How Competitive Is the Wireless Industry?

[Commentary] The New York Times published dueling Letters to the Editor concerning an Oct 26 editorial “How to Fix the Wireless Market.”

Steve Largent, President of CTIA-The Wireless Association, writes that he disagrees with the editorial “because the evidence shows that this industry is competitive and innovative.” He points to CTIA’s new usage alert initiative to argue that regulation of the industry is unnecessary. “It’s the light, effective regulatory touch imposed since Bill Clinton’s presidency that encourages the wireless industry to innovate and create products and services that Americans love. The competitive wireless ecosystem means that our members are responsive to their customers, since consumers can — and do — switch providers, devices and apps. Compared with countries like Japan, Britain or South Korea, we have more subscribers who use more voice minutes yet pay less for those minutes than any of these countries’ customers.”

Consumer Union Policy Counsel Parul Desai argues that the editorial was right on the money. “As a consumer group, we think that alerting customers before they exceed their wireless limits is a great step, and we stood up with the Federal Communications Commission and wireless companies to support that. But it’s just the tip of the iceberg. There isn’t robust competition in the industry, and consumers are paying a steep price. Consumers have little power to negotiate or shop around when choosing a wireless plan. That’s because a handful of companies control the game, saddling customers with long-term contracts, exorbitant rates, hefty penalties for switching companies and devices that are wedded to one service. To increase competition and promote better choices for consumers, policy makers should crack down on early termination fees and make it easier for consumers to take their phones to another service.”