**[STATEMENT OF COMMISSIONER]{.underline}**

**[MICHAEL J. COPPS]{.underline}**

**[CONCURRING]{.underline}**

June 26, 2003

*RE: Implementation of Section 6002(b) of the Omnibus Budget
Reconciliation Act of 1993; Annual Report and Analysis of Competitive
Market Conditions With Respect to Commercial Mobile Services.*

Congress requires the Commission annually to "review competitive market
conditions with respect to commercial mobile services" and "include in
its annual report an analysis of those conditions," in order to perform
an "analysis of whether or not there is effective competition." I
believe that the Commission could do far better. The Report's contains
insufficient data. Much of the limited data included are unverifiable
and are derived from sources with a stake in the outcome of our
determination. And the Commission does not establish any standard for
determining when "effective competition" exists or even to define what
"effective competition" is. These problems leave the Report vulnerable
to the charge of being results-oriented, and mean that the hard and good
work of the Commission's staff is underutilized.

The limited data that we do have show that in urban areas wireless
prices are dropping and carriers are expanding their networks. That's
great news, and I believe that better data and a better standard for
analyzing this data would yield results that would show that in many
areas the competition that characterizes the wireless market is
something to strive for as the FCC pursues wireline competition policy.
But half of the country is still served by three or fewer competitors.
And one quarter of all US counties have two or fewer competitors.

In this context, and because we need the ability to analyze competition
changes if wireless mergers occur, the nature and sources of our data
trouble me, especially in the Enron era, when the use of hard to verify
corporate data and Wall Street analysts' reports is under close
scrutiny. The Report is largely based on unverified corporate press
releases and advertisements, surveys conducted by industry lobbying
organizations, unverified Wall Street analysts' reports that may be
influenced by the stock holdings of those analysts' firms, SEC filings
that are not designed for this purpose, and newspaper reports.

I believe that the Commission must gather more independent, verified
data to do its job effectively. But the Commission does not gather any
of its own data for this report. To their credit, our staff recognized
the natural limitations of its data sources and generated some creative
solutions to counteract a subset of the inadequacies of the publicly
available sources. For instance, this year's Report was improved by data
from the Number Resource Utilization/ Forecast ("NRUF") database and the
ULS Database. Using these new sources of information, aside from
strengthening the integrity of the Report, underscores the reliability
and utility of data directly collected by the FCC, as opposed to data
generated by interested parties. But FCC-collected data is just not
available for most of the critical questions the Report addresses.

This year the Commission staff also tried to gather more information
through a NOI that asked for more data from our licensees. But as the
Report states, the Commission did not receive from licensees any new
data on subscribership, ARPU, usage, churn, or pricing, or maps of their
coverage areas. In other words, we asked industry to help us with our
effort and they said "no."

If industry will not assist us in this effort, I believe that the
Commission has a responsibility to contract with outside, independent
researchers to gather the following data. First, we need independent
data on wireless prices. We currently have no pricing data at all on
smaller markets, and rely instead on pricing in the most competitive,
biggest markets as a proxy for the least competitive, smallest markets.
This does not make sense. Second, we need reliable data on the number of
competitors in various markets. Today we treat an entire county as
served by a company if that company advertises that they serve any part
of the county, even just a highway skirting the edge of a county. We say
that consumers in a county have two competitors to choose from even if
the service areas of those competitors don't overlap at all in the
county. Again, this does not make sense. Third, we need independent,
annual data on quality of service. Quality of service, price and
investment are three critical indicia of competition, and we need to
understand all three. Specifically, we need data on dropped calls,
service unavailability, and poor connections. Without this basic
information, the Commission cannot make conclusions on competition that
withstand scrutiny.

I am not alone in thinking that we must improve. In April, the GAO
released a report that found that the Commission does not gather any
data on call quality despite its importance to consumers. The GAO Survey
states that the Commission must begin to include quality of service
analysis in it's competition report and that "\[d\]ata sources other
than consumer surveys would be useful in assessing the extent of mobile
phone quality problems; however, these data were either not available or
were of limited usefulness because they were not collected
systematically." I share the GAO's broad concern that our data
collection is inadequate and that we should make data on call quality
available to this public. If it is somehow too financially burdensome on
the Commission to gather adequate data, we should explain our plight to
Congress and ask for the needed budget resources. But this is too
important to ignore.

In considering the benefits of a more comprehensive and intensive data
gathering effort, I also want to note that the British regulatory agency
gathers far more information for the benefit of its wireless consumers
than does the FCC. While I am not at this time suggesting that we should
follow OFTEL's practice of requiring licensees to submit reports, as
part of its ongoing monitoring of competition in the British wireless
industry, OFTEL conducts quarterly surveys of mobile phone users. OFTEL
has used the information it collects on network performance and other
factors to determine whether there is effective competition among
carriers. We should find a way to gather similar data. If this is
somehow too financially burdensome on the Commission, we should explain
our plight to Congress and ask for the needed budget resources.

I also believe that we must establish a definition of "effective
competition" and a standard for determining when such competition
exists. How can we do the job Congress gave us without doing so?
Admirably, the Report includes a long list of possible indicia of
competition, including price, expansion of networks, investment levels,
churn, quality of service, subscriber growth, usage rates, and ARPU. But
merely listing possible relevant areas of inquiry is far different from
having a rigorous method of determining whether current market
characteristics mean that there is adequate competition. We don't say
whether one factor is more important than another, how they relate to
each other, or whether regional differences matter at all in the overall
competitive determination. Without more rigor, without an articulated
"effective competition" standard, the Report is of limited use in
providing an analytically solid foundation for Commission or
Congressional action.

Without adequate data and without a clear explanation of how we
determine adequate competition, I cannot support the reasoning contained
in this item, and must only concur in the result. I do want to thank the
Wireless Bureau staff, however, for another fine job this year. They
work hard, and do good work with the resources they have. The report is
very important, and your work is very important, which is why I focus so
much on it every year. Thank you.