FCC paves way for wireless mergers, net neutrality repeal

For the first time in eight years, the Federal Communications Commission has declared the mobile wireless market to be competitive.

The findings were outlined in the FCC's 20th annual report on the state of the mobile wireless market. The FCC is required by Congress to examine the state of competition in the wireless market each year. Previous reports, under Democratic chairs of the agency during former President Barack Obama's administration, declined to make a finding on whether the market benefits from effective competition. Previous reports indicated the market was highly concentrated according to antitrust standards. 

The FCC had declared the market competitive during George W. Bush's presidency. And this report, under another Republican administration, returns to that finding.

The report comes as T-Mobile and Sprint are reportedly engaged in merger discussions, and it could play a role in the FCC's review of the merger once it's announced. Because the wireless carriers would have to transfer FCC spectrum licenses, the agency would have jurisdiction to determine if the merger is in the public interest. The FCC opposed T-Mobile's proposed sale to AT&T in 2011 stating the merger would bring "significant harms to competition" if the number of national players was reduced from four to three carriers.

The competition report could also be used to back up the FCC's plans to repeal its 2015 net neutrality rules. In May, FCC Chairman Ajit Pai introduced a proposal to roll back the rules, which reclassify broadband and wireless services as a utility. The rules are meant to prevent broadband providers from exerting too much control over the internet. But broadband and wireless companies argue the new classification imposes outdated rules that were designed for the telephone monopoly. The FCC is currently reviewing comments on the proposal, and the competition report could be used to bolster the argument that strict regulations are unnecessary.

Unlike prior reports, the FCC didn't evaluate the entire wireless ecosystem and instead based its findings on certain factors, such as falling prices and investment in wireless networks. This led the two Democrats on the FCC to oppose the report's findings. Democratic commissioner Mignon Clyburn dissented from the report and called the FCC's conclusion "myopic."

"I can neither understand nor condone why the majority used a truncated analysis to reach this conclusion," she said in a statement. "This is like a doctor looking at one organ and pronouncing a patient fit as a fiddle."

Democrat Jessica Rosenworcel also dissented and said the report failed to define what effective competition actually is. An "I know it when I see it" standard is not good enough, she said. Rosenworcel also cautioned against using this report to allow mergers that would reduce competition.

"While this report celebrates the presence of four nationwide wireless providers, let's be mindful that a transaction may soon be announced that seeks to combine two of these four," Rosenworcel said. "While the commission should not prejudge what is not yet before us, I think this agency sticks its collective head in the sand by issuing this report and implying, 'move along, there is nothing to see here.'"

Wireless carriers said they were encouraged by the report and applauded the agency for its return to "data-driven analysis."

"Today, new leadership at the FCC released a report acknowledging what American consumers have known for years that they are in the driver's seat of the mobile economy," Will Johnson, a Verizon senior vice president, said in a statement.