Hahn, Litan, and Singer Declare U.S. Wireless Industry to Be Effectively Competitive

April 10, 2008

In a declaration submitted today to the Federal Communications Commission, Criterion President Hal Singer and co-authors Robert Hahn (AEI) and Robert Litan (Brookings) demonstrate that it is unnecessary for the FCC to develop a novel method for defining effective competition in the wireless industry. The declaration was submitted into evidence as part of the FCC’s annual evaluation of the state of competition within the U.S. Commercial Mobile Radio Services (CMRS) industry.

In its most recent Annual Report on the wireless industry, the Commission concluded “that the CMRS marketplace is effectively competitive.” Although this conclusion is consistent with earlier Commission reports as well as the literature on competitive markets generally, some suggest that the force of the Commission’s findings is undermined by a failure to establish an a priori framework for effective competition.

The declaration proceeds first by evaluating other contexts in which the FCC has assessed the competitiveness of a communications market. Next, it constructs a definition of effective competition based on the commonalities from those other regulatory proceedings, and then shows that the definition is consistent with a sampling of the relevant economic literature on the topic of effective competition. Finally, applying data exclusively from the Twelfth Report, the analysis strongly indicates the U.S. wireless market is characterized by effective competition, as the Commission has rightly concluded.

To read the declaration in full, click here.