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Federal Communications Commission

DA 14-1862

Before the
Federal Communications Commission
Washington, D.C. 20554

In the Matter of
Implementation of Section 6002(b) of the
Omnibus Budget Reconciliation Act of 1993
Annual Report and Analysis of Competitive
Market Conditions With Respect to Mobile
Wireless, Including Commercial Mobile Services

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WT Docket No. 13-135

SEVENTEENTH REPORT

Adopted: December 18, 2014

Released: December 18, 2014

By the Chief, Wireless Telecommunications Bureau:
TABLE OF CONTENTS
Heading

Paragraph #

I. INTRODUCTION .................................................................................................................................. 1
II. COMPETITIVE DYNAMICS WITHIN THE INDUSTRY ................................................................ 10
A. Service Providers ............................................................................................................................ 11
1. Facilities-Based Providers ....................................................................................................... 11
2. Resale and MVNO Providers................................................................................................... 15
3. Other Providers ........................................................................................................................ 17
B. Connections, Net Additions, Churn................................................................................................ 19
1. Subscribers and Total Connections, and Net Additions .......................................................... 19
2. Subscribers and Net Additions................................................................................................. 23
3. Churn ....................................................................................................................................... 26
C. Market Shares and Concentration .................................................................................................. 29
D. Financial Indicators ........................................................................................................................ 34
1. Revenue and ARPU ................................................................................................................. 34
2. Average Revenue per Unit (ARPU) by Provider ..................................................................... 38
3. Wireless Telephone Services CPI ............................................................................................ 40
4. Profitability Metrics ................................................................................................................. 42
III. OVERALL MOBILE WIRELESS INDUSTRY METRICS ................................................................ 44
A. Network Coverage .......................................................................................................................... 45
1. Overall Network Coverage ...................................................................................................... 46
2. Network Coverage and Roaming ............................................................................................. 57
3. Network Coverage by Technology .......................................................................................... 58
4. Network Coverage by Income Levels ...................................................................................... 60
5. Commission Actions Related to Coverage, Technology and Roaming ................................... 61
B. Connections and Subscribers.......................................................................................................... 66
1. Connections and Subscribers by Geography ........................................................................... 66
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2. Connections and Subscribers by Demographics ...................................................................... 67
C. Consumers and Mobile Wireless .................................................................................................... 69
1. Usage ....................................................................................................................................... 70
2. Handsets ................................................................................................................................... 75
3. Mobile Applications................................................................................................................. 77
4. Consumer Access to Information............................................................................................. 82
5. Intermodal Developments ........................................................................................................ 86
IV. INPUT MARKETS............................................................................................................................... 87
A. Spectrum......................................................................................................................................... 88
1. Importance of Spectrum for the Provision of Mobile Wireless Services................................. 89
2. Facilitating Access to Spectrum............................................................................................... 93
3. Analysis of Spectrum Holdings ............................................................................................. 104
B. Non-Spectrum Input Segments..................................................................................................... 108
1. Wireless Infrastructure ........................................................................................................... 108
2. Backhaul ................................................................................................................................ 116
C. Downstream Mobile Wireless Ecosystem .................................................................................... 120
V. PRICING LEVELS AND TRENDS................................................................................................... 126
A. Postpaid Service ........................................................................................................................... 128
1. Equipment Installment Plans ................................................................................................. 129
2. Changes in Monthly Pricing of Postpaid Plans...................................................................... 135
3. Impact of EIPs on Consumer Costs ....................................................................................... 140
4. Promotions and Incentives ..................................................................................................... 144
5. Evolution of Data Pricing Models ......................................................................................... 147
6. Other Developments .............................................................................................................. 152
B. Prepaid Service ............................................................................................................................. 154
1. Prepaid Plan Choices ............................................................................................................. 159
2. Availability of Handsets ........................................................................................................ 162
3. Service Coverage ................................................................................................................... 163
4. Data Speeds and Data Allowances ........................................................................................ 164
C. Price Indicators for Mobile Data .................................................................................................. 165
1. Postpaid Smartphone Data Price ............................................................................................ 166
2. Prepaid Smartphone Data Price ............................................................................................. 167
VI. NON-PRICE RIVALRY .................................................................................................................... 168
A. Investment .................................................................................................................................... 169
B. Network Coverage and Technology Upgrades............................................................................. 173
1. Current Coverage by Provider ............................................................................................... 174
2. Coverage and Roaming .......................................................................................................... 180
3. Service Provider Network Deployments................................................................................ 182
C. Quality of Service ......................................................................................................................... 189
1. Network Speed ....................................................................................................................... 193
2. Latency................................................................................................................................... 204
D. Differentiation in Mobile Wireless Handsets/ Devices ................................................................ 208
E. Advertising and Marketing ........................................................................................................... 212
VII.CONCLUSION ................................................................................................................................... 216
VIII. PROCEDURAL METTERS ........................................................................................................ 217
APPENDICES
APPENDIX I: Maps
APPENDIX II: Competitive Dynamics within the Industry
APPENDIX III: Overall Mobile Wireless Industry Metrics
APPENDIX IV: Input Markets
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APPENDIX V: Pricing Levels and Trends
APPENDIX VI: Non-Price Rivalry
APPENDIX VII: List of Abbreviations and Acronyms

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Federal Communications Commission

I.

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INTRODUCTION

1.
In this Seventeenth Mobile Wireless Competition Report (Report), the Federal Communications
Commission (Commission or FCC) fulfills its obligation, pursuant to Section 332(c)(1)(C) of the
Communications Act, to report annually to the Congress on the state of competition in mobile services.
Competition in mobile wireless services is a cornerstone of the Commission’s mission and essential for driving innovation, investment, and consumer benefits. In recent years, mobile wireless services have gone from a luxury to a convenience to an absolutely central part of Americans’ daily lives. Increasing numbers of users now have multiple devices connected to mobile networks. Handsets are no longer used just for voice communication, email, social networking, and web browsing, but increasingly as hubs for entertainment, mobile commerce, and to connect other personal devices such as smart watches and fitness monitors. These developments have helped make mobile wireless one of the most important sectors in the national economy.
2.
Following on the Sixteenth Report, released in March 2013, which provided an analysis of market conditions and developments during 2010, 2011, and 2012, 1 this Report presents data and analysis covering 2013 and the first half of 2014, to the extent data are available. 2 The analysis focuses on “competitive market conditions with respect to commercial mobile services,” as required by the Act. 3 While like the Sixteenth Report, this Report presents a multitude of industry data on various aspects of mobile wireless competition, 4 it employs a more data-centric model, with a more concise analysis along with a greater use of Tables and Charts in accessible data formats. For instance, we are providing the charts and tables in the Report and its Appendices, as well as much of the underlying data, on a dedicated website 5 that we intend to update before the release of the next
Report as new data becomes available.
3.
Similar to previous reports, the analysis in this Report is based on a consumer-oriented view of mobile services, with a focus on specific product categories regardless of their regulatory classification. Thus, our analysis of commercial mobile radio services (CMRS) is integrated into an analysis of all mobile wireless services, including not only voice, but also messaging and broadband. 6 Because consumers increasingly view various mobile voice, messaging, and data services as interchangeable with one another, no matter their regulatory classification, service providers are competing for customers using CMRS services as well as non-CMRS services. As a result, the Commission has indicated that it is important to consider potential substitutes when analyzing the competitive landscape for these services, and to evaluate the mobile wireless industry as a whole, rather than just focusing on the provision of CMRS services. 7 This Report analyzes competition across the entire

1

Implementation of Section 6002(b) of the Omnibus Budget Reconciliation Act of 1993, Annual Report and Analysis of
Competitive Market Conditions with Respect to Commercial Mobile Services, Sixteenth Report, 28 FCC Rcd at 3836 (2013)
(Sixteenth Report).

2

For instance, much data are only published as year-end numbers and are publicly available only in middle of the following year. For example, all CTIA data are yearend 2013, and this is available in their annual report published in July 2014. For these data, we are able to present only 2013 numbers with no mid-year updates. As more data becomes available, we plan to provide web updates rather than wait until release of the next Competition Report.
3

47 U.S.C. § 332(c)(1)(C),.

4

47 U.S.C. § 332(c)(1)(C). As with previous Reports, this Report does not address the merits of any license transfer applications that are currently pending before the Commission or that may be filed in the future, which will be decided based on the record collected in each proceeding.

5

fcc.gov/wireless-competition-report

6

See Section II, Introduction, infra.

7

See Sixteenth Report at 28 FCC Rcd at 3836 (2013) at ¶31. As the Commission has concluded, paraphrasing the
Department of Justice/Federal Trade Commission guidelines on merger review, “When one product is a reasonable substitute for the other in the eyes of consumers, it is to be included in the relevant product market even though the products themselves are not identical.” Application of Echostar Communications Corporation, General Motors Corporation, and Hughes

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mobile wireless marketplace, including key market segments such as spectrum and infrastructure. This Report, like the previous three Reports, adopts an approach similar to the earliest reports, but undertakes an expanded and more detailed competitive analysis of the entire mobile wireless ecosystem.
4.
Congress enacted the requirement in 1993 that the Commission report annually on “competitive market conditions with respect to commercial mobile services.” 8 At the same time, it created the statutory classification of “commercial mobile services” to promote the consistent regulation of mobile radio services that are similar in nature, 9 and established the promotion of competition as a fundamental goal for CMRS policy formation and regulation. 10 In particular, the statute requiring the annual report on CMRS competition states:
The Commission shall review competitive market conditions with respect to commercial mobile services and shall include in its annual report an analysis of those conditions. Such analysis shall include an identification of the number of competitors in various commercial mobile services, an analysis of whether or not there is effective competition, an analysis of whether any of such competitors have a dominant share of the market for such services, and a statement of whether additional providers or classes of providers in those services would be likely to enhance competition. 11
5.
This Report complies with the statutory requirements for analyzing competitive market conditions with respect to commercial mobile services by employing an analysis founded upon an expanded view of the mobile wireless services marketplace and an examination of competition across the entire mobile wireless ecosystem. We analyze competitive rivalry in the mobile wireless industry, and the benefits received by consumers. This competitive analysis also identifies areas where competition is strong, as well as areas that could benefit from increased competition.
6.
Consistent with the Commission’s first seven Reports, and the Fourteenth and subsequent
Reports, this Seventeenth Report does not reach an overall conclusion or formal finding regarding whether or not the CMRS marketplace was effectively competitive, but provides an analysis and description of the CMRS industry’s competitive metrics and trends. 12 Given the complexity of the various inter-related segments and services within the mobile wireless ecosystem, we refrain from providing any single conclusion because such an assessment would be incomplete and possibly misleading in light of the variations and complexities we observe.
Rather, the Report focuses on presenting the best data available on competition throughout this sector of the economy, both at the regional and national level, and highlighting several key trends in the mobile wireless industry. We note that there is no definition of “effective competition” widely accepted by economists or

Electronics Corporation (Transferors) and Echostar Communications Corporation (Transferee), Hearing Designation Order,
17 FCC Rcd 20559, 20606 ¶ 106 (2002).
8

47 U.S.C. § 332(c)(1)(C). As noted in previous Reports, any individual proceeding in which the Commission defines relevant product and geographic markets, such as an application for approval of a license transfer, may present facts pointing to narrower or broader markets than any used, suggested, or implied in this Report. See, e.g., Implementation of Section
6002(b) of the Omnibus Budget Reconciliation Act of 1993, Annual Report and Analysis of Competitive Market Conditions with Respect to Commercial Mobile Services, Twelfth Report, 23 FCC Rcd 2241, 2250 ¶ 3 n. 5 (2008) (Twelfth Report).
9

Omnibus Budget Reconciliation Act of 1993, Pub. L. No. 103-66, Title VI, § 6002(b), amending the Communications Act of 1934 and codified at 47 U.S.C. § 332(c).

10

47 U.S.C. § 332 (a)(3).

11

47 U.S.C. § 332 (c)(1)(C).

12

This is in contrast to the Eighth through the Thirteenth Reports, which included a specific finding that there was effective competition in the CMRS market without defining the term “effective competition.” See, e.g., Thirteenth Report, 24 FCC
Rcd 6185.

