UPDATE 2-US fails to describe wireless industry as competitive

* Key phrase “effective competition” not in report

* Competition has eroded due to concentration–Copps

* FCC chair: Report not meant to be overly simplistic
(Rewrites first paragraph; adds Genachowski, Baker, AT&T
comments, details, background)

By John Poirier

WASHINGTON, May 20 (BestGrowthStock) – The U.S. Federal
Communications Commission for the first time since 2002 did not
describe the wireless industry as having “effective
competition,” a situation one senior regulator blamed on
consolidation.

The key omission was in an annual report on the state of
competition in the wireless industry. The FCC on Thursday
released the report, which covers 2008 and a portion of 2009.

The last time the FCC did not describe the industry as
having “effective competition” was in a report released in
2002.

The lack of the key phrase could set the stage for U.S.
regulators to impose policies and regulations to increase
competition for consumers who are demanding more data plans on
their mobile handsets to surf the Internet and watch videos.

It also could help shape the terms of the next set of major
auctions on spectrum for a wireless industry largely dominated
by AT&T Inc (T.N: ), Verizon Wireless, Sprint Nextel Corp (S.N: )
and Deutsche Telekom AG’s (DTEGn.DE: ) T-Mobile unit. Verizon
Wireless is a joint venture between Verizon Communications Inc
(VZ.N: ) and Vodafone Group Plc (VOD.L: ) (VOD.N: ).

Sprint and T-Mobile are seeking more spectrum to better
compete against AT&T and Verizon Wireless.

Robert Quinn, AT&T senior vice president of federal
regulatory policy, said the FCC’s decision was a dramatic break
from years of solid precedent.

“We can’t help but worry that this seems intended to
justify more regulation in a market where it is clear beyond
doubt that regulation is simply unwarranted,” Quinn said.

FCC Chairman Julius Genachowski said at an open meeting
that the report was not meant to be an “overly simplistic
yes-or-no conclusion about the overall level of competition in
this complex and dynamic ecosystem.”

CONSOLIDATION EFFECT

His colleague, Michael Copps, one of three Democrats on the
five-member panel, however was more critical of some of the
findings, calling them sobering and worrying.

“Specifically, the report confirms something I have been
warning about for years — that competition has been
dramatically eroded and is seriously endangered by continuing
consolidation and concentration in our wireless markets,” Copps
said.

“We are going to need an extra dose of vigilance going
forward and use whatever policy levers we have available to
ensure good outcomes for American consumers,” he said.

All five FCC commissioners voted in support of the report,
but the two Republicans expressed disagreement with some of the
findings.

“I believe we actually should have made an affirmative
finding of a competitive market,” Republican FCC member
Meredith Attwell Baker said.

The industry has seen an explosive demand from consumers
who increasingly surf the Web on mobile devices, especially
smartphones. Demand is increasing faster for data than for
voice services.

In August, the FCC began an inquiry into competition in the
wireless industry. Under recommendations made in the National
Broadband Plan, the agency is considering ways to provide more
airwaves to wireless companies to meet a growing demand for
mobile devices.

Chris Riley, a policy counsel at public interest group Free
Press, praised the FCC for omitting the key phrase, but said
the agency should have gone further.

“The market is largely controlled by two companies (AT&T
and Verizon), and it will not dig itself out of this mess and
magically produce competition,” Riley said. “Oversight and
reform are badly needed.”

Investing Advice

(Reporting by John Poirier; editing by John Wallace and Lisa
Von Ahn)

UPDATE 2-US fails to describe wireless industry as competitive