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16th Mobile Competition Report

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Released: March 21, 2013

Federal Communications Commission

FCC 13-34



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
WT Docket No. 11-186
)

(Terminated)
)
Annual Report and Analysis of Competitive
)
Market Conditions With Respect to Mobile
)
Wireless, Including Commercial Mobile Services
)


SIXTEENTH REPORT


Adopted: March 19, 2013

Released: March 21, 2013



By the Commission: Chairman Genachowski and Commissioner Clyburn issuing separate statements;
Commissioner McDowell concurring and issuing a statement; Commissioner Pai
concurring in part, and issuing a statement.

TABLE OF CONTENTS

Heading
Paragraph #
I. EXECUTIVE SUMMARY .................................................................................................................... 1
II. INTRODUCTION .................................................................................................................................. 3
III. OVERVIEW OF THE MOBILE WIRELESS SERVICES INDUSTRY ............................................ 19
A. Introduction to Mobile Wireless Services ...................................................................................... 19
B. Overview of Service Providers ...................................................................................................... 25
1. Facilities-Based Providers ....................................................................................................... 25
2. Resale and MVNO Providers .................................................................................................. 29
3. Narrowband Data Providers .................................................................................................... 37
4. Mobile Satellite Service Providers .......................................................................................... 38
C. Mobile Wireless Network Coverage .............................................................................................. 42
D. Horizontal Concentration ............................................................................................................... 51
1. Market Shares .......................................................................................................................... 52
2. Herfindahl-Hirschman Index ................................................................................................... 54
3. Recent Entry and Exit .............................................................................................................. 62
a. Entry ................................................................................................................................. 63
b. Exit .................................................................................................................................... 67
E. Entry and Exit Conditions .............................................................................................................. 73
1. Regulatory Entry and Exit Conditions .................................................................................... 75
2. Non-Regulatory Entry and Exit Conditions ............................................................................ 78
F. Spectrum for Mobile Wireless Services......................................................................................... 85
1. Availability of Mobile Wireless Services Spectrum ............................................................... 86
2. Current Spectrum Transactions ............................................................................................. 111




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3. Analysis of Spectrum Holdings Overall ................................................................................ 116
4. Analysis of Spectrum Characteristics .................................................................................... 119
5. Competitive Effects of Spectrum Holdings ........................................................................... 133
IV. MOBILE WIRELESS SERVICES: PROVIDER CONDUCT .......................................................... 136
A. Price Rivalry: Developments in Mobile Service Pricing Plans ................................................... 137
1. Postpaid Service .................................................................................................................... 138
2. Prepaid Service ...................................................................................................................... 159
3. Early Termination Fees (ETFs) for Postpaid Service ............................................................ 175
B. Non-Price Rivalry ........................................................................................................................ 180
1. Network Coverage and Technology Upgrades ...................................................................... 181
a. Service Provider Technology Deployments ................................................................... 185
b. Coverage by Technology Type ....................................................................................... 202
c. Roaming .......................................................................................................................... 207
2. Investment ............................................................................................................................. 211
3. Differentiation in Mobile Wireless Handsets/Devices and Applications .............................. 220
4. Advertising, Marketing, Sales Expenditures, and Retailing .................................................. 231
a. Advertising Expenditures................................................................................................ 232
b. Marketing Campaigns ..................................................................................................... 234
c. Retailing .......................................................................................................................... 240
V. MOBILE WIRELESS SERVICES: PERFORMANCE AND OUTCOMES .................................... 242
A. Numbers of Mobile Wireless Connections and Customers ......................................................... 244
1. Industry-Wide Connections ................................................................................................... 244
2. Connections by Type of Service and Device ........................................................................ 246
3. Connections by Service Segment .......................................................................................... 250
4. Connections by Age .............................................................................................................. 251
5. Connections by Economic Area (EA) ................................................................................... 252
B. Mobile Wireless Net Additions of Customers ............................................................................. 253
1. Industry-Wide Net Additions ................................................................................................ 253
2. Net Additions by Service Segment........................................................................................ 254
3. Net Adds by Service Provider ............................................................................................... 256
C. Connection Churn ........................................................................................................................ 257
D. Output and Usage Levels ............................................................................................................. 258
1. Mobile Voice ......................................................................................................................... 258
2. Mobile Messaging ................................................................................................................. 259
3. Mobile Data Traffic (Non-Messaging) .................................................................................. 261
E. Pricing Levels, Changes, and Trends ........................................................................................... 262
1. Price Metrics.......................................................................................................................... 262
2. Wholesale Pricing.................................................................................................................. 269
3. Intercarrier Roaming Rates and Revenue .............................................................................. 270
F. Revenue and ARPU ..................................................................................................................... 273
G. Accounting-Based Measures of Profitability ............................................................................... 281
H. Network Performance .................................................................................................................. 287
I. Network Coverage by Income Level ........................................................................................... 297
VI. MOBILE WIRELESS SERVICES: CONSUMER BEHAVIOR ...................................................... 298
A. Consumer Decision Factors in Choosing a Service Provider ...................................................... 299
B. Consumer Access to Information on Mobile Wireless Services .................................................. 305
C. Surveys of Consumer Satisfaction with Service Providers .......................................................... 313
VII. INPUT AND DOWNSTREAM SEGMENTS OF THE MOBILE WIRELESS
ECOSYSTEM .................................................................................................................................... 316
A. Non-Spectrum Input Segments .................................................................................................... 316
1. Infrastructure Facilities .......................................................................................................... 317
a. Background ..................................................................................................................... 317
b. Demand for Infrastructure Facilities ............................................................................... 322

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c. Infrastructure Costs ......................................................................................................... 325
2. Backhaul Facilities ................................................................................................................ 329
a. Background ..................................................................................................................... 329
b. Demand for Backhaul ..................................................................................................... 331
c. Supply of Backhaul ......................................................................................................... 333
d. Costs ............................................................................................................................... 334
e. Recent FCC Initiatives on Backhaul ............................................................................... 336
B. Downstream Segments................................................................................................................. 339
1. Mobile Wireless Handsets/Devices and Operating Systems ................................................. 339
b. Factors Affecting Mobile Wireless Competition ............................................................