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competition policy authorities such as the U.S. Department of Justice (DOJ). 13 The approach taken in this Report is consistent with the policy of the DOJ.
7.
This Report first provides an analysis of the overall competitive dynamics of the industry, describing the various types of entities and their positions vis a vis one another across indices such as market share and various financial indicators. 14 The Report then presents a broad overview of trends and developments in the mobile marketplace that have taken place since the Sixteenth Report, such as subscribership growth, adoption and deployment of technologies, and usage trends. While most of the developments have been along a continuum of previously noted trends, the ongoing deployment and adoption of LTE networks and the technologies they have enabled, has had a particularly profound effect throughout the mobile wireless marketplace during the period under review.
8.
The Report then turns to an analysis of key inputs necessary for provision of mobile service, such as spectrum resources and network infrastructure. Spectrum, in particular, is the single most important input that wireless providers need for the provision of service and is a finite and scarce resource. The Report examines how the distribution of spectrum in the various bands affects competition. The Report next examines developments in the ways providers compete for and attract subscribers through pricing innovations, such as the decreased reliance on traditional handset subsidies and term contracts. As part of this analysis, the analysis looks at the differences between pre and postpaid market segments as well as ways in which those segments are converging. Finally, the
Report analyzes competitive rivalry in non-price factors, such as coverage, service quality and speed of providers’ service offerings.
9.
In addition to providing analysis of market conditions, various sections of the Report highlight
Commission policies and actions designed to enhance competition -- for example, by making more spectrum available to existing mobile service providers and potential new entrants through competitive bidding such as the upcoming AWS-3 and incentive auctions. We also revised our transaction review process and spectrum screen to ensure that multiple providers in each market have access to sufficient spectrum to compete effectively. 15 The
Commission’s policies have been guided by the goal of promoting and preserving competition, which in turn has facilitated the ability of consumers to make choices among numerous service providers and leads to lower prices, improved quality, and increased innovation. 16
II.

COMPETITIVE DYNAMICS WITHIN THE INDUSTRY

10.
As part of our analysis of competition in the mobile wireless services industry, we begin by discussing some of the various competitive dynamics within the industry. 17 Providers of mobile wireless services
13

See Ex Parte Submission of the United States Department of Justice, GN Docket No. 09-51 at 11 (filed Jan. 4, 2010). The
DOJ states, “[t]he operative question in competition policy is whether there are policy levers that can be used to produce superior outcomes, not whether the market resembles the textbook model of perfect competition.”
14

. Dollar figures stated in this Report have not been adjusted for inflation (i.e., they are nominal dollars) unless stated otherwise. 15

See In The Matter Of Policies Regarding Mobile Spectrum Holdings Expanding The Economic And Innovation
Opportunities Of Spectrum Through Incentive Auctions, WT Docket No. 12-269, Report and Order (Mobile Spectrum
Holdings Report and Order), 29 FCC Rcd 6133

16

See Mobile Spectrum Holdings Report and Order, 29 FCC Rcd at 6144¶ 17, and at 6193¶ 143. Our public interest evaluation necessarily encompasses the “broad aims of the Communications Act,” which include, among other things, a deeply rooted preference for preserving and enhancing competition in relevant markets, accelerating private sector deployment of advanced services, and generally managing the spectrum in the public interest. See, e.g., AT&T WCS Order,
27 FCC Rcd at 16464 ¶ 11; AT&T-Centennial Order, 24 FCC Rcd at 13928 ¶ 28;.
17

We discuss in more detail in Sections IV and V below additional aspects in the competitive dynamics of the industry when we discuss elements of price and non-price rivalry.

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offer an array of mobile voice and data services, including interconnected mobile voice services, text and multimedia messaging, and mobile broadband Internet access services. Mobile wireless services also include machine-to-machine connections for fleet management systems, smart grid devices, vehicle tracking, home security systems, and other telematics services. This section presents information and data on all mobile wireless services as well as on individual services and segments where appropriate and when the data are available.18
A.

Service Providers
1.

Facilities-Based Providers

11.
Facilities-based mobile wireless service providers offer mobile voice, messaging, and/or data services primarily using their own network facilities, although coverage areas usually are supplemented through roaming agreements. 19 Facilities-based providers can operate nationwide, multi-regional, regional, or local networks. Some data and messaging services offered by facilities-based providers rely only on Internet Protocol
(IP)-based, packet-switched networks, but most mobile voice services continue to connect to the Public Switched
Telephone Network (PSTN) and rely on North American Numbering Plan telephone numbers.
12.
Nationwide Service Providers. As of year-end 2013, there were four facilities-based mobile wireless service providers in the United States that industry observers typically describe as “nationwide.” These providers include AT&T, 20 Sprint, 21 T-Mobile, 22 and Verizon Wireless. 23 Although none of these four providers has a network that covers the entire land area or population of the United States, each has a network that covers a significant portion of both, and therefore these four providers will be referred to as “nationwide providers” throughout this Report. 24 Each of the four nationwide service providers has a mobile wireless network that covers in excess of 99 percent of the U.S. population. 25
18

See Sixteenth Report, 28 FCC Rcd at 3836 at ¶ 20 - 22

19

Fixed wireless services are currently not included in our analysis of mobile wireless services.

20

AT&T Mobility is the successor of Cingular, a joint venture formed in October 2000 between Southwestern Bell (SWB) and Bell South. In 2005, SWB subsidiary that included SWB’s interest in Cingular merged with AT&T Corp. In 2006,
AT&T acquired Bell South and therefore 100% ownership of Cingular. As of December 31, 2013, AT&T Mobility served more than 110 million subscribers.” See AT&T Inc., SEC Form 10-K, filed Feb. 21, 2014, at 2.
21

Sprint Nextel was created by the merger in 2005 of Sprint Corp. and Nextel Communications, Inc. See Tenth Report, 20
FCC Rcd at 15931 ¶ 60. On July 5, 2013, the FCC released an order approving the acquisition of Sprint by SoftBank Corp., and Sprint’s acquisition of 100 percent of Clearwire’s stock. See Softbank-Sprint-Clearwires Order, 28 FCC Rcd at 9643-44
¶ 1-4.

22

T-Mobile traces its roots to May 2001,when Deutsche Telekom AG (DT) acquired in a deal worth $24 billion two US providers -- VoiceStream Wireless (formerly a division of Western Wireless that had recently acquired regional GSM providers Aerial Communications in the Midwest and Omnipoint in the Northeast), and Southern regional provider Powertel.
In September 2002, they were re-branded nationally with the T-Mobile name, conforming to the brand under which DT provided mobile services overseas. See http://www.celtnet.org.uk/telecos/T-mobile.php Most recently, on March 12, 2013, the FCC released an order approving the application of Deutsche Telekom, T-Mobile, and MetroPCS, which resulted in the creation of T-Mobile USA as a wholly-owned subsidiary of Deutsche Telekom . See T-Mobile-MetroPCS Order, 28 FCC
Rcd at 2323-24 ¶ 1-2.
23

As of December 31, 2013, Verizon owned a controlling 55% interest in Verizon Wireless and Vodafone owned the remaining 45%. See Verizon Communications, Inc., SEC Form 10-K, filed Feb. 27, 2014, at 2. On February 21, 2014,
Verizon completed its acquisition of Vodafone’s 45 percent indirect interest in Verizon Wireless, so that Verizon now owns
100 percent of Verizon Wireless. See http://newscenter.verizon.com/corporate/news-articles/2014/02-21-acquisition-ofvodafone-stake-in-vzw-complete/
24

All four nationwide have spectrum in CONUS and in HI and AK.

25

Thus, a nationwide network covers a sufficiently large percentage of the population such that it would be inappropriate to categorize it as a regional network.

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13.
All nationwide providers provide service directly to consumers and businesses and also provide machine-to-machine (M2M) services. Later in the Report, detailed data and analysis are provided on the retail voice and broadband service provided by these companies. However, there are limited statistics on M2M communications. The research firm “Current Analysis” estimates that AT&T had approximately 14.7 million
M2M connections, Verizon Wireless had between 7 and 9 million connections, and both Sprint and T-Mobile had
3.3 million connections. M2M has gained significant interest in the past few years as providers continue to provide connectivity between devices, sensors, monitors, etc. and their networks. The new “Internet of Things”
(IoT) is seen by some commentators as promising the next major opportunity for providing interconnection and advanced connect among devices. Many industries such as healthcare, are transforming to use M2M networks to connect their numerous smart devices and machines. While M2M resides mostly in the Enterprises space, more and more providers are launching services for the home market.
14.
Multi-Regional, Regional, and Local Service Providers. US Cellular is a multi-regional service provider that has developed wireless networks and customer service operations covering five geographic market areas in portions of 23 states that collectively represent a total population of 31.8 million as of December 31,
2013.” 26 US Cellular relies on roaming agreements with nationwide facilities-based providers, as well as other smaller providers, to supply service to its customers in areas not covered by its networks. C-Spire and Ntelos are two other regional providers with substantial market presence in certain parts of the country. There are also dozens of regional and local facilities-based providers throughout the continental United States, Alaska, and
Hawaii that typically provide service in a single geographical area, many of them rural areas.27
2.

Resale and MVNO Providers

15.
Resellers and mobile virtual network operators (MVNOs) do not own any network facilities but instead purchase mobile wireless services wholesale from facilities-based providers and resell these services to consumers. 28 An agreement between an MVNO and a facilities-based provider may be more likely to occur when the MVNO has better access to some market segments than the host facilities-based provider, possibly due to its brand reputation, distribution network, marketing strategies, or business model. 29 MVNOs often increase the range of services offered by the host facilities-based provider by targeting specific market segments, including segments previously not served by the hosting facilities-based provider. 30 Hence, the relationship between an
MVNO and its hosting facilities-based provider can be a mutually beneficial strategic partnership. 31 In 2013, the

26

United States Cellular Corp., SEC Form 10-K for the fiscal year ended December 31, 2013 at 1.

27

Some regional facilities based providers include, but are not limited to, Alaska Communications, Big River Broadband,
Bluegrass Cellular, Cellcom, Choice Wireless, GCI Wireless, People’s Wireless, Pioneer, West Central Wireless.
28

According to one service provider, “MVNOs execute a contract with [the facilities-based provider] to buy wireless service from [the facilities-based provider] to resell under their own brand to customers and perform all marketing, billing, collections and customer service for the customers they activate. MVNOs establish and maintain the relationship with its customers. MVNOs own the relationship with their customers and establish their own calling plans and pricing.” See
Verizon Wireless, Authorized Retailers and MVNOs, http://www.verizonwireless.com/b2c/aboutUs/reseller/authorizedAgentIndex.jsp (visited June. 23, 2014).
29

See P. Kalmus and L. Wiethaus, On the Competitive Effects of Mobile Virtual Network Operators, Telecommunications
Policy, Vol. 34, 2010 at 263, 266, 268.
30

See P. Kalmus and L. Wiethaus, On the Competitive Effects of Mobile Virtual Network Operators, Telecommunications
Policy, Vol. 34, 2010, at 268 (On the Competitive Effects of Mobile Virtual Network Operators). See A. Banerjee and C.
Dippon, Voluntary Relationships Among Mobile Network Operators and Mobile Virtual Network Operators: An Economic
Explanation, Information Economics and Policy, Vol. 21, 2009, at 72 (Voluntary Relationships Among Mobile Network
Operators and Mobile Virtual Network Operators: An Economic Explanation).
31

See The Yankee Group, Jason Armitage, Yankee Group’s 2011 Predictions: 4G Fuels the Decade of Disruption, at 7
(stating, “[I]t’s critical the MVNO does not compete to any meaningful degree with the host.”)

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largest MVNO was TracFone Wireless (TracFone). 32
16.
Unlike facilities-based providers, MVNOs do not engage in non-price rivalry by creating capacity through network investments, network upgrades, or network coverage. MVNOs may target their service and product offerings at specific demographic, lifestyle, and market niches, including consumers who are low income, are relatively price sensitive, do not want to commit to multi-year subscription contracts, have low usage needs, or do not want to buy a bundle that contains unwanted data services. Following widespread industry practices, the
Commission generally attributes the subscribers of MVNOs to their host facilities-based providers, including when it calculates market concentration metrics.
3.

Other Providers

17.
Narrowband Data Providers. Narrowband data and paging services comprise a specialized market segment of the mobile wireless industry. These services include two-way messaging, as well as machineto-machine and other telemetry communications, and are consumed primarily by businesses, government users, and other institutions. According to XXXX licensing databases, there is approximately seven megahertz of spectrum allocated to narrowband and paging services, and there are hundreds of licensees for these services, including private individuals, firms, and local and state governments.
18.
Mobile Satellite Service Providers. Mobile Satellite Services (MSS) providers offer satellitebased communications to mobile devices. Traditionally, MSS has involved voice and narrowband data services.
MSS services are generally targeted at users who require service in remote areas, in disaster response situations, or other places where terrestrial mobile wireless network access may be limited.33 Examples of MSS customers include the oil industry, maritime users, public safety agencies, and other government/military operations.
B.

