The Competition Conundrum: Can Competition Be Bad News for the Spectrum Crunch?

by Latoya Livingston on August 19, 2012

Part II of a three-part series.

The 21st century has welcomed us with technology that has connected the world and fostered rapid innovation.  But this progress will be stymied due to the impending spectrum crunch and its effect on our continued ability to take advantage of this new digital world.

Traditionally, competition has been a hard-fought concept in capitalist societies.  In the communications realm, the idea of consumer choice and the negatives of monopolies led to the breakup of the telecommunications behemoth Ma-Bell.  However, faced with limited time and an even more limited resource – spectrum – some industry insiders have sounded the rallying cry in favor of feeding the two giant telecommunications giants over protecting their smaller rivals.  In this David vs. Goliath-esque battle for spectrum, who will ultimately triumph, and are we sure of which side is more in line with the needs and wants of the people?

The unspoken ‘Truth’

Greater investment into infrastructure and services by smaller wireless providers doesn’t necessarily translate to consumers switching carriers.  Brand loyalty and reputation are just as important to consumers as the services that the carriers can provide.  According to this year’s Brand Keys Customer Loyalty Engagement Index, AT&T and Verizon came in first and second, respectively, in a survey of wireless providers.  The rating is based on how well AT&T performed on the four drivers of loyalty in the wireless category: brand reputation, network size and connectivity, understandable plans, and customer service.  This is the third consecutive year that AT&T has won the top spot among wireless providers.  This makes sense, given the services that both AT&T and Verizon provide and the companies’ abilities to meet customers’ expectations.

This feather in their cap is supported by a recent road test that PC Magazine performed in order to compare the connectivity of the five largest wireless providers.  PC Magazine writers drove across the country and visited 30 cities using mobile devices subscribed to AT&T, MetroPCS, Sprint, T-Mobile, and Verizon Wireless to determine which carrier had the fastest mobile network in 2012.   And the results are telling:

  • Verizon’s 4G LTE network dueled with AT&T’s new 4G LTE network for supremacy.  Testers found that Verizon won 19 cities while AT&T won 10, and the two carriers tied in one.
  • To their surprise, T-Mobile came close for a non-LTE carrier.
  • However, according to PC Magazine, “The slower results in cities where AT&T and T-Mobile have less spectrum show that the spectrum crunch is real.”

This supports the conclusion that after all is said and done, wireless customers want the security in knowing that they can traverse the nation without worrying (too much) about losing their signal.  So, sometimes even with options, consumers will be wary of considering wireless carrier alternatives over their true blue standards, unless outside influences like price and availability are also factored in.

FCC Wireless Bureau Chief Rick Kaplan rightly said, “Every carrier needs spectrum … [and] we want to make sure that carriers of every size have the opportunity to bid.”  This is the right approach.  However, how does this statement translate to the reality of the imminent nature of the spectrum crunch and the ever-growing need for wireless providers to get more spectrum ready for wireless customers?  How do policymakers reconcile the spectrum crunch with the need for more competition?  Can it be reconciled?

Next time: We continue our discussion competition and the spectrum crunch by further examining consumers’ need or desire for choice versus providers’ need for spectrum in a strained time frame.

    • Latoya LivingstonLatoya Livingston is a Washington-D.C.-based attorney with years of legal experience working in the private and public sector. Currently, Attorney Livingston serves as a Senior Attorney and the Earle K. Moore Fellow at MMTC.

 

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  • Jerry Settoff

    What the author is saying it true…. I’ve been with AT&T for years and I’ve never thought of switching carriers. I’m addicted to my iPhone and wouldn’t dare consider a provider that couldn’t offer me comparable services and connectivity.

  • Blazer

    Yeah funny I never thought of it that way either…AT&T happened to be my first company as a teenager and after many years I’ve never thought of switching carriers. And I think it goes beyond brand loyalty. People generally just go with what they know, and if there are no serious problems they really have no need to change.

    Cable companies, on the other hand…I’ve switched several times, based on price changes. I wonder how much this changes depending on the industry.

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