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 STATEMENT  OF  COMMISSIONER  MICHAEL  J.  COPPS 
 CONCURRING  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 
 Reports  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  Commissions  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.  Thats  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  years  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 
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 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  dont  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  its  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  GAOs  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  OFTELs  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 
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 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  dont  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. 
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