Connections, Net Additions, Churn
1.

Subscribers and Total Connections, and Net Additions

19.
In the period since the Sixteenth Report, the U.S. mobile wireless services industry experienced continued strong growth, with total wireless connections up by 10 million in 2013. 34 Of the four nationwide facilities-based providers, AT&T and Verizon Wireless maintained the largest market shares throughout 2013. 35
T-Mobile had the largest quarterly increases in market share during this time period. While Sprint steadily lost subscribers in the first three quarters of 2013, it rebounded slightly in the final quarter of the year. 36
20.
This Report uses several data sources to estimate the number of mobile wireless subscribers and connections. One source, the Numbering Resource Utilization Forecast (NRUF), tracks the quantity of phone numbers that have been assigned to mobile wireless devices. 37 Based on NRUF data, it appears that the number
32

Some MVNO companies that currently provide service include Straight Talk, H2O Wireless, Ultra Mobile, Net10,
LycaMobile, Spot Mobile, Telcel America, GIV Mobile, Simple Mobile, Red Pocket, Pure Talk, PagePlus, Ting, iWireless,
Voyager, FreedomPop, ROK Mobile, Tracfone, See sprint/?utm_source=GeneralUsers&utm_campaign=41e3559dd9c:tec,mdad:07-29&utm_medium=email&utm_term=0_1dd83065c6-41e3559dd9-98996217 http://gigaom.com/2014/07/28/unlock-phone-att-verizon-tmobile 33

See Thirteenth Report, 24 FCC Rcd at 6301 ¶ 247.

34

NRUF, Dec 2013.

35

UBS Investment Research. US Wireless 411 v51 4Q13. Figure 21

36

UBS Investment Research. US Wireless 411 v51 4Q13, Figure 24

37

When all mobile wireless devices were assigned telephone numbers and subscribers generally carried one mobile device for making voice calls, NRUF provided reasonably accurate measures of subscribership. Now, however, consumers are more likely to use more than one mobile device that have been assigned telephone numbers – particularly non-voice devices, such as Internet access devices (e.g., wireless modem cards, netbooks, and mobile Wi-Fi hotspots), e-readers, tablets, and telematics systems. In addition, certain mobile broadband providers do not assign telephone numbers to at least some of the devices on their networks. Therefore, NRUF is becoming less useful in measuring the number of individual subscribers.

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of mobile wireless connections in 2013 were 335.7 million. Connections grew three percent during 2013, from
329.2 million at the end of 2012, to 339.2 million at the end of 2013. CTIA also estimated the total number of mobile wireless connections based on its own industry survey, 38 and found that the number of connections grew by three percent during the same period, from 326.5 million at the end of 2012, to 335.7 million at the end of
2013. 39 This information is presented in Chart II.B.1.

Estimated Connections (in millions)

Chart II.B.1
Total Mobile Wireless Connections
2001 - 2013
400
350
300
250
200
150
100
50
0

NRUF
CTIA

Year

Note. Based on data from NRUF, CTIA (CTIA Year-End 2013 Wireless Indices Report, Table 6).
Latest available data.

21.
Chart II.B.2 presents data on total connections by service segment. The postpaid segment accounts for more than 60 percent of the total connections over the reported period, while the prepaid connections have grown from approximately 15 to 20 percent of the total connections. Wholesale connections and connected devices are a small but growing portion of the total connections. 40

Instead, it is providing more of an estimate of the number of mobile wireless connections or connected devices. In addition, it will become a less accurate measure of connected devices to the extent that more devices are sold that do not use telephone numbers. 38

CTIA states that “the terms subscriber, subscriptions, and connections are being used interchangeably” in their report and survey. See CTIA Wireless Industry Indices at p. 7.
39

See Appendix Table II.B.i for detailed data.

40

See Appendix Table II.B.ii for detailed data.

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Chart II.B.2
Qualrterly Total Mobile Wireless Connections by Service Segment
2011-1st Half 2014

Total Connections (thousands)

400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
0

Postpaid

1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14
Quarter, Year
Prepaid Wholesale Connected devices

Source: UBS Investment Research. US Wireless 411 Version 51. Figure 17: US Wireless 411 Version 54.

22.
Table II.B.1 presents data on total connections of the larger individual providers Based on the
2014 data, it appears that AT&T and Verizon Wireless account for roughly two-thirds of the estimated connections, with Sprint and T-Mobile together accounting for slightly less than a third. Regional providers accounted for approximately 3 percent of the total mobile wireless connections.
Table II.B.1
Estimated Total Connections for Publicly Traded Facilities–Based Mobile
Wireless Service Providers (In thousands)
2011- 1st Half 2014
Nationwide Providers
2011
2012
2013
1st Half 2014
Verizon Wireless
A&T
Sprint
T-Mobile
Nationwide Provider Total
Regional Providers
US Cellular
Metro PCS
Leap Wireless
NTELOS
Cincinnati Bell
Regional Provider Total
Total Estimated Connections

108,667
103,247
55,021
30,756
297,691
2011
5,891
9,347
5,934
415
459
22,046
319,736

116,570
106,965
55,626
30,299
309,460

125,535
129, 615
110,276
116,542
54,622
54,080
46,684
50,545
337,117
350,782
2012
2013
2nd Q 2014
5,798
4,774
4,653
8,887
5,297
4,551
440
465
458
398
340
277
20,820
10,130
5,388
330,279
347,247
356,170

Note: UBS Wireless 411 Report. Version 51 2014 Q1, Table 21, pp.14. UBS Wireless 411 Version 54. Total

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estimated connections figure includes data only for the providers reported in the table. Annual numbers are end of the year, 1st half 2014 numbers are end of 2nd quarter 2014.

2.

Subscribers and Net Additions

Net Additions (in Millions)

23.
Net additions for 2013 totaled 10.0 million based on NRUF data, and 9.2 million based on CTIA data. The Commission is also able to use data reported by service providers on Form 477 to estimate the number of mobile voice subscribers and mobile internet subscribers. Form 477 data generally show a lower number of subscriber additions than NRUF data. Between 2011 and 2013, annual net subscriber additions amounted to 12.2 million, 7.6 million, and 4.2 million, respectively. This information, along with NRUF and CTIA data, is presented in Chart II.B.3.

25.0
20.0
15.0

Chart II.B.3
Annual Net Additions to Total Mobile Wireless Connections
(2008 - 2013)
19.7
16.6
14.9
12.0

15.5

15.3
13.0
11.1

12.2 11.9
10.5
7.6

11.1 10.710.8

10.0

10.0

9.2

CTIA
4.2

5.0

NRUF

Form 477

0.0
2008

2009

2010

2011
2012
2013
Year
Source: NRUF, CTIA (CTIA Year-End 2013 Wireless Indices Report Table 6), Form 477. Latest available data.

24.
In 2012, quarterly net additions varied by service segment, with connected device adds seeing significant growth. In the fourth quarter of 2012, wholesale additions dropped substantially, while postpaid adds showed significant increase. The net number of connected device additions was consistently higher than prepaid additions during through the first half of 2014, with the second quarter of 2013 and 2014 showing negative prepaid additions. Postpaid net additions fell dramatically in the first quarter of 2013, but climbed for the remainder of the year and showed significant growth in the first half of 2014. This information is presented in
Chart II.B.4. 41

41

See Appendix Table II.B.iii for detailed data.

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8000

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Chart II.B.4
Quarterly Net Additions by Service segment
2012 - 1st Half 2014

7000

2,181

Net Adds (thousands)

6000

5,389

4,378

4,418

4Q13
5,389
1,069
802
1,026
2,492

1Q14
4,378
472
-945
1,703
3,147

2Q14
4,418
-1,029
975
1,574
2,899

5000
4000

3,682

3,533

3,229

3000
2,246

2,156
788

2000
1000
0
-1000

1Q12
Total
3,533
Prepaid
1,891
Wholesale
1,296
Connected Devices 493
Postpaid
-147

2Q12
2,246
414
568
480
784

3Q12
2,156
462
1,244
854
-405

4Q12
3,682
603
-151
1,053
2,177

1Q13 2Q13
2,181
788
1,278 -1,391
3,431
598
1,344 1,318
-3,872
263

3Q13
3,229
280
436
1,381
1,132

Source: UBS Investment Research. UBS Wireless 411 Version 54. Figure 16: UBS categorizes Tracfone customers as prepaid, not wholesale.

25.
From 2009 through 2011, AT&T had the largest number of net additions, partly through acquisitions and partly through organic growth. Verizon Wireless had the largest number in 2012, accumulating the most net additions in 2012 and 2013. T-Mobile hovered between third and last place from 2009 to 2012. In
2013, however, T-Mobile experienced a surge in customer growth, moving past AT&T to accumulate the second most net additions for the year, as well as in the first half of 2014. The significant subscriber growth Sprint experienced during 2010 and 2011 slowed significantly in 2012, and Sprint lost customers in 2013. US Cellular lost subscribers every year from 2009 through the first half of 2014. These trends are displayed in Chart II.B.5.

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Federal Communications Commission

Chart II.B.5
Annual Net Additions by Service Provider
(2009-1st Half 2014)

10,000
Net Subscriber Additions (Thousands)

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8,000
6,000
4,000
2,000
0
-2,000
-4,000
2009

Verizon
AT&T
Sprint
T-Mobile
US Cellular

2010

2011

2012

2013

5,486
7,278
-1,141
1,032
-55

5,627
8,853
1,777
-56
-69

6,421
7,699
5,111
-549
-186

7,903
3,764
605
204
-88

8,868
2,721
-2,500
4,300
-1,024

1st Half
2014
4220
1696
-796
3861
-121

Source: UBS Investment Research. UBS Wireless 411 Version 51. Figure 14: UBS Wireless 411 Version 54.

3.

Churn

26.
Churn measures the number of connections that are disconnected from mobile wireless service during a given period time period, and is usually expressed as a percentage. Churn is calculated by dividing the aggregate number of wireless subscriber connections who canceled service during a period by the total number of wireless subscriber connections at the beginning of that period. The churn rate for the period is equal to the average of the churn rate for each month of that period, e.g., the three months in a quarter or the twelve months for an annual churn rate. Thus a monthly churn rate of 1 percent averaged over the three month reporting period would also be reported as 1 percent. Providers publish their monthly churn rate information as part of their quarterly filings with the SEC.
27.
A service provider’s churn rate depends on many factors, including the distribution of its customers between postpaid and prepaid service plans, customer satisfaction with their service provider, service provider switching costs, and competition. As an example, if a service provider has an average monthly churn rate of 2 percent in each month of a year, the service provider would lose approximately 24 percent of its customer base over the course of the year.
28.
Churn rates of the nationwide facilities-based service providers, measured in the second quarter of 2014, ranged from 1.2 percent for Verizon Wireless and 1.5 percent for AT&T, up to 2.1 percent for T-Mobile and 2.4 percent for Sprint. These data are presented in Chart II.B.6. The average industry quarterly churn rates have ranged from 1.9 percent to 3.0 percent since 2010. 42 Churn rates for prepaid connections are typically significantly higher than churn rates for postpaid connections, because prepaid customers, unconstrained by a
42

UBS Investment Research. US Wireless 411 v51 Q1 2014. Figure 14: U.S. Wireless Industry Model.

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multi-month or multi-year service contract, are more likely than postpaid customers to terminate a relationship with a wireless service provider.

Churn Rate

Chart II.B.6
Quarterly Churn Rate for Nationwide Mobile Wireless Providers
2011 - 1st Half 2014
4.5%
4.0%
3.5%
3.0%
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%

1Q1
1
AT&T
1.4%
Verizon Wireless 1.3%
Sprint
2.3%
T-Mobile
3.4%

2Q1
1
1.4%
1.2%
2.2%
3.3%

3Q1
1
1.3%
1.2%
2.3%
3.5%

4Q1
1
1.4%
1.2%
2.2%
4.0%

1Q1
2
1.5%
1.2%
2.2%
3.3%

2Q1
2
1.2%
1.1%
2.0%
3.2%

3Q1
2
1.3%
1.2%
2.1%
3.4%

4Q1
2
1.4%
1.2%
2.3%
3.7%

1Q1
3
1.4%
1.3%
2.4%
3.3%

2Q1
3
1.4%
1.2%
3.2%
2.6%

3Q1
3
1.3%
1.3%
2.3%
2.5%

4Q1
3
1.4%
1.2%
2.1%
2.5%

1Q1
4
1.4%
1.3%
2.4%
2.1%

2Q1
4
1.5%
1.2%
2.4%
2.1%

Source: UBS Investment Research. US Wireless 411 Version 49, Table 16; US Wireless 411 Version 51, Figure 28; US
Wireless 411 Version 54.

