Verizon Admits Wireless Industry Really Not Competitive, Has No Intention of Lowering Prices

Wireless

from the big-fat-show-pony dept

As we just got done stating, the wireless industry would have you believe that it doesn’t need net neutrality rules applied to wireless because the sector is just so damn competitive, and all that competition will keep companies on their very best behavior. In a recent Wireless Week editorial, former FCC Commissioner-turned-Comcast-lobbyist-turned-wireless-industry lobbyist Meredith Attwell Baker proudly proclaimed that we don’t need neutrality rules because of “82% of Americans having four or more providers competing for their broadband business.”

Except the number of major wireless carriers doesn’t really mean much when AT&T and Verizon together dominate 85% of retail sales, and have an 80% plus market share of the special access market — the lines that feed cellular towers. And while it’s true that T-Mobile has disrupted the industry of late with some more consumer friendly policies and a lot of highly-entertaining rhetoric, there’s only so much the company can do with that kind of duopoly in place. In a recent filing with the FCC, T-Mobile highlighted how AT&T charges them an arm and a leg for roaming. AT&T shot back insisting that T-Mobile should spend less time complaining and more time building their own network, but that can be hard to do when AT&T and Verizon also own the lion’s share of available spectrum.

While AT&T and Verizon fend off neutrality rules by over-stating competition, the press helps their case by repeatedly over-stating T-Mobile’s impact on the overall market (price war! price war!). If you pay closer attention, all of the industry’s big four players make it clear that despite all the noise, not much has changed. In an investor research note this week, several Jefferies analysts say they’ve spoken with Verizon Wireless, which doesn’t plan to seriously compete with T-Mobile (or a growing chorus of MVNOs) because they feel they simply don’t have to:

“According to the note, Verizon’s management “does not believe the wireless industry feels much different than in the past, contrary to the broad view that competition is intensifying to detrimental levels.” Verizon Communications CEO Lowell McAdam and Fran Shammo have made similar comments in public at recent investor conferences. “Management again highlighted that it does not intend to broadly price down its subscriber base, but instead offer discounts to at-risk customers while making surgical plan changes,” the Jefferies analysts wrote.”

And by “surgical,” Verizon means “largely cosmetic.” So far, Verizon Wireless has pretended to compete by offering superficial price reductions on only their most expensive plans — with the goal of heavily upselling users. Even T-Mobile, whose escape from AT&T’s hungry maw has resulted in a shift away from device subsidies (and toward phone financing plans that may not be any better a value), admits they’re not eager to have a price war, even if they could get roaming issues sorted out. Underneath the dull roar of their faux-punk rock CEO Tom Legere, the company’s CFO concur’s with Verizon’s take that meaningful pricing changes really haven’t occurred:

“The carrier says it has been competing more effectively by doing away with subscriber “pain points” like service contracts and international data fees. But its executives have also been signaling that they don’t plan to start a price war. “When you really analyze a lot of the pricing moves that have been made, there has not been a significant repricing,” (T-Mobile) Chief Financial Officer Braxton Carter said at a Morgan Stanley conference last week.”

It’s rather nice for them that they have the choice. As we’ve long noted, you probably don’t need net neutrality rules if you’ve got meaningful competition, but what the broadband industry generally engages in is superficial theatrics, or what I affectionately refer to as “wink wink, nod nod” competition. It’s that lack of more meaningful competition that has allowed Verizon and AT&T to engage in all manner of anti-competitive behavior, whether that’s attacking users for tethering, blocking Facetime, blocking competing mobile wallet platforms, disabling device GPS so you’ll use their more expensive services, cramming, or just good-old fashioned ripping people off with false advertising and stealth charges.

Limited competition from T-Mobile can’t magically change these realities all alone, and it certainly can’t automatically thwart the dumb, anti-competitive ideas to come. That’s not to say things can’t improve down the road (especially if Sprint can turn its fortunes around and MVNOs improve service coverage and reliability), but declaring that you don’t need consumer neutrality protections on wireless simply because four carriers exist isn’t much of an argument.

Filed Under: competition, mobile operators, net neutrality, price war, prices, wireless