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Friday, August 28, 2009, 07:45 am PT (10:45 am ET)

FCC investigates wireless carrier competition

The Federal Communications Commission signaled this week that it will look into major U.S. wireless carriers in an attempt to increase competition, innovation, and consumer protection in the market.

"Wireless mobility has become central to the economic, civic, and social lives of over 270 million Americans," an FCC press release stated. "We are now in the midst of a transition from reliance on mobile voice services to increasing use of and reliance on mobile broadband services, which promise to connect American citizens in new and profound ways. A robustly competitive mobile wireless market will be essential to realizing the full benefits to American consumers and channeling investment into vitally important national infrastructure. The FCC is seeking to ensure that competition in the mobile wireless market continues to bring substantial benefits to American consumers."

The commission released a number of official notices of inquiry this week, announcing investigations designed to look into wireless innovation and investment, mobile wireless competition, and additional opportunities to protect and empower consumers in the communications marketplace. The news comes just a week after Apple, AT&T and Google all responded to an FCC inquiry over the absence of the Google Voice application from the iPhone App Store.

The FCC is taking a hard look at mobile providers and their business practices, suggesting the agency could take a more hands-on approach with the U.S. market's four major carriers: AT&T, Verizon, T-Mobile and Sprint. Earlier this year, the commission was asked to look into matters involving Skype and the iPhone, and the availability of Apple's phone in smaller, more rural markets. However, the FCC has not yet mandated any industry changes, nor has it suggested any regulation is guaranteed.

The commission's mere interest, though, is a good sign for companies like Google, Vonage and Skype, BusinessWeek reported. Those companies offer alternative phone and communication services that aim to compete with major wireless carriers. Christopher Libertelli, senior business director at Skype, he believes the FCC is asking the "right questions to maximize innovation."

For its inquiry into protection of consumers, the FCC will look into the information available to consumers as they choose a provider, choose a service plan, manage the use of their service plan, and decide whether and when to switch providers. It is also asking for comments on mandatory information disclosure, compared with other industries, like nutrition labels on food.

The mobile wireless competition inquiry aims to enhance the FCC's understanding of the industry in three ways: what analytic framework and data sources "most clearly describe competition;" reviewing market segments not covered thoroughly in previous reports; and "vertical relationships between 'upstream' and 'downstream' market segments."

Finally, the FCC's investigation into wireless innovation and investment seeks to explore spectrum availability and use, as well as devices, applications and business practices of each wireless network. The inquiry will look into how wireless services can aid in issues such as health care, energy, education and public safety. The ultimate goal is to form a framework that will serve as a knowledge base for future wireless regulatory issues.

Playing a part in the FCC's interest in the wireless market are exclusive contracts between wireless providers and handset makers, like the agreement between AT&T and Apple for the iPhone. In June, a group of U.S. senators asked the FCC to examine those business agreements to see if they are in the best interest of consumers. The four members of the Commerce Subcommittee on Communications, Technology and the Internet has expressed concern over exclusive deals, after a petition was filed by the Rural Cellular Association, which represents smaller tier II and tier III carriers that provide service to parts of the U.S. where major carriers do not. The association has argued that their inability to provide customers with popular handsets limits competition. Bowing to federal pressure, Verizon Wireless responded by agreeing to allow some exclusive handsets on smaller, rural carriers' networks to promote competition.