C.

Market Shares and Concentration

29.
Revenues and connections or subscribers are key metrics that are used to measure the size of a company. In turn, the relative size of a company compared to the total size of the industry determines market share. The revenue data are presented in Table II.C.1 below.
Table II.C.1
Service Revenues for Facilities–Based Mobile Wireless Service Providers (In millions of dollars)
2005-1st Half 2014
National
2005
2006
2007
2008
2009
2010
2011
2012
2013 1H2014
28,131 32,796 38,016 49,717 52,046 55,629 59,157 63,733 69,033
36,065
Verizon
30,665 33,788 38,678 44,249 48,563 53,510 56,726 59,186 61,552
30,535
AT&T
28,631 31,918 32,106 28,435 25,832 25,894 27,390 29,086 29,263
14,337
Sprint
12,308 14,511 16,891 19,242 18,926 18,689 18,481 17,213 20,535
10,821
T-Mobile
1,695
468
Nextel
Regional
2005
2006
2007
2008
2009
2010
2011
2012
2013 1H2014
2,832
2,445
3,679 3,940
3,926 3,913 4,054 4,099 3,595
1,697
US Cellular
872
1,291
1,919 2,437
3,130 3,690 4,428 4,540
Metro PCS
769
956
1,396 1,709
2,171 2,413 2,829 2,947 2,631
Leap (Cricket)
264
302
357
392
400
383
395
424
467
226
NTELOS
215
236
267
291
284
269
252
225
185
80
Cincinnati Bell
6,485
7,030
7,984
Alltel
395
433
484
524
408
Centennial
363
339
294
320
236
CentennialPCS
1,117
1,202
1,030
Dobson
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Rural Cellular
SunCom

511
739

539
755

608
649

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327

Note: UBS Investment Research. - UBS Wireless 411 Report. Version 51, Table 31. UBS Wireless 411 Report Version 54,
MetroPCS was acquired by T-Mobile in March 2013 and Leap (Cricket) was acquired by AT&T in March of 2014.

30.
Market share is usually calculated as the percentage of an industry or market's total revenues earned (or number of customers served) by a particular company over a specified time period.43 In general, market share increases and decreases can be a sign of the relative competitiveness of a company's products or services. Nationwide service provider market shares by service revenues are shown in Table II.C.2 below. This table provides market share estimates of the largest facilities-based service providers based on revenues. The four nationwide service providers accounted for about 96 percent of the nation’s mobile wireless service revenue in
2013, up from 91.5 percent in 2012. The service revenues of Verizon Wireless and AT&T accounted for about 70 percent of total service revenue in 2013.
Table II.C.2
Market Shares for Facilities-Based Mobile Wireless Providers
Based on Service Revenues 2011 – 2013 44
2011
2012
Nationwide Service Providers

2013

Verizon Wireless
AT&T
Sprint
T-Mobile
Total National Service Provider Market Share
Regional Service Providers

33.8%
32.4%
15.6%
10.6%
92.4%
2011

34.4%
32.0%
15.7%
9.3%
91.5%
2012

36.5%
32.5%
15.5%
10.9%
95.3%
2013

US Cellular
Metro PCS
Leap Wireless
NTELOS
Cincinnati Bell
Other
Total Regional Service Provider Market Share

2.3%
2.5%
1.6%
0.2%
0.1%
0.7%
7.6%

2.2%
2.5%
1.6%
0.2%
0.1%
1.9%
8.5%

1.9%
1.4%
0.2%
0.1%
1.0%
4.7%

Note: Data based on Table II.C.1, infra ,UBS Wireless 411 Report. Version 51 2014 Q1, Table 31, pp.19 UBS
Wireless 411 Report. Version 54 and CTIA total service revenue figures. For 2011, the data are also from the
Sixteenth Competition Report Table 11 and 12.

31.
Market concentration can be measured by the number of competitors in the marketplace, or by the share of subscribers, sales or revenues attributable to each competitor. High market concentration levels in a given market may raise some concern that the market is not competitive. However, an analysis of other factors, such as prices, entry conditions, and non-price rivalry, may find that a market with high concentration levels is competitive. 32.

The Herfindahl-Hirschman Index (HHI), which is employed by the Commission to measure

43

Markets as discussed in this Report are independent of markets determined in the context of transactions. In prior transactions, the Commission has found that the relevant geographic markets for certain wireless transactions generally are
“local” and have used CMAs (cellular marketing areas) as the local geographic market. In addition, it has also evaluated a transaction’s competitive effects at the national level where a transaction exhibits certain national characteristics that provide cause for concern. See AT&T-Leap Order, 29 FCC Rcd at 2735 ¶ 27.
44

We do not report mid-year market shares.

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market concentration, is a widely-accepted measure of concentration in competition analysis. The HHI is calculated by summing the squared market shares of all firms in any given market. In this Report, we calculate
HHIs by EA (economic areas), to maintain continuity with past Reports and to ensure that we do not compromise the confidential information found in the NRUF data. 45 The Commission generally estimates HHIs on a narrower geographic area than the EA to evaluate the competitive consequences of transactions.46
33.
At the end of 2013, the weighted average of the HHI (weighted by population across the 172
Economic Areas in the United States) for the mobile wireless services industry was 3,027, a small increase from
2,966 at the end of 2012, which in turn was an increase from 2,874 at the end of 2011. 47 As in previous years, the most recent increases in the weighted average of HHIs reflect continued industry consolidation, such as the 2013 merger of T-Mobile and MetroPCS. Average HHIs across EAs are presented in Chart II.C.1 48 At the end of
2013, the value of the HHI for individual Economic Areas (EAs) ranged from a low of 2,237 in EA 63
(Milwaukee-Racine WI) to a high of 6,689 in EA 146 (Missoula MT).

Chart II.C.1
Average HHI Across EAs
2008-2013

3,500
3,000

2,693

2,874

2,866

2,966

3,027

Highly Concentrated (HHI > 2500)

2,500

HHI

2,806

2,000
1,500
1,000
500
2008

2009

2010

2011

2012

2013

Year
Source: NRUF and 2010 census data, EAs defined as in 1995. The latest NRUF data available is 2013.

45

By contrast, in wireless transactions, the Commission has analyzed competitive effects on “local” geographic markets using CMAs (cellular marketing areas). See AT&T-Leap Order, 29 FCC Rcd at 2735 ¶ 27. See also note 43 supra.
46

Antitrust authorities in the United States generally classify markets into three types: Unconcentrated (HHI < 1500),
Moderately Concentrated (1500 < HHI < 2500), and Highly Concentrated (HHI > 2500). See Horizontal Merger Guidelines,
U.S. Department of Justice and the Federal Trade Commission, http://www.justice.gov/atr/public/guidelines/hmg-2010.pdf .
The Commission’s HHI screen flags markets for further competitive review if the HHI is 2800 with a change from the pre to the post transaction HHI of 100 or greater or a change of 250 or greater regardless of the initial HHI. See Applications of
AT&T Wireless Services, Inc., Transferor, and Cingular Wireless Corp., Transferee, Memorandum Opinion and Order, 19
FCC Rcd 21522 (2004); Applications of AT&T Inc. and Cellco Partnership d/b/a Verizon Wireless for Consent to Assign or
Transfer Control of Licenses and Authorizations and Modify a Spectrum Leasing Arrangement, WT Docket No. 09-104,
Memorandum Opinion and Order, 25 FCC Rcd 8704 (2010).
47

Data are based on 2010 census data. EAs defined as in 1995.

48

EA level data are presented in Appendix Table II.C.i

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D.

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Financial Indicators
1.

Revenue and ARPU

34.
Total service revenues of the wireless providers, as reported by the CTIA, include monthly service fees, usage-related charges, activation charges, vertical services (voice mail, enhanced calling features, and other services), out-collect roaming revenues, and data service revenues.49 In 2013, total wireless service revenue was $189 billion. It has grown steadily over the last twenty years, although the pace has tended to fluctuate over the last five years. Revenue increased by 2.3 percent in 2013. 50 As reported earlier in Table
II.C.1, company-specific revenues reported by the providers during this time indicate that Verizon Wireless and
AT&T had the highest service revenues, followed by Sprint, and then T-Mobile. 51
35.
Given the longstanding variation in terms of plan characteristics and pricing for mobile voice and data, average price metrics have been necessary and useful tools to compare broad trends in pricing, even though average metrics have always had their limitations. 52 Previous Reports have reported average price metrics, including the per-minute price of voice service, the average revenue per text message, the average revenue per megabyte, and the average revenue per unit (ARPU). 53 As detailed in the Sixteenth Report, 54 however, in the second half of 2012 Verizon and AT&T launched their shared data plans that bundled unlimited voice and texting with a data allowance for a single flat monthly fee, starting a shift toward shared data plans by wireless service providers. Beginning with its report of 2012 data, CTIA discontinued separately tracking and reporting wireless data service revenues. 55 As a result of these changes, estimates of the unit price of wireless voice and data revenues are increasingly unreliable and difficult to come by, and the Commission is no longer able to report from the CTIA data an average revenue per text message, an average revenue per megabyte, or an average voice revenue per minute.
36.
Similarly, the ARPU metric, which has commonly been used in the industry as an overall pricing indicator and which remains the best such measure currently used by industry and financial analysts, has come under increasing pressure, especially as a measure for comparisons across different providers. Consistent estimation of ARPU has become more difficult due to the growing prevalence of shared data plans, family and group plans, and other types of bundling, along with the increasing number of accounts with multiple devices, with each device potentially subject to a different pricing model. We note that ARPU is not consistently reported by different providers. For instance, AT&T, Sprint and T-Mobile report ARPU, while Verizon Wireless provides its reporting based on ARPA (Average Revenue per Account), which accounts for the multiple devices that may be associated to a single account. CTIA’s Wireless Industry Indices no longer report an “average local
49

See CTIA Year-End 2013 Wireless Indices Report, at 70-72.

50

Revenue increased by 3.0 percent, 4.9 percent, 6.2 percent, 9.0 percent, and 2.3 percent in 2009, 2010, 2011, 2012, and
2013, respectively. See Appendix Table II.D.i for details.
51

Detailed service provider service revenues are shown in Appendix Table II.C.i.

52

Different mobile wireless providers have offered a variety of pricing plans for their voice and data services, with service often offered under multi-part pricing schemes and with differing non-price terms and features, such as early termination fees and the consequences of reaching usage limits. As discussed in previous reports, it is therefore difficult to identify sources of information that track actual mobile wireless service prices in a comprehensive and consistent manner. Additionally, data on subscribership is not available at the plan level, and any average price comparison implicitly assumes uniform subscribership of all plans.
53

Industry and financial analysts have used company reported ARPU as a fair proxy of the amount of revenue generated per subscriber on a monthly basis

54

Sixteenth Report, 28 FCC Rcd at 3836, ¶144-146

55

See CTIA Year-End 2013 Wireless Indices Report, at 85-90 for a detailed discussion.

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monthly bill” consistently reported by providers that was used to estimate ARPU. 56 To account for these shortcomings, industry and financial analysts have had to make additional assumptions and begun to estimate a new, normalized version of ARPU, dividing overall reported service revenues by the average number of subscribers for the period.
37.
In its year-end 2013 annual report, CTIA reported an industry average measure of ARPU, specifically “Average Revenue per Reported (subscriber) Unit”, 57 which is based “upon total revenues divided by the average total reported active units per survey period, divided by the number of months in the survey period,”
i.e., an annualized monthly ARPU. The total service revenues used in this ARPU calculation includes roaming revenues, usage fees, access and other connection fees. Thus all revenues, including those from roamers in a provider’s market, are attributed to the subscriber base of the provider. 58 According to CTIA, from December
2012 to December 2013, the average revenue per active unit (ARPU) in 2013 was $48.79 based on annual revenues and average active revenue-generating subscriber units. Total wireless industry service revenues for
2013 equaled $189.12 billion, up from $185 billion for 2012 as a whole. Total reported prepaid revenues for
2013 equaled $22.4 billion, down 5 percent from $23.7 billion reported for 2012. 59 Chart II.D.1 below shows the total service revenue, subscribers and ARPU for the past 20 years. It appears that based on nominal dollars, the average industry ARPU appears to be fairly stable, while revenues and subscribership has increased.
Chart II.D.1
Total Service Revenues , Subscribers , ARPU
1993 - 2013

350

Reported
Subscribers
(millions)

300
250
200

Total Annual
Service
Revenue ($ billions) ARPU ($)

150
100
50
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013

0

Year
Note: Based on CTIA Year-End 2013 Wireless Indices Report, Table 27. Latest available data.

