Wireless Oligopoly?

by on February 12, 2007 · 4 comments

I haven’t had time to read Tim Wu’s new paper, but something struck me from reading Hance’s summary. Wu describes the wireless market as “a textbook oligopoly with four major players, premised on a bottleneck resource.” That didn’t strike me as being quite right, so I did a quick check on Wikipedia. Wu is right that the four largest carriers are AT&T, Verizon, Sprint, and T-Mobile. But these are not, as he implies, the only carriers. If Wikipedia is to be believed, at least, Alltel is #5 with 15 million customers in 36 states. U.S. Cellular is #6 with 5.7 million customers in 26 states. There are also a variety of smaller carriers. Most of them are Mobile virtual network operators piggy backing on networks owned by the big four, but you’ve also got Cellular South, Centennial Wireless, and SunCom, all of which appear to be non-trivial wireless carriers, although none of them come close to being national networks.

And then we must keep in mind that many customers still use landlines through their Baby Bell or cable company for their phone service. The Baby Bell option doesn’t add much competition since most people have either Verizon or AT&T for a Baby Bell. But most peoples’ cable companies are independent companies, and I don’t believe that Qwest owns any of the major wireless providers.

So depending on how you count, and what part of the country you’re in, the average consumer has between 5 and 8 choices for wireless phone service. Update: Oops, I meant to say “phone” here–including cable and Baby Bells as options

Now that’s obviously not as competitive as say, the PC industry. But it’s certainly comparable to a lot of industries we don’t generally think of as problematic. Your average metropolitan area only has 3 or 4 major supermarket chains, for example. Obviously, it’s always nice to have more competition, and we should be looking at policies that might open up the market to more players. But 5 to 8 major providers strikes me as a reasonably healthy industry by almost any standard.

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