Federal Communications Commission FCC 06-142 Before the Federal

Federal Communications Commission FCC 06-142 Before the Federal

Federal Communications Commission FCC 06-142 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 WT Docket No. 06-17 ) (Terminated) ) Annual Report and Analysis of Competitive ) Market Conditions With Respect to ) Commercial Mobile Services ) ELEVENTH REPORT Adopted: September 26, 2006 Released: September 29, 2006 By the Commission: Chairman Martin, Commissioners Tate and McDowell issuing separate statements; Commissioner Copps concurring and issuing a statement. TABLE OF CONTENTS Heading Paragraph # I. EXECUTIVE SUMMARY.......................................................................................................1 II. INTRODUCTION .....................................................................................................................6 A. Background..........................................................................................................................6 B. Sources of Information ........................................................................................................9 C. Structure of Report.............................................................................................................16 III. MOBILE TELECOMMUNICATIONS MARKET STRUCTURE ........................................19 A. Services and Product Market Definition............................................................................21 B. Overview of Service Providers ..........................................................................................25 1. Facilities-Based Mobile Telephone Providers.............................................................25 2. Resale/MVNO Providers.............................................................................................27 3. Data-Only Providers ....................................................................................................29 4. Satellite Providers........................................................................................................35 C. Horizontal Concentration...................................................................................................36 1. Number of Mobile Telephone Competitors.................................................................38 2. Concentration Measures for Mobile Telephone Services............................................42 3. International Comparison of Mobile Market Concentration .......................................48 D. Consolidation and Exit.......................................................................................................53 1. Sales and Swaps...........................................................................................................56 Federal Communications Commission FCC 06-142 2. Affiliations ...................................................................................................................58 E. Entry Conditions and Potential Barriers to Entry ..............................................................59 1. Spectrum Allocation and Assignment .........................................................................60 a. Cellular, Broadband PCS, and SMR......................................................................61 b. 800 MHz Band Reconfiguration and 1.9 GHz Spectrum Exchange .....................66 c. Narrowband Spectrum...........................................................................................67 d. 700 MHz Bands .....................................................................................................69 e. Advanced Wireless Services..................................................................................73 f. Broadband Radio Service ......................................................................................78 2. Other Potential Barriers to Entry .................................................................................83 F. Rural Markets.....................................................................................................................85 1. Geographical Comparisons: Urban vs. Rural ..............................................................85 2. Rural Competition........................................................................................................86 3. Conclusion ...................................................................................................................88 IV. CARRIER CONDUCT IN THE MOBILE TELECOMMUNICATIONS MARKET............89 A. Price Rivalry......................................................................................................................90 1. Developments in Mobile Telephone Pricing Plans......................................................90 2. Prepaid Service............................................................................................................93 3. Mobile Data Pricing.....................................................................................................95 B. Non-Price Rivalry ............................................................................................................101 1. Technology Deployment and Upgrades.....................................................................102 a. Overview..............................................................................................................102 b. Background on Network Design and Technology...............................................105 c. Technology Choices and Upgrades of Mobile Telephone Carriers.....................109 d. Coverage by Technology Type............................................................................115 e. Data-Only Networks and Technology Deployment ............................................118 2. Capital Expenditures..................................................................................................124 3. Roaming.....................................................................................................................125 4. Advertising and Marketing........................................................................................128 5. Quality of Service ......................................................................................................130 6. Mobile Data Services and Applications.....................................................................136 V. CONSUMER BEHAVIOR IN THE MOBILE TELECOMMUNICATIONS MARKET...............................................................................................................................141 A. Access to Information on Mobile Telecommunications Services ...................................142 B. Consumer Ability to Switch Service Providers ...............................................................144 1. Churn..........................................................................................................................144 2. Local Number Portability ..........................................................................................146 VI. MOBILE TELECOMMUNICATIONS MARKET PERFORMANCE................................149 A. Pricing Levels and Trends ...............................................................................................150 1. Pricing Trends............................................................................................................150 2. Average Revenue Per Unit.........................................................................................155 B. Quantity of Services Purchased .......................................................................................157 1. Subscriber Growth.....................................................................................................157 a. Mobile Telephony................................................................................................157 b. Mobile Data.........................................................................................................162 c. Satellite ................................................................................................................167 2 Federal Communications Commission FCC 06-142 2. Minutes of Use...........................................................................................................168 3. Mobile Data Usage ....................................................................................................170 4. Sub-National Penetration Rates .................................................................................173 C. Quality of Service ............................................................................................................175 D. International Comparisons...............................................................................................189 1. Mobile Voice.............................................................................................................189 2. Mobile Data...............................................................................................................196 VII. INTERMODAL ISSUES .....................................................................................................204 A. Wireless – Wireline Competition.....................................................................................204 1. Wireless Substitution .................................................................................................205 2. Wireless Alternatives.................................................................................................208

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