2.
38.

Average Revenue per Unit (ARPU) by Provider

There is considerable variation in ARPU amongst the various national and regional wireless

56

CTIA’s Indices Report provides discussion of some of the alternative methods of calculating ARPU. For example, the report indicates that a Yankee Group study on ARPU had found that the majority of major providers used nine to ten separate revenue components in their calculation. As noted in the Indices Report, consistency of reporting is critical to accurately compare the data over time. CTIA Year End 2013 Wireless Indices Report, at 85 – 90.

57

See Infra Footnote 22.

58

This ARPU is not equal to the ‘average bill’ for a household, or consumer, as it is not equal to an ‘account’ which may cover several different devices, such as multiple phones (under a family plan) or multiple devices (including phones and tablets, wireless broadband modems, or other adjunct devices covered by a customer’s service plan). It assigns overall service revenue across all revenue generating devices. See CTIA Year-End 2013 Wireless Indices Report, at 2.
59

See Appendix Table II.D.i

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providers, despite the overall stable numbers. From Table II.D.1 below we find that between the fourth quarter of
2011 and the fourth quarter of 2013, AT&T’s ARPU was fairly stable, Verizon Wireless experienced a slight increase in ARPU, and T-Mobile showed a steady decline in ARPU. Regional providers such as US Cellular experienced a slight decrease in ARPU during this time.

Table II.D.1
ARPU Estimates of Publicly Traded Facilities-Based Mobile Wireless Providers
4th Quarter 2011 – 2nd Quarter 2014
Nationwide Providers
AT&T
Verizon Wireless
Sprint
T-Mobile
Regional/Rural Providers
US Cellular
MetroPCS
Leap Wireless
NTELOS
Cincinnati Bell

4Q11
$ 47.04
$ 46.55
$ 43.08
$ 44.29
4Q11
$ 49.74
$ 40.55
$ 42.39
$ 48.57
$ 43.26

4Q12
$ 46.94
$ 47.57
$ 43.37
$ 40.24
4Q12
$ 50.89
$ 40.86
$ 40.69
$ 52.78
$ 43.28

4Q13
$ 47.58
$ 47.50
$ 44.83
$ 36.91
4Q13
$ 50.21
$ 45.55
$ 54.11
$ 41.35

2Q 14
$ 43.91
$ 46.96
$ 43.55
$ 36.17
$ 53.27

$ 52.21
$ 42.81

Source: UBS Investment Research. UBS Wireless 411 v. 51 Figure 36, UBS Wireless 411 Report Version 54.

39.
As a consequence of the shift to shared data plans by the two largest wireless service providers, estimates of the unit price of wireless voice and data revenues are increasingly unreliable and difficult to come by, as discussed in earlier paragraphs. In addition, we note that the available estimates do not fully reflect the prices of all relevant mobile broadband services offered by U.S. wireless service providers, and therefore are subject to certain caveats depending on the methodology used in the particular analyst report. Acknowledging these limitations, we present some analyst estimates of ARPU and the unit price of mobile wireless broadband services.
As seen in Table II.D.1, on average, the combined ARPU for voice, text and data has been fairly stable for most nationwide providers, with the exception of T-Mobile, which shows a steady decline in ARPU over the reported period. 3.

Wireless Telephone Services CPI

40.
The Consumer Price index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a fixed market basket of consumer goods and services. The basket of goods includes over
200 categories, such as food and beverages, housing, apparel, transportation, medical care, recreation, education, and communications. The CPI allows consumers to compare the price of the basket of goods and services this month with the price of the same basket a month or a year ago. As documented in previous Reports, two different pricing indicators – the Wireless Telephone Services CPI and the per-minute price of voice service – show that mobile wireless prices have declined significantly since the launch of PCS service in the mid-1990s. However, given the shift in mobile voice service plans away from a defined number of monthly minutes 60, there is no simple way to calculate a per-minute price for such service, so this discussion focuses on the CPI.
41.
The wireless telephone services’ component of the CPI (Wireless Telephone Services CPI) is published by the U.S. Department of Labor’s Bureau of Labor Statistics (BLS) on a national basis. 61 From 2011
60

See Section II.D.1 infra

61

Starting in December 1997, the basket included a category for cellular/wireless telephone services. All CPI figures discussed above were taken from BLS databases found at http://www.bls.gov. The index used in this analysis, the CPI for
All Urban Consumers (CPI-U), represents about 87 percent of the total U.S. population. See Bureau of Labor Statistics,
Consumer Price Index: Frequently Asked Questions, http://www.bls.gov/cpi/cpifaq.htm (visited June 16, 2014). The Cellular

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to 2012, the annual Wireless Telephone Services CPI decreased by 1.2 percent while the overall CPI increased by
2.1 percent and the Telephone Services CPI was approximately unchanged. 62 From 2012 to 2013, the annual
Wireless Telephone Services CPI decreased by 1.6 percent while the overall CPI increased by 1.5 percent and the
Telephone Services CPI was unchanged. The Wireless Telephone Services CPI has steadily declined since 2010 following an unchanged Wireless Telephone Services CPI in 2009 and a series of much smaller declines in the period from 2002 to 2008. Since December 1997, the Wireless Telephone Services CPI has declined nearly 43 percent while the overall CPI has increased by 34 percent.
4.

Profitability Metrics

42.
One measure of competition is the relative profitability of competitors within the wireless market.
It is also informative to compare the profitability of the wireless industry with other industries. In the absence of the data necessary to estimate economic profits, accounting profits can instead be estimated using various metrics available to wireless industry observers. One such metric, based on company data reported to the Securities and
Exchange Commission, is EBITDA (Earnings before Interest, Taxes, Debt, and Amortization). EBITDA equals accounting profits before deducting interest expenses, corporate income taxes, depreciation, and amortization. In
2014, out of the nationwide facilities-based providers, EBITDA per subscriber ranged from a low of $6.13 (US
Cellular) to a high of $24.19 (Verizon Wireless). These numbers are presented in Table II.D.2.
Table II.D.2
Annual EBITDA per Subscriber ($/month), 2011 – 1st half 2014
Top 5 Mobile Wireless Service Providers
2011
2012
2013
20.85
22.21
23.56
Verizon Wireless
18.49
18.64
19.55
AT&T
6.84
6.11
7.53
Sprint
13.17
12.09
10.08
T-Mobile
11.88
11.51
7.34
US Cellular

1st Half 2014
24.19
19.67
11.13
8.64
6.13

Source: UBS Investment Research. UBS Wireless 411 Version 51, Fig 47; UBS Wireless 411 Version 54. Annual figures calculated by taking the average of each quarter for each year.

43.
A second indicator of mobile wireless segment profitability is EBITDA margin 63, which expresses EBITDA as a percentage of service revenue. Standardizing EBITDA by service revenues facilitates cross-provider comparisons. The EBITDA margin of a number of the publicly reported mobile providers for the past several years is shown in Chart II.D.1. In the fourth quarter of 2013, the EBITDA margin of the top four nationwide providers ranged from 47.0 percent (Verizon Wireless), to 14.4 percent (Sprint). The EBITDA margin of Verizon Wireless has remained above 40 percent since the fourth quarter of 2005. 64 AT&T’s EBITDA margin has fluctuated since 2009, dropping below 30.0 percent in 2011, then rising above the 40 percent mark in late 2012 and in mid- 2103. 65 The other providers’ EBITDA margins were all substantially lower in the second quarter of 2013.
CPI includes charges from all telephone companies that supply “cellular telephone services,” which are defined as “domestic personal consumer phone services where the telephone instrument is portable and it sends/receives signals for calls by wireless transmission.” This measure does not include business calls, telephone equipment rentals, portable radios, and pagers. While the CPI-U is urban-oriented, it does include expenditure patterns of some of the rural population. Information submitted by companies for the CPI is provided on a voluntary basis. See Sixteenth Report, 28 FCC Rcd at 3836 at ¶ 263.
62

For details, see Appendix Table II.D.ii,

63

It is equal to earnings before interest, tax, depreciation and amortization (EBITDA) divided by total revenue. Because
EBITDA excludes depreciation and amortization, EBITDA margin can provide a cleaner view of a company's core profitability. 64

UBS, US Wireless 411 Reports, 2002 – 2014.

65

Id.

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Chart II.D.1
Reported EBITDA Margins (in %) for Selected Publicly Traded Facilities-Based
Wireless Providers
2011 - 1st Half 2014
60
50
Percentage

40
30
20
10
0
-10

1Q
11
Verizon Wireless 43.7
AT&T
39.7
Sprint
19.1
T-Mobile
25.7
Metro PCS
27.2
Leap (Cricket)
16.1
US Cellular
20.6

2Q
11
45.4
41.7
16.3
27.6
32.1
21.8
25.3

3Q
11
47.8
44.3
17.6
31
28.9
21.4
22.5

4Q
11
42.2
29.2
9.5
30.7
31.9
18
15.7

1Q
12
46.3
42.3
14.6
28.7
22.6
17
22.4

2Q
12
49
45.8
17.8
30.5
41.1
24.8
22.8

3Q
12
50
41.6
15.3
28.8
41.5
18
19.7

4Q
12
41.4
29.1
8.8
24
27.9
20.8
13.5

1Q
13
50.4
43.2
19.2
28.9

2Q
13
49.8
42.4
17.6
24.7

3Q 4Q 1Q 2Q
13 13 14 14
51.1 47 52.1 50.2
42 37.4 45.9 42.6
16.2 14.4 25.3 25.3
26.2 24 20.3 26.4

17.4 21.5 11.1 9.1
20.4 19.9 18.3 -7.8 9.27 11.1

Source: UBS Investment Research UBS Wireless 411 Version 51, Fig 46; UBS Wireless 411 Version 54.

III.

OVERALL MOBILE WIRELESS INDUSTRY METRICS

44.
In this section, we discuss the current market trends in the mobile wireless marketplace and provide additional analysis highlighting specific changes that have occurred over the last year. Specifically, this section examines such indices as numbers of connections and distribution of subscribers by geography and by demographics. It analyzes the extent of voice and broadband coverage, including by number of available providers, and a comparison of rural to non-rural markets. We will also discuss developments in wireless devices, intermodal developments such as wireless-wireline substitution and wireless-only households, and consumers’ access to information about their available choices in the marketplace.
A.

Network Coverage

45.
The analysis in this section is based on U.S. census blocks 66 overlaid on provider coverage maps provided to the Commission through a contract with Mosaik Solutions, an independent consulting firm that tracks

66

A census block is the smallest geographic unit for which the Census Bureau tabulates decennial census data. There are
11,166,336 blocks designated in the 2010 Census, and they range in population from zero to several hundred. See U.S.
Census Bureau, 2010 Census Summary File 1 – 2010 Census of Population and Housing, Technical Documentation, Mar.
2010, at 2-1, available at http://www.census.gov/prod/cen2010/doc/sf1.pdf#page=504.

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coverage footprints of mobile voice and mobile data networks. 67 If the center point, or centroid, of a census block is within the coverage boundary of a map provided by Mosaik, then we consider the census block to be “covered” by that provider and/or technology. 68 We then aggregate the population and land area of the covered census blocks. These coverage estimates represent deployment of mobile networks and do not indicate the extent to which providers actually offer service to residents in the covered areas. While recognizing that this analysis likely overstates the coverage experienced by consumers because of limitations in Mosaik data, 69 we find that this analysis is useful because it provides a general baseline that can be compared over time across network technologies, and providers.
1.

Overall Network Coverage

46.
We first estimate the percentage of the U.S. population, land area, and road miles covered by a certain number of facilities-based mobile wireless service providers. 70 We then present estimated mobile broadband coverage, using the same categories. For purposes of this Report, mobile wireless coverage represents either mobile voice or mobile broadband coverage, and “mobile broadband” includes coverage and services offered using the following 3G and 4G technologies: EVDO, EVDO Rev A, WCDMA/HSPA, HSPA+, LTE, and mobile WiMAX. 71 Finally, we note the data underlying these estimates measure mobile network “coverage,” and not the number of network providers affirmatively offering service to any or all residents in those locations.
a.

