WASHINGTON (Reuters) - U.S. regulators launched an inquiry on Thursday into competition in the wireless industry, a step that could lead to probes of other sectors.
The Federal Communications Commission issued a notice of inquiry as part of a congressionally mandated annual assessment of the industry, which is dominated by Verizon Wireless, AT&T Inc, Sprint Nextel Corp and T-Mobile, a unit of Deutsche Telekom AG.
Verizon Wireless is a joint venture between Verizon Communications Inc and Vodafone Group Plc.
The inquiry comes as the FCC is examining exclusive deals between handset makers and carriers, such the one making AT&T the sole U.S. service provider for Apple Inc’s popular iPhone.
Exclusive deals are common among the biggest carriers but have recently faced strong opposition from rural carriers, which say they lack the clout to make deals to carry the most popular phones.
FCC Chairman Julius Genachowski said the agency is seeking data on how competition affects consumers. He also said the wireless inquiry could lay the foundation for future questions in other sectors such as cable and broadband.
“I hope the new wireless competition report will help set a standard for fact-based, analytically deep analysis of the mobile industry,” Genachowski, a Democrat, said during an open meeting with a full slate of commissioners.
“It is essential that the commission develop policies that encourage a new generation of innovators, working with new tools, on new platforms, and having an extraordinary impact on our economy and society,” he said.
The five FCC commissioners also voted unanimously in favor of issuing a separate inquiry into how the agency can help spur innovation and investment across the wireless sector, focusing on spectrum, networks, devices, applications and business models.
The agency also wants to examine if current conditions in the wireless market allow for new entrants.
The comment period for both initiatives is 30 days, with another 15 days for replies from the FCC.
The commissioners issued a third inquiry, into billing practices by communications service providers such as phone, Internet and cable companies. The public comment period for that inquiry is 45 days, with another 15 days for FCC replies.
Senator Herb Kohl, chairman of the Senate Judiciary subcommittee on antitrust, competition policy and consumer rights, welcomed the FCC inquiry into competition in wireless. He said the four national carriers control about 90 percent of the cell phone market, and AT&T and Verizon combined control 60 percent.
“Strong competition in this market is the only way to ensure that consumers in all parts of the country have access to innovative products and services at fair prices,” he said.
Kohl, a Democrat, has urged Genachowski and Christine Varney, the Justice Department’s top antitrust official, to take action to insure that the cell phone industry is fully open to competition and that barriers to entry and expansion by new competitors are removed.
Both Republican FCC commissioners, Robert McDowell and Meredith Baker, said the 30-day comment period was too short to gather data. McDowell also said competition exists in the wireless industry and prices for wireless services have dropped.
The inquiry was welcomed by Andrew Jay Schwartzman, president of Media Access Project.
“This investigation is long overdue,” he said. “The country’s four major wireless providers have enjoyed the fruits of market power for too many years, at the expense of the public’s ability to gain widespread access to low-cost mobile broadband services,” Schwartzman said.
The wireless industry’s trade group, CTIA, said the industry has the “least concentrated wireless market on the planet.”
“The wireless ecosystem — from carriers to handset manufacturers, to network providers, to operating system providers, to application developers — is evolving before our eyes, and this is not the same market that it was even three years ago,” CTIA President Steve Largent said in a statement.
Genachowski, a former tech industry executive and a law school friend of President Barack Obama, has said he wants the FCC to focus more on how the agency can empower consumers.
The inquiries approved Thursday are part of an aggressive agenda at the agency, which is also crafting a national broadband plan to extend affordable high-speed Internet service to rural areas of the country and to those who have access but have not subscribed for various reasons.
Reporting by John Poirier; Editing by Maureen Bavdek, Matthew Lewis and John Wallace