other spectrum-based services often compete with CMRS providers, as well as with other providers of telecommunications services, the Commission believes that it is important to consider them in the analysis. Since the release of the Sixth Report, the Commission has expanded its efforts to improve the quality and granularity of the data used to examine competition in the CMRS marketplace. For example, this report utilizes data submitted directly to the FCC, in addition to non-governmental surveys, for information on 1 Commercial Mobile Services came to be known by the Commission as the Commercial Mobile Radio Services, or “CMRS.” 2 The Omnibus Budget Reconciliation Act of 1993, Pub. L. No. 103-66, Title VI, § 6002(b), amending the Communications Act of 1934 and codified at 47 U.S.C. § 332(c). 3 Id. codified at 47 U.S.C. § 332(c)(1)(C). 4 See Implementation of Section 6002(b) of the Omnibus Budget Reconciliation Act of 1993, Annual Report and Analysis of Competitive Market Conditions with Respect to Commercial Mobile Services, Fourth Report, 14 FCC Rcd 10145 (1999) (“Fourth Report”); Implementation of Section 6002(b) of the Omnibus Budget Reconciliation Act of 1993, Annual Report and Analysis of Competitive Market Conditions with Respect to Commercial Mobile Services, Fifth Report, 15 FCC Rcd 17660 (2000) (“Fifth Report”); Implementation of Section 6002(b) of the Omnibus Budget Reconciliation Act of 1993, Annual Report and Analysis of Competitive Market Conditions with Respect to Commercial Mobile Services, Sixth Report, 16 FCC Rcd 13350 (2001) (“Sixth Report”). 5 This report, like the others before it, discusses CMRS as a whole because Congress called on the Commission to report on “competitive market conditions with respect to commercial mobile services.” 47 U.S.C. § 332 (c)(1)(C). Any individual proceeding in which the Commission defines relevant product and geographic markets, such as an application for approval of a license transfer, may present facts pointing to narrower or broader product markets than any used, suggested, or implied in this report. 6 47 C.F.R. § 20.9(10). 7 See, e.g., Section II.A.2.b, Satellite Operators, infra, which includes a discussion of satellite services that are regulated as commercial mobile radio services as well as satellite services that may compete with CMRS, even though they are not subject to the CMRS rules. Federal Communications Commission FCC 02-179 mobile telephony subscribership.8 An analysis of this information allows the Commission to estimate wireless penetration rates on a regional basis in addition to a national basis. As part of its ongoing effort to improve its annual CMRS report, the Commission also held a Public Forum in February 2002 to examine ways in which to better gather and analyze data for this report, in particular data regarding the development of rural and underserved wireless markets.9 Participants included representatives from telecommunications companies, industry associations, consumer groups, academics, consulting firms, and federal government agencies. In response, the Commission has integrated into this report the data submitted at the forum, and adopted a number of suggestions made by Forum participants on how to obtain and analyze data more effectively. In addition, the Commission will be issuing a Notice of Inquiry (“NOI”) to help gather more information for next year’s report. This report focuses on two categories of wireless services: mobile telephony10 and mobile data.11 We emphasize that these two service categories are not as clearly delineated
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