Mobile Wireless Coverage

47.
As of January 2014, 99.9 percent of the total U.S. population lived in census blocks that were covered by at least one facilities-based mobile wireless provider, as shown in Chart III.A.1. The percentage of the population living in a census block with mobile wireless coverage by at least one or two providers has not changed significantly since January 2012, 72 while the percentage of the population living in a census block with coverage by at least three or four providers has fallen slightly during this time. 73 However, the percentage of the population living in a census block covered by at least five providers fell sharply to 22.8 percent in January 2014,
67

Mosaik provides data to the FCC under contract on facilities-based providers in the form of coverage boundary maps based on the coverage boundaries provided to them by mobile wireless network operators. See Mosaik, About Us, http://www.mosaik.com/about-us/ (visited July. 7, 2014).
68

The Centroid Method overlays the geographic polygons showing wireless coverage onto a map of census blocks. The
Centroid Method codes a census block as covered if the calculated center point (the “centroid”) of the census block is within the coverage polygon. If a centroid is covered, then all of the population and land area in the corresponding census block is coded as covered as well. We also note that in some cases the calculated center point may lay outside of the boundaries of a census block. In these cases, the centroid will be identified as the point inside the census block nearest to the calculated center point.
69

This analysis likely overstates the coverage actually experienced by consumers, because Mosaik reports advertised coverage as reported to it by many wireless service providers, each of which uses a different definition or determination of coverage. The data does not expressly account for factors such as signal strength, bit rate, or in-building coverage, and may convey a false sense of consistency across geographic areas and service providers but nonetheless are useful for benchmarking mobile network deployment across the United States, especially over time. National Broadband Plan, at 39
(Chapter 4). We also recognize that an analysis of coverage at the nationwide level provides only a general benchmark. A nationwide average will mask regional disparities in coverage and create an overall picture that does not capture variances across the country.
70

Also see Appendix Table III.A.i and III.A.ii

71

The Commission has used alternative definitions of mobile broadband in different contexts. For the 706 Report (Broadband
Progress Report), it has used both a speed threshold based on the SBI data and a technology threshold based on the Mosaik data to define mobile broadband. See Eighth Broadband Progress Report, FCC Rcd 12-90A1 at 10366 ¶¶ 37 – 40.
72

Sixteenth Report, 28 FCC Rcd at ¶ 45

73

Sixteenth Report, 28 FCC Rcd at 3836, Table 4¶ 44 - 47

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from 79.6 percent in January 2012. We note that the number of providers in a census block does not necessarily reflect the number of network provider choices available to a particular individual or household residing in those areas. 74
48.
Chart III. A.1 also presents the approximate percentage of the U.S. land area and road miles covered by a certain number of mobile wireless providers. While more than 90 percent of the U.S. population lived in census blocks with coverage by at least four mobile voice providers in January 2014, these census blocks accounted for only approximately 29.9 percent of the total land area of the United States, and approximately 54.1 percent of U.S. road miles. Furthermore, while 0.1 percent of the U.S. population lived in census blocks that received no mobile wireless coverage, approximately 25 percent of the U.S. land area and 5 percent of U.S. road miles were not covered.

Number of Service Providers with Coverage
(2014)

Chart III.A.1
Estimated Mobile Wireless Coverage by Census Block
January 2014
1 or more

74.9%

2 or more

64.9%

3 or more

47.1%

4 or more
5 or more
0.0%

29.9%

54.1%

72.9%

99.9%
95.5%

88.9%

99.4%

96.8%
91.4%

22.8%
18.4%
10.4%
20.0%

% of U.S. Population

40.0%
60.0%
80.0%
100.0%
Mobile Wireless Coverage (%)
% of U.S. Road Miles
% of U.S. Square Miles

Note: Based on January 2014 Mosaik Data and 2010 Census Data. The number of providers in a census block represent network coverage, which does not necessarily reflect the number of choices available to a particular individual or household,
Coverage calculations based on Mosaik data, while useful for measuring developments in mobile wireless coverage, have certain limitations that likely overstate the extent of mobile wireless coverage.

49.
In this Report, we have included a provider if it has market share above a particular threshold, and have made estimates based on two alternative thresholds. Specifically, to estimate the number of providers serving a CMA, we include a provider if it has a greater than two percent market share (alternatively, a five percent market share which provides greater assurance of a meaningful choice for consumers) of mobile wireless connections based on NRUF data at the CMA level. Table III.A.1 presents the data for December 2013. Since the
74

The percentages of population located in census blocks with zero, one, two, or three or more mobile wireless or mobile broadband providers represent network coverage, which does not necessarily mean that they offered service to residents in the census block. In addition, we emphasize that a provider reporting mobile wireless or mobile broadband coverage in a particular census block may not provide coverage everywhere in the census block. For both these reasons, the number of providers in a census block does not necessarily reflect the number of choices available to a particular individual or household, and does not purport to measure competition. In addition, calculations based on Mosaik data on coverage, while useful for measuring developments in mobile wireless coverage, have certain limitations that likely overstate the extent of mobile wireless and mobile broadband coverage.

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Sixteenth Report, 75 the percentage of CMAs with three or more providers have remained essentially unchanged from 29.3to 29.7 percent. 76 CMAs with 4 or more providers have increased from 34.4 percent to 43.7 percent, while there has been a decrease in the number of CMAs with at least five providers based on the five percent threshold primarily due to increased industry consolidation as discussed above.
Table III.A.1
Estimated Mobile Wireless Providers Offering Service by CMA, Excluding Territories
December 2013
Two Percent Market Share
Five Percent Market Share
Threshold
Threshold
Number of Providers Offering
Number of
Total CMAs
Number of
Total CMAs
Service Anywhere in a CMA
CMAs
(percent)
CMAs
(percent)
716
100.0%
716
100.0%
Total for U.S., excluding territories
0
0.0%
2
0.3%
1 provider
62
8.7%
139
19.4%
2 providers
148
20.7%
213
29.7%
3 providers
358
50.0%
313
43.7%
4 providers
148
20.7%
49
6.8%
5 or more providers
Source: Based on December 2013 NRUF data. Just as is the case for census blocks, the number of providers in a CMA represents network coverage, which does not necessarily reflect the number of choices available to a particular individual or household. b.

Mobile Broadband Coverage

50.
Chart III.A.2 presents mobile wireless broadband coverage as of January 2014. 77 As discussed in an earlier section, for purposes of this Report, “mobile broadband” includes coverage and services offered using the following 3G and 4G technologies: EVDO, EVDO Rev A, WCDMA/HSPA, HSPA+, LTE, and mobile
WiMAX. 78 Mobile broadband coverage has generally increased since the Sixteenth Report. 79 While this increase was small overall, there was significant expansion of specific broadband technologies, especially LTE, during this time. 80 Despite the general increase in broadband coverage, the percentage of the U.S. population living in areas with five or more broadband providers fell to 11.8 percent in January 2014, compared to 52.9 percent in January
2012.
51.
Mobile wireless broadband deployment focuses on high population centers. While more than 80 percent of the U.S. population lived in census blocks with coverage by at least four mobile service providers in
January 2014, these census blocks only accounted for 35.3 percent of road miles, and 15.7 percent of the total land area of the United States. Furthermore, while 0.3 percent of the U.S. population lived in census blocks that received no mobile wireless broadband coverage, 7.3 percent of U.S. road miles and 20.8 percent of the U.S. land area were not covered.

75

See Sixteenth Report ¶ 50.

76

See Appendix Table III.A.iii for December 2011 data. Because NRUF includes data on the number of telephone numbers that have been assigned to end-user devices by mobile wireless providers, this analysis does not include providers whose data-only devices are not assigned a mobile telephone number. See also Section V.A, and Customers, infra.
77

Also see Appendix Table III.A.iv and III.A.v.

78

See Footnote 70 infra.

79

See Sixteenth Report, 28 FCC Red at 3836, ¶48

80

This is discussed in more detail in section VI.B of this Report, and in Table VI.B.1, below

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Chart III.A.2
Estimated Mobile Wireless Broadband Coverage by Census Block
January 2014
99.7%
92.7%

1 or more
70.2%

98.8%
82.9%

2 or more
57.6%

93.4%
3 or more

58.8%
33.8%
82.1%

4 or more

35.3%
15.7%

5 or more

11.8%
5.8%
2.5%

0.0%

20.0%

% of U.S. Population

40.0%
60.0%
80.0%
100.0%
Mobile Wireless Broadband Coverage
% of U.S. Road Miles
% of U.S. Square Miles

Note: Based on January 2014 Mosaik Data and 2010 Census Data. The number of providers in a census block represent network coverage, which does not necessarily reflect the number of choices available to a particular individual or household,
Coverage calculations based on Mosaik data, while useful for measuring developments in mobile wireless coverage, have certain limitations that likely overstate the extent of mobile wireless coverage.

c.

Urban/Rural Comparisons

52.
Since the release of the Sixth Report, 81 the Commission has also evaluated competition in rural areas. The Communications Act does not include a statutory definition of what constitutes a rural area. 82 Since its 2004 Report and Order concerning deployment of wireless services in rural areas, the Commission has used a
“baseline” definition of rural as a county with a population density of 100 persons or fewer per square mile. 83 We
81

Sixth Report, 16 FCC Rcd at 13350.

82

The federal government has multiple ways of defining rural, reflecting the multiple purposes for which the definitions are used. See Eighth Report, 18 FCC Rcd at 14834; Facilitating the Provision of Spectrum-Based Service to Rural Areas and
Promoting Opportunities for Rural Telephone Companies to Provide Spectrum-Based Services, See also Notice of Proposed
Rulemaking, 18 FCC Rcd 20802, 20808-11 (2003). The Commission has used Rural Services Areas (RSAs) as a proxy for rural areas for certain purposes, such as the former cellular cross-interest rule and the former CMRS spectrum cap, stating that “other market designations used by the Commission for CMRS, such as [EAs], combine urbanized and rural areas, while
MSAs and RSAs are defined expressly to distinguish between rural and urban areas.” See 1998 Biennial Regulatory Review,
Spectrum Aggregation Limits for Wireless Telecommunications Carriers, Report and Order, 15 FCC Rcd 9219, 9256 ¶ 84,
n.203 (1999).
83

Facilitating the Provision of Spectrum-Based Services to Rural Areas and Promoting Opportunities for Rural Telephone
Companies To Provide Spectrum-Based Services, Report and Order, 19 FCC Rcd. 19078, 19087-88 (2004) (“We recognize, however, that the application of a single, comprehensive definition for ‘rural area’ may not be appropriate for all purposes. . .
. Rather than establish the 100 persons per square mile or less designation as a uniform definition to be applied in all cases, we instead believe that it is more appropriate to treat this definition as a presumption that will apply for current or future
Commission wireless radio service rules, policies and analyses for which the term ‘rural area’ has not been expressly defined.
By doing so, we maintain continuity with respect to existing definitions of ‘rural’ that have been tailored to apply to specific policies, while also providing a practical guideline”).

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use this same definition to analyze service availability in rural areas in this Report. By this definition, roughly 59 million people, or 19 percent of the U.S. population, live in rural counties, based on 2010 US Census data. These counties comprise 3.1 million square miles, or 86 percent of the geographic area of the United States. 84
Approximately 81 percent of the U.S. population lives on 15 percent of the land, while 19 percent live on the remaining 85 percent of the land. 85
(i)

Mobile Wireless Network Coverage

Number of Service Providers with Coverage
(January 2014)

53.
As seen in Chart III.A.3, 100 percent of the non-rural population lived in census blocks that were covered by at least one provider in January 2014, compared to 99.3 percent of the rural population. 86 The percentage of the population living in census blocks covered by at least two providers was also similar for rural and non-rural areas. As with mobile wireless coverage, the gap between rural and non-rural mobile broadband coverage jumps when we consider coverage by at least three or more providers. However, a higher percentage of the rural population lives in census blocks that were covered by at least five providers, with 25.9 percent of the rural population live in census blocks covered by at least five providers, compared to 20.8 percent of the non-rural population. 87 While the percentage of rural and non-rural populations living in census blocks covered by at least one, at least two, at least three, and at least four providers has not changed significantly since January 2012, the percentage of the population living in census blocks with at least five providers has again decreased since January
2012. 88
Chart III.A.3
Percentage of Population Living in a Census Block Covered by Mobile Wireless
Voice Providers in Rural vs. Non-Rural Areas , January 2014
100.0%
99.3%
99.9%
96.4%

1 or more
2 or more
3 or more

84.2%

4 or more
5 or more

63.6%

99.2%
96.2%

Non-Rural
(% of U.S.
POPs)
Rural (% of
U.S. POPs)

20.8%
25.9%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Percentahe of US POPs

Source: Based on January 2014 Mosaik Data and 2010 Census Data. The number of providers in a census block represent network coverage, which does not necessarily reflect the number of choices available to a particular individual or household,
Coverage calculations based on Mosaik data, while useful for measuring developments in mobile wireless coverage, have
84

Based on 2010 Census data. Includes the population of Puerto Rico.

