The Modern FCC Competition-Policy Linchpin

The Modern FCC Competition-Policy Linchpin
October 22, 2013

Scott Cleland

Scott Cleland is a precursor: a proven thought leader with a long track record of industry firsts.... (read full bio)

When will the FCC acknowledge the obvious?

Every day many tens of millions of Americans competitively  substitute wireless for wired  communications and wired for wireless.

Everyone knows you can watch video or talk to  someone over wired or wireless technology.

Everybody using the Internet knows you can access it over wireless  or wired technology.

Every part of the mobile  Internet revolution  of smart-phones, tablets and other devices that enable users to surf, stream,  and access Internet apps is about doing wirelessly what previously was done over  a wire.

One of the most pervasively modern parts of our society today is  how we all can communicate with each other seamlessly regardless of the  technology used.

So why is it obvious to everyone but the FCC, that wireless and  wired connections are interchangeable, competitive substitutes for American  consumers?

The answer is simple and parochial.

Competitive reality threatens the FCC’s alternate reality where  successful competition is a problem, because it threatens the FCC’s historical  authority, power, and purpose.

If the FCC officially admits that American consumers competitively  substitute wired and wireless technology offerings routinely, the FCC would have  to concede that marketplace competition has been successful, leaving  once-very-powerful FCC regulators with increasingly less to do going  forward.

Just as the old adage goes, if you are a hammer all you see is  nails; and if you are a regulator all you see is regulations to promulgate.

When will the FCC’s assessment of competition join the modern  era?

Consider all the accumulating obvious facts that the FCC has to  ignore to maintain its parochial fiction that wired and wireless technologies  are not competitive substitutes.

For video, over fifty million American households watch video over  cable wires. Over 30 million watch DBS over wireless. Several million watch  video over fiber wires. A few million watch over copper wires. A few million  watch broadcast TV wirelessly. Meanwhile, tens of millions of Americans watch  video on smart-phones and tablets over  wireless every day.

For voice, Americans have long embraced cordless phones connected  to coax, copper, or fiber wires. And wireless cellular  service or  Wifi-enabled voice services over apps (like Skype or Facetime) use fiber wire  backbones.

According to the CDC, 38% of Americans have a wireless  phone only, 51%  have both wireless and wired phones, and only 9% have only a wired landline  telephone.

For broadband Internet access, Americans routinely use wireless  Wifi services connected to wired connections of coax, copper or fiber. And  wireless smart-phones, tablets and laptops serve as Wifi hotspots for other  devices too.

Those who quibble that wireless may not be as fast as some wires  miss the point.

The issue for consumers is whether wireless is fast enough for  their needs. And since most Americans have little need for speeds in excess of  what 4G wireless and fixed wireless services can deliver, wireless is fast  enough for what most Americans do most of the time, because they put a premium  on the convenience of mobility.

Practically, there is little a wire can do that wireless can’t do  and vice versa. The rare instance where they may not be competitively  substitutable increasingly is the exception not the rule.

In short, if asked, most Americans would laugh at the notion that  wired and wireless technologies were separate services that could not be  substituted or did not compete with one another every day for their attention  and business.

Prospective FCC Chairman Tom Wheeler knows better than most anyone  that wired and wireless are technological and competitive substitutes. That’s  because he twice led innovative industries proving the mass-market,  competitive-substitution case in the real world: first from wireless to wired,  and second from wired to wireless.

Mr. Wheeler led the cable industry’s association from 1979 to 1984,  when cable wires competitively substituted 25 million wireless broadcast TV  households. He pioneered a period of 360% industry growth, from 9 million to 34  million household subscribers, per NCTA.

Amazingly Mr. Wheeler did it again. He led the wireless industry’s  association from 1992 to 2003, when wireless phones competitively substituted  many tens of millions of landline wired telephones. Again he pioneered a period  of 1,645% industry growth, from 9 million to 148 million subscribers, per  CTIA.

In sum, proponents of broadband-regulation try to imagine away  competitive substitution of wired and wireless technologies and services.

They seek to unilaterally shrink market definitions to deem cable  broadband a monopoly and wireless broadband a duopoly of Verizon and AT&T,  despite the overwhelming competitive substitution and competition evidence to  the contrary.

If they can get away with denying the existence of broadband  competitive substitution, they then can try and assert that 1996 congressional  competition policy is fatally-flawed, warranting more FCC intervention relying  on the FCC’s obsolescing 1934 authority that conveniently presumes monopoly  markets.

Hope springs eternal that a data-driven, expert agency, FCC  will acknowledge the linchpin of a modern FCC competition policy: the obvious  technological and market reality of competitive substitution of wired and  wireless providers, products, and services.

 

Scott Cleland

Scott Cleland is a precursor: a proven thought leader with a long track record of industry firsts.... (read full bio)