Georgetown%20University

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Georgetown University
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Congruity and Incongruity in the Evolving
Telecommunications Industry

• John W. Mayo
• Georgetown University
• mayoj_at_georgetown.edu
• [phone]

Phoenix Center 2007 Annual U.S. Telecoms
Symposium November 28th, 2007
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BackgroundThe Telecommunication Act of 1996

• the purpose of the Act is "to provide for a
  pro-competitive, de-regulatory national policy
  framework
• The FCC and states shall encourage the
  deployment on a reasonable and timely basis of
  advanced telecommunications capability to all
  Americans

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Congruity and Incongruity

• Todays emerging telecommunications debates
  create the very real prospect of incongruous
  policies that will undermine the prospect of
  accomplishing the goals of the Telecommunications
  Act
• The discipline of clear-headed economic analysis
  (and common sense) create the pathway for policy
  congruity.

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Issues of the Day

• How to maximize inter-modal competition?
• Municipal franchise reform
• Free spectrum
• Should we impose regulation on wireless?
• Force unbundling of hardware and wireless
  service?
• Force access to platform for software
  applications?
• Should we regulated broadband providers?
• Force a bit is a bit treatment within networks?
  (Net Neutrality)
• What should we do, if anything, to promote
  broadband in rural areas?
• Promoting supply to match exploding demand for
  broadband?
• One hour HD TV download 17,000 typical webpages

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The Wireless Industry

• 4-5 national carriers, regional carriers and
  numerous wireless resellers
• Yet, not unlimited choices
• the Soviet Ministries Mossberg (2007)
• a tarpit of misery, pain and destruction.
  applications provider, quoted by Wu(2007)
• a spectrum-based oligopoly, not a fiercely
  competitive market Wu (2007)

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The Soviet Ministries? Really?
Has a short-sighted and often just plain stupid
federal government permitted wireless carriers
to trap its citizens in a backward, stifling
system?
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The Economists Lens

• Monopolies raise prices, reduce output, restrict
  choices
• Competition pushes prices toward costs, pushes
  costs down, raises output, expands output and
  choices

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Soviet Ministries?
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The Emergence and Evolution of Wireless Telephony
1947 Cellular Concept developed 1983
Ameritech initiates service
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The Invention of Cellular Telephony
Text and Figure from D.H. Rings original 1947
memorandum
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Growth of Wireless Subscribers
Source Eleventh Annual Report and Analysis of
Competitive market Conditions with Respect to
Commercial Radio Services, FCC, September 29,
2006 (FCC Competition Report), and CTIAS
Semi-Annual Wireless Industry Survey Results,
2007.
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Mobile Usage 12 hours a month???!!!
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Prices in the CMRS market
Source FCC
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Mobile Telephone Prices in the US and Europe
Source FCC, Eleventh Annual CMSR Competition
Report
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Wireless as an Innovator and Competitor
Source FCC High-Speed Services for Internet
Access Status as of December 31, 2006.
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The Future of Wireless?
2007 700 hundred handsets, scores
of features
2008
The Coupe
Any Apps, any Device
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Soviet Ministries?
No!
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Where are we headed?

• Today, behavior is very competitive
• Consumers are benefiting from lower prices,
  higher speeds, expanding output
• Could market become less competitive and need
  greater regulatory oversight?
• Theoretically, yes
• Is there a need to rush to (big R) Regulate?
• Observed behavior suggests no
• Policies to enable markets (reducing barriers to
  entry)
• Available tools antitrust/regulation

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Conclusion Avoiding the Incongruities.
Anyone who has the power to make you believe
absurdities has the power to make you commit
injustices. Voltaire