85

Id

86

Also see Appendix Tables III.A.iv and III.A.v

87

This is largely a result of T-Mobile’s acquisition of MetroPCS and AT&T’s acquisition of Leap Wireless. Because the acquired providers had a larger presence in non-rural areas, the effect of the consolidation was more pronounced in those areas. 88

Sixteenth Report, 28 FCC Rcd at 3836, Table 55 and 57

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certain limitations that likely overstate the extent of mobile wireless coverage

Number of Service Providers with
Coverage (January 2014)

54.
Chart III.A.4 presents mobile wireless coverage of rural and non-rural road miles in January
2014. 89 The changes in road mile coverage since January 2012 are similar to the trends in population coverage over the same time period.
Chart III.A.4
Percentage of Road Miles Covered by Mobile Wireless Voice Providers in Rural vs. Non-Rural Areas, January 2014
99.3%
1 or more
92.5%
2 or more

97.7% Non-Rural (% of U.S. Road
Miles)
93.3%
Rural (% of
U.S. Road
82.2%
Miles)

81.2%

3 or more

58.8%

4 or more

35.1%
22.4%
13.0%

5 or more
0%

10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Percentage of US Road Miles

Source: Based on January 2014 Mosaik Data and 2010 Census Data. The number of providers in a census block represent network coverage, which does not necessarily reflect the number of choices available to a particular individual or household,
Coverage calculations based on Mosaik data, while useful for measuring developments in mobile wireless coverage, have certain limitations that likely overstate the extent of mobile wireless coverage.

(ii)

Mobile Broadband Network Coverage

55.
As seen in Chart III.A.5, approximately 100 percent of the non-rural population lived in census blocks that were covered by at least one provider in January 2014, compared to 98.5 percent of the rural population. 90 The percentage of the population living in census blocks covered by at least two providers was also similar for rural and non-rural areas. The gap between rural and non-rural coverage jumps when we consider coverage by at least three or more providers, narrowing again when we consider the percentage of the population living in census blocks covered by at least five providers. The percentage of rural residents living in census blocks with at least one available mobile broadband provider did not change significantly between January 2012 and January 2014. 91 During the same time period, the percentage of rural residents living in census blocks with at least two, at least three, or at least four available mobile broadband providers increased by 8.4 percent, 13.6 percent, and 9.9 percent, respectively. Meanwhile, the percentage of rural residents living in census blocks with at least five available mobile broadband providers fell only slightly, from 10.3 percent to 8.6 percent The percentage of non-rural residents living in census blocks with at least one, two, three, or four available mobile broadband providers increased only slightly during this time, while the percentage of non-rural residents living in census blocks with at least five broadband providers dropped significantly, from 62.8 percent to 12.5 percent, largely reflecting the acquisitions of MetroPCS and Leap/Cricket by T-Mobile and AT&T, respectively.

89

Also see Appendix Tables III.A.vi and III.A.vii

90

Also see Appendix Tables III.A.viii and III.A.ix

91

Sixteenth Report, 28 FCC Rcd at 3836, Tables 55 and 57, ¶385-387

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Chart III.A.5
Percentage of Population Living in a Census Block Covered by Mobile
Broadband Providers in Rural vs. Non-Rural Areas , January 2014
100.0%
98.5%

1 or more
2 or more

99.8%
94.4%

3 or more

98.4%

Non-Rural
(% of U.S.
POPs)

72.0%
92.0%

4 or more

Rural (% of
U.S. POPs)

39.6%
12.5%
8.6%

5 or more

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Percentahe of US POPs
Source: Based on January 2014 Mosaik Data and 2010 Census Data. The number of providers in a census block represent network coverage, which does not necessarily reflect the number of choices available to a particular individual or household,
Coverage calculations based on Mosaik data, while useful for measuring developments in mobile wireless coverage, have certain limitations that likely overstate the extent of mobile wireless coverage

Number of Service Providers with
Coverage (January 2014)

56.
Chart III.A.6 presents mobile broadband coverage of rural and non-rural road miles in January
2014. 92 The percentage of rural road miles with mobile broadband coverage increased across the board between
January 2012 and January 2014. The percentage of non-rural roads covered by at least one, at least two, at least three, and at least four providers increased, however the percentage of non-rural roads covered by at least five providers fell dramatically from 40.5 percent to 10.8 percent between January 2012 and January 2014.
Chart III.A.6
Percentage of Road Miles Covered by Mobile Broadband Providers in Rural vs.
Non-Rural Areas , January 2014
98.8%
89.7%

1 or more
2 or more

76.2%

3 or more

96.9%
89.4%

44.0%
71.5%

4 or more

17.7%
10.8%
3.3%

5 or more
0%

Non-Rural
(% of U.S.
Road Miles)
Rural (% of
U.S. Road
Miles)

10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Percentage of US Road Miles

Source: Based on January 2014 Mosaik Data and 2010 Census Data. The number of providers in a census block represent network coverage, which does not necessarily reflect the number of choices available to a particular individual or household,
Coverage calculations based on Mosaik data, while useful for measuring developments in mobile wireless coverage, have
92

Also see Appendix Tables III.A.viii and II.A.ix

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certain limitations that likely overstate the extent of mobile wireless coverage.

2.

Network Coverage and Roaming

57.
Service providers often use roaming services to enhance their coverage. They offer their customers coverage outside of their network coverage areas through roaming arrangements with other providers.
Roaming arrangements between mobile wireless service providers allow customers of one mobile wireless provider to automatically receive service from other providers’ networks when they are in areas that are covered by their roaming partners’ networks but not their own network. Smaller providers that rely on roaming arrangements to offer nationwide coverage to their customers often include the price of nationwide roaming services in the plans’ monthly fees instead of billing for roaming on a usage basis. In contrast to the purchase of capacity wholesale from other service providers to provide resale or MVNO services, a provider uses roaming services to market extended coverage to consumers residing within the provider’s network coverage area, not to acquire customers where a provider does not have network coverage. A detailed discussion is provided in Section
VI.B, which discusses non-price rivalry between providers.
3.

Network Coverage by Technology

58.
The Commission has adopted flexible licensing policies, and does not mandate any particular technology or network standard for commercial mobile wireless licensees. Mobile wireless service providers choose their own network technologies and services and abide by certain technical parameters designed to avoid radiofrequency interference with adjacent licensees. As a result of this approach, over the past 15 years U.S. service providers have deployed a variety of digital network technologies with divergent technology migration paths. Previously, two main technology migration paths have been the CDMA and GSM paths. 93 There has not been any significant change in CDMA or GSM/TDM coverage since the Sixteenth Report, and each technology covers over 99 percent of the population. Sprint’s iDEN network was shut down on July 2013, and the percentage of the population that is covered by this technology accordingly fell from 90.0 percent in January 2012, to 4.9 percent in January 2014 with service being provided by small providers in a few markets. 94 The evolution of mobile network technologies is now converging on LTE, as all of the major service providers are deploying or planning to deploy LTE technology. 95
59.
During the time period covered by this Report, the four nationwide facilities-based mobile wireless service providers, as well as other mobile providers continued to upgrade and expand their networks with advanced 3G and 4G technologies that allow for faster mobile broadband connection speeds. 96 LTE, in particular, has been growing in importance over the past few years, as it can provide faster speeds and improved user experience. Each provider is extending its LTE footprint in order to better compete in the mobile wireless marketplace. According to Verizon Wireless, about 69 percent of total data traffic was over the 4G/LTE network in. 97 As of January 2014, 98.5 percent of the population lived in census blocks that were covered by an LTE
93

See Appendix Chart III.A.i. Of the top four nationwide mobile wireless providers, AT&T and T-Mobile have deployed technologies on the GSM migration path, while Verizon Wireless and Sprint have deployed technologies on the CDMA migration path. Sprint has shut down its iDEN network.
94

Appendix Table III.A.viii presents mobile wireless network coverage by technology type in terms of population, land area, and road miles, as of January 2014
95

See section VII.B.3 for a more detailed discussion of service provider network deployments.

96

For purposes of this Report, the term “broadband” – when referring to mobile broadband networks, coverage, providers, or services – includes the 3G and 4G network technologies: HSPA, EV-DO, LTE, and mobile WiMAX. The Commission may include other combinations of mobile network technologies when referring to “mobile broadband” in other contexts. See,
e.g., Eighth Broadband Progress Report at Table 15.

97

VZ – Q4 2013 Verizon Earnings Conference Call, January 21, 2014

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network, compared to 67.5 percent of the population in January 2012. 98 WCDMA/HSPA/HSPA+ coverage also increased during this time, increasing from 93.1 percent of the population in January 2012 to 97.7 percent of the population in January 2014 as shown in Table III.A.2.
Table III.A.2

Estimated Mobile Wireless Data/Broadband Network Coverage by Census Block,
Jan. 2014 99
Technology

POPs in
Covered
Blocks
(Thousands)

2.5G CDMA 1xRTT
GPRS/EDGE
Total 2.5G Mobile
Data Network
Coverage
3G/ WCDMA/HSPA/
HSPA+
4G
EV-DO/EV-DO
Rev. A
Mobile WiMAX
LTE
Total Mobile
Broadband
Coverage (3G/4G)

% of
Total
POPs

Square Miles
Contained in
Those Blocks
(Thousands)

% of
Total
Square
Miles

Road Miles
Contained in
Those Blocks
(Thousands)

310,365
310,396
311,962

99.3%
99.3%
99.8%

2,532
2,507
2,788

66.6%
65.9%
73.3%

6,117
6,082
6,460

% of
Total
U.S.
Road
Miles
89.7%
89.2%
94.7%

305,138

97.7%

2,121

55.8%

5,421

79.5%

310,024

99.2%

2,434

64.0%

6,001

88.0%

105,486
307,736
311,492

33.8%
98.5%
99.7%

44
2,067
2,669

1.2%
54.4%
70.2%

419
5,475
6,322

6.1%
80.3%
92.7%

Note: Based on January 2014 Mosaik Data and 2010 Census Data. Calculations based on Mosaik data on coverage, while useful for measuring developments in mobile wireless coverage, have certain limitations that likely overstate the extent of mobile broadband coverage. The number of providers in a census block reflect network coverage, which does not necessarily reflect the number of choices available to a particular individual or household

4.

Network Coverage by Income Levels

60.
We also analyze how the number of facilities-based mobile wireless providers that have coverage in a census tract varies based on median household income levels. 100 The analysis is based on mobile wireless and

98

The analysis of mobile wireless network coverage in this section is based on U.S. census blocks overlaid on provider coverage maps provided to the Commission through a contract with Mosaik Solutions, described above. Also see CR 16 table 31
99

Includes Federal lands. Commission estimates based on census block analysis of Mosaik CoverageRight coverage maps,
January 2014. Population data are from the 2010 Census, and the square miles include the United States and Puerto Rico.

100

The percentages of population located in census tracts where zero, one, two, or three or more mobile wireless or mobile broadband providers represent network coverage, which does not necessarily mean that they offered service to residents in the census block. In addition, we emphasize that a provider reporting mobile wireless or broadband coverage in a particular census tract may not provide coverage everywhere in the census tract. For both these reasons, the number of providers in a census tract, or by income level does not necessarily reflect the number of choices available to a particular individual or household at a certain income level, and does not purport to measure competition. In addition, calculations based on Mosaik data on coverage, while useful for measuring developments in mobile wireless coverage, have certain limitations that likely overstate the extent of mobile wireless and mobile broadband coverage.

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mobile broadband coverage data reported by Mosaik 101 and the median household income levels in each of the country’s 74,000 census tracts based on United States Census Bureau’s American Community Survey (ACS). 102
Chart III.A.7 below shows that, as of January 2014, the average number of mobile wireless providers in census tracts with median household income less than $25,000 was 4.65, compared to 4.10 in census tracts with median household income of more than $150,000. The average number of mobile broadband providers in census tracts with median household income less than $25,000 was 4.41, compared to 3.95 in census tracts with median household income of more than $150,000. Chart III.A.8 compares the number of mobile broadband providers by income level for August 2010, January 2012, and January 2014. 103

Number of Wireless Providers and Wireless
Broadband Providers

Chart III.A.7
Average Number of Mobile Wireless Providers and Mobile Broadband
Providers in Census Tracts by Median Household Income
January 2014
5.00
4.00

4.65

4.41

4.29
3.93

4.42

4.47

4.15

4.35

4.45 4.38

4.44 4.39

4.10 3.95

3.00
2.00
1.00
0.00

Median Household Income by Census Tract
Average Number of Mobile Wireless Providers
Average Number of Mobile Broadband Providers

Source: Data on median household income by census tract are based on United States Census Bureau’s American
Community Survey 2009-2013 (ACS). Data on number of providers are from Mosaik, January 2014. The number of mobile wireless or mobile broadband providers in a census tract represents network coverage, which does not necessarily mean that they offered service to any or all the residents in the census tract. In addition, we emphasize that a provider reporting mobile wireless or broadband coverage in a particular census tract may not provide coverage everywhere in the tract. 101

Data on numbers of mobile wireless providers and mobile broadband providers are based on Mosaik database, January
2014. We note that the calculations based on Mosaik data on coverage, while useful for measuring developments in mobile wireless coverage, have certain limitations that likely overstate the extent of mobile wireless and mobile broadband coverage.
102

Data on median household income are based on United States Census Bureau’s American Community Survey 2009-2013
(ACS). The analysis is done on a census tract, rather than census block, basis because the smallest geographic area for which median household income data is available is census tracts. These data do not allow for an analysis of adoption rates for mobile wireless or mobile broadband services.
103

See Sixteenth Mobile Wireless Competition Report, 28 FCC Rcd ¶ 297, for the August 2010 and January 2012 data.

