Category Archives: Industry Structure and Market Performance

Senator Kohl, Wireless Economics and the “Public Interest” Standard…

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Last week, Senator Herb Kohl, the powerful Chairman of the Antitrust, Competition Policy and Consumer Rights Sub-Committee of the Senate Judiciary Committee, wrote a letter to Attorney General Eric Holder and FCC Chairman Julius Genachowski informing them that he “believes” that the pending acquisition of unused spectrum by Verizon from a consortium of cable companies “presents serious competition concerns.”  In support of this position, Senator Kohl not only argues that there is excess concentration in the current wireless market (dominated by Verizon and AT&T), but that the transaction would allow a “dominant firm” to gain “access to essential inputs needed Continue Reading »

Julius Genachowski’s Speech at CTIA…

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In his recent keynote speech at the CTIA show in New Orleans, Federal Communications Commission Chairman Julius Genachowski reiterated his (and the industry’s) concern that the “demand for mobile services is on pace to exceed the capacity of our mobile networks” and, therefore, we must “tackle the capacity challenge.” The Chairman has previously foretold of a future where spectrum exhaust could make “consumers […] face slower speeds, more dropped connections, and higher prices.” Plainly, spectrum exhaust remains a key challenge for both mobile service providers and policymakers. The Chairman also took the chance in his CTIA speech to challenge what Continue Reading »

What is the Effect of Regulation on Investment?

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What is the effect of regulation on investment?  At a high level of abstraction, it is impossible to say.  Rate-of-return regulation, for example, is criticized by economists for possibly encouraging too much investment—a principle known as the Averch-Johnson Effect.  On the other hand, if a firm fears that the regulator will alter the rules in a way that reduces the ability to earn profits on large, long-term capital investments, then the incentive to make such investments is reduced.  Importantly, the issue is not, as some claim, just about “regulatory uncertainty.”  There could be great uncertainty about future rule changes, but Continue Reading »

A Response to Steven Crowley at GigaOm…

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This past February, we released a paper entitled Wireless Competition After Spectrum Exhaust.  As far as we can tell, this paper was the first serious attempt to model the effect of spectrum exhaust on mobile wireless competition.  We found that the addition of a binding capacity constraint (i.e., spectrum exhaust) to the standard Cournot model of competition reveals that that fewer—not more—firms would lead to lower price, more investment, and more jobs.  Our paper, not unexpectedly, raised a few eyebrows.  (For a CliffsNotes summary of our paper, see my February 8, 2012 blog post.) This weekend, Steven Crowley at GigaOm, Continue Reading »

Are Spectrum Caps Back?

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As the old saying goes, “be careful what you wish for.”  Well, in the case of spectrum policy, we got our wish this month when President Obama signed into law the Payroll Tax Extension bill which contained sweeping provisions to free up much-needed new commercial spectrum. While the implementation of the specific provisions of such ambitious legislation will no doubt be complex and arduous, I would like to touch on two general themes in this particular post. First, we at the Phoenix Center are very proud that our research helped contribute to get the D Block assigned to public safety Continue Reading »

Wireless Competition Under Spectrum Exhaust (CliffsNotes Edition)…

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As noted in our earlier blog posts, FCC Chairman Julius Genachowski seems to be of two minds when it comes to spectrum policy.  On one hand, he has taken great pains throughout his tenure to warn about the crucial issue of spectrum exhaust for commercial spectrum.  As also noted in our earlier blog posts, the FCC under Chairman Genachowski has at the same time expressed grave concerns about the concentrated nature of the U.S. wireless market in its CMRS Reports and, as such, has condemned large transactions such as AT&T/T-Mobile and imposed a de facto spectrum cap when it approved Continue Reading »

The Effect of Spectrum Exhaust on Mobile Market Structure and Performance…

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In an effort to address the current spectrum crunch for commercial spectrum, Congress is working on legislation to empower the FCC to hold voluntary incentive auctions to facilitate the transfer spectrum from broadcasters to mobile carriers.  FCC Chairman Julius Genachowski, among others, are complaining loudly that the House version of the bill unduly constricts the FCC’s ability to manipulate the mobile industry by excluding some bidders from the auction (primarily the nation’s two most successful wireless firms that a little more than half of all Americans have chosen as their wireless carrier).  As Larry explained in a post dated January Continue Reading »

Why GigaOM has it Wrong on the Comcast/Verizon Spectrum Deal…

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This past Sunday, Kevin Fitchard wrote a piece in GigaOm entitled If Comcast Can’t Make It in the Wireless Biz, Who Can?  In this piece, Mr. Fitchard laments that Comcast’s decision to sell its AWS spectrum to, and enter into a joint marketing agreement with, Verizon, rather than construct their own 4G network, “raises some troubling questions about the state of the U.S. wireless industry.”  According to Mr. Fitchard, “if a company with a $71 billion market cap and deep roots in the telecom service provider business can’t make a go of the wireless business, what hope is there for Continue Reading »

Final Thoughts on CES: The Rise of the Network Agnostic Device…

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While attending the Consumer Electronics Show last week, FCC Chairman Julius Genachowski observed in his speech to the assembled technology glitterati that “… virtually every new product on the CES floor is fueled by broadband Internet—by connectivity and bandwidth, wired and wireless.  If you shut off the Internet, virtually nothing on the CES floor would work.”  Certainly, the rapid innovation in edge devices is a wonderful thing.  But, such innovation may not be traveling alone.   That is, economic theory suggests this rapid increase in the number and sophistication of edge devices may be accompanied by an increase in the intensity Continue Reading »