A new government report on competition in the wireless sector has exposed that AT&T and Verizon have a virtual duopoly with Sprint and TMobile picking up the slack.
The government’s latest annual report on the state of mobile wireless competition is out, and its conclusions are not what the wireless sector wanted to hear. Over the last half-decade, concentration in the industry has gone up—way up, in fact. The Federal Communications Commission says that the two dominant providers, AT&T and Verizon, now enjoy a 60 percent chunk of revenue and subscribers, “and continue to gain share.”
Their nearest rivals, T-Mobile and Sprint, serve most of that remaining 40 percent. T-Mobile enjoyed some growth over the last two years. Sprint lost subscribers.
As a consequence, the antitrust measurement gauge that the FCC uses, the Herfindahl-Hirschman Index, has jumped by almost 700 points since the agency first began using it in 2003. That’s a 32 percent increase. Some of this newer concentration is a consequence of mergers over the last few years: AT&T/Aloha, T-Mobile/Suncom, Verizon Wireless/Rural Cellular, and Verizon Wireless/Alltel.
So the wireless sector HHI is now at 2848, the agency says, which doesn’t mean diddly until you know that the Department of Justice regards a market to be “highly concentrated” if, following a merger, the HHI in a given industry throttles past 1800. The FCC typically starts to eyeball the situation after a post-merger calculation of 2880.