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Number of Wireless Broadband Providers

Chart III.A.8
Average Number of Mobile Broadband Providers in Census Tracts by
Median Household Income
August 2010, January 2012, January 2014
6
5

4.85

4.56

4.41

3.93

4
3.32

3.71

3.74

4.39

4.38

4.35

4.15

3.7

5.47

5.42

5.36

5.32

5.04

3.75

3.7

3.95

3.26

3
2
1
0

Median Household Income by Census Tract
Aug-10

Jan-12

Jan-14

Source: Current data on median household income by census tract are based on United States Census Bureau’s American
Community Survey 2009-2013 (ACS). Current data on number of providers are from Mosaik, January 2014. August
2010 and January 2012 data are from the Sixteenth Competition Report (Chart 41). The number of mobile wireless or mobile broadband providers in a census tract represents network coverage, which does not necessarily mean that they offered service to any or all the residents in the census tract. In addition, we emphasize that a provider reporting mobile wireless or broadband coverage in a particular census tract may not provide coverage everywhere in the tract.

5.

Commission Actions Related to Coverage, Technology and Roaming

61.
When competing mobile wireless service providers deploy compatible network technologies, greater economies of scale in the production of both end-user devices and network infrastructure equipment can result, lowering the unit cost of handsets, chipsets, and other network equipment. This, in turn, may promote more rapid adoption of mobile wireless services, a greater variety of handsets, and more price competition. In
October, 2013, the Commission adopted a Report and Order and Order of Proposed Modification to effectuate a voluntary industry agreement and thereby provide for interoperable LTE service in the Lower 700 MHz band.
Since that time, the Commission has adopted specific interoperability requirements for the AWS-3 band, as well as for the 600 MHz Band. 104

104

See Amendment of the Commission’s Rules with Regard to Commercial Operations in the 1695-1710 MHz, 1755-1780
MHz, and 2155-2180 MHz Bands, GN Docket No. 13-185, Report and Order, 29 FCC Rcd. 4610, ¶¶ 225-231 Rel. March
31, 2014, (AWS-3 Report and Order) and Expanding the Economic and Innovation Opportunities of Spectrum Through
Incentive Auctions, GN Docket No. 12-268, Report and Order, 29 FCC Rcd. 6567, ¶¶ 731-737 Rel. June 2, 2014 (Incentive
Auctions Report and Order).

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62.
In order to encourage mobile network deployment into unserved or underserved areas, the
Commission adopted rules creating the Mobility Fund in November 2011. 105 The Mobility Fund uses Universal
Service Fund reserves to support the deployment of current- or future-generation mobile network technologies that provide mobile voice and Internet services. 106 For Mobility Fund Phase I, the Commission will provide up to
$300 million in one-time support payments, plus up to $50 million dedicated to Tribal lands, that were awarded through reverse auctions,. 107 The Commission is currently exploring whether to retarget Mobility Fund Phase II ongoing support to ensure the continued deployment and preservation of 4G LTE mobile broadband service and preservation of mobile voice and broadband service in areas that otherwise would not have such service through marketplace forces. 108
63.
In recent years, the Commission has taken actions to facilitate roaming arrangements. 109 In 2007, for instance, it clarified that automatic voice roaming is a common carrier obligation for CMRS providers. 110 In
April 2010, the Commission adopted the Roaming Order on Reconsideration, which eliminates the home roaming exclusion and establishes the same general obligation to provide automatic voice roaming, regardless of whether the provider requesting roaming holds spectrum in an area. 111 In April 2011, the Commission issued the Data
Roaming Order. 112 The Data Roaming Order requires facilities-based providers of commercial mobile data services, whether or not such providers also offer CMRS, to offer data roaming arrangements to other mobile data service providers on commercially reasonable terms and conditions, subject to certain limitations.113
64.
Several commenters in the current record contend that it is still difficult to negotiate roaming agreements with larger, nationwide providers. 114 A recent survey by NTCA of its membership, which consists exclusively of small, rural providers, asked participants to categorize their experience in negotiating data roaming and in-market roaming agreements with other providers. Of the respondents, 69 percent categorized it as moderately to extremely difficult, 27 percent as moderately to relatively easy, and four percent as extremely easy. In addition, 52 percent of those respondents who have a reciprocal roaming agreement with
105

Connect America Fund, A National Broadband Plan for Our Future, Establishing Just and Reasonable Rates for Local
Exchange Carriers, High-Cost Universal Service Support, Developing an Unified Intercarrier Compensation Regime, FederalState Joint Board on Universal Service, Lifeline and Link-Up, Universal Service Reform – Mobility Fund, Report and Order and Further Notice of Proposed Rulemaking, 26 FCC Rcd 17663 (2011). See Section IX, Urban-Rural Comparisons, infra.
106

Id

107

Auction 901 Closing Public Notice. Mobility Fund Phase I disbursements were authorized beginning April 2013 and are anticipated to continue through 2016. Mobility Fund Phase I Support Authorized for Seven Winning Bidders; Defaults on
Two Auction 901 Winning Bids Determined, AU Docket No. 12-25, Public Notice, 28 FCC Rcd 5599. Tribal Mobility Fund
Phase I Auction Closes Winning Bidders Announced for Auction 902, Public Notice, released February 28, 2014, XX FCC
Rcd Commission.
108

See In the matter of Connect America Fund Universal Service Reform – Mobility Fund, ETC Annual Reports and
Certifications, Establishing Just and Reasonable Rates for Local Exchange Carriers, Developing an Unified Intercarrier
Compensation Regime, WC Docket No. 10-90, Further Notice of Proposed Rulemaking, (rel. June 10, 2014).
109

Sixteenth Report, 28 FCC Rcd at 3837 ¶ 209.

110

See Roaming Obligations of Commercial Mobile Radio Service Providers, Report and Order and Further Notice of
Proposed Rulemaking, 22 FCC Rcd 15817, 15828 ¶ 27 (2007) (2007 Roaming Order and FNPRM) (“[W]e recognize that automatic roaming benefits mobile telephony subscribers by promoting seamless CMRS service around the country, and reducing inconsistent coverage and service qualities.”)
111

Roaming Order on Reconsideration, 25 FCC Rcd at 4182 ¶ 2.

112

Data Roaming Order, 26 FCC Rcd 5411.

113

Id. at 5418-5428 ¶ 13-31.

114

See. e.g. CCA Comments at 17.

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another provider indicated that they pay about as much as they themselves are paid, while 33 percent pay more and 14 percent pay less. 115
65.
On May 27, 2014, T-Mobile USA, Inc. (“T-Mobile”) filed a petition for an expedited declaratory ruling that would provide guidance on the criteria used for determining whether the terms of a data roaming agreement meet the “commercially reasonable” standard set forth in the Commission’s data roaming rule. 116 The data roaming rule requires facilities-based providers of commercial mobile data services to offer roaming arrangements to other such providers on “commercially reasonable terms and conditions.” 117 T-Mobile contends that providers need this guidance to evaluate the commercial reasonableness of terms offered in individual negotiations and to reach agreements. The Commission released a Public Notice on June 10, 2014 seeking comment on the petition. 118
B.

Connections and Subscribers
1.

Connections and Subscribers by Geography

66.
To better understand the number of connections across geographic areas, for this Report, we have estimated penetration rates, 119 using NRUF subscriber data, 120 at the level of the 172 Economic Areas (EAs) 121 of the United States, each of which is an aggregation of a differing number of counties. We use EAs as the geographic unit for measuring the level of concentration in the mobile wireless services marketplace in order to maintain continuity with past Reports and to ensure that we do not compromise the confidential information contained in the NRUF data. 122 Regional penetration rates for the 172 EAs range from 85 percent in La Crosse,
WI-MN to 188 percent in Grand Island, NE. 123 The nationwide penetration rate based on NRUF data now exceeds 100 percent, meaning that the number of connected devices exceeds the population, and the penetration

115

NTCA 2012 Wireless Survey Report, September 2012, at 3. See http://www.ntca.org/images/stories/Documents/Advocacy/SurveyReports/2012ntcawirelesssurveyreport.pdf 116

Petition for Expedited Declaratory Ruling of T-Mobile USA, Inc., WT Docket No. 05-265, filed May 27, 2014.

117

47 C.F.R. § 20.12(e).

118

Wireless Telecommunications Bureau Seeks Comment on Petition for Expedited Declaratory Ruling by T-Mobile USA,
Inc. Regarding Data Roaming Obligations, WT Docket No. 05-265, Public Notice, DA 14-798 (WTB rel. June 10, 2014).
119

The penetration rate is defined as the number of mobile wireless connections per 100 people.

120

NRUF subscriber data indicate the number of assigned phone numbers that a wireless provider has in a particular wireline rate center (there are approximately 18,000 rate centers in the country). Rate centers are geographic areas used by local exchange carriers for a variety of reasons, including the determination of toll rates. See HARRY NEWTON, NEWTON’S
TELECOM DICTIONARY: 19TH EXPANDED & UPDATED EDITION 660 (July 2003). All mobile wireless providers must report to the Commission the quantity of their phone numbers that have been assigned to end users, thereby permitting the Commission to calculate the total number of mobile wireless subscribers. For purposes of geographical analysis, the rate center data can be associated with a geographic point, and all of those points that fall within a county boundary can be aggregated together and associated with much larger geographic areas based on counties. We note that the aggregation to larger geographic areas reduces the level of inaccuracy inherent in combining non-coterminous areas such as rate center areas and counties.
121

EAs are geographic areas defined by the U.S. Department of Commerce that define geographic markets using data on commuting patterns. . We recognize that EAs may be broader or narrower than other geographic markets employed in the
Commission’s analyses. For example, the Commission typically has used smaller geographic areas, such as CMAs, in its analysis of mobile wireless transactions. See, e.g., Sprint Nextel-Clearwire Order, 23 FCC Rcd at 17591 ¶¶ 51-52; Verizon
Wireless-Alltel Order, 23 FCC Rcd at 17472-73 ¶ 52.
122

See Section II.D infra.

123

See Appendix Table III.B.i

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rate in 82 of the 172 EAs was at least 100 percent at the end of 2013. 124
2.

Connections and Subscribers by Demographics

67.
Several socio-economic and demographic factors such as household income and age are correlated with overall mobile wireless subscription rates as well as smartphone subscription rates. Based on
August 2014 survey data from ComScore Mobilens, 125 Chart III.B.1 shows that mobile wireless subscribers overall, and smartphone subscribers in particular, are in higher income brackets. For example, 24.7 percent of the population live in households with an annual income of less than $25,000, but only 16.5 percent of mobile wireless users and 13.1 percent of smartphone users are in this bracket. Conversely, 22.0 percent of the population live in households with an annual income over $100,000, but 28.2 percent of mobile wireless subscribers and 32 percent of smartphone subscribers are in this income bracket. The chart also shows that income may also be correlated with the choice of a prepaid plan or a postpaid plan: more postpaid users are in a higher income bracket, while the converse is true for prepaid subscribers.

Percemt of Subscribers

Chart III.B.1
Total Mobile Subscribers, Smartphone Subscribers, and
Prepaid/Postpaid Subscribers by Income Bracket, August 2014
28.2%
14.2%
19.8%
21.4%
16.5%
U.S. Mobile
Subscribers

*CTIA - 335.6 million.
*NRUF - 336.0 million

$100k+

32.0%
33.4%
15.3%
16.0%
21.0%
19.0%
10.6%

20.0%
19.6%
13.1%

U.S. Smartphone
Subscribers

Postpaid
Subscribers

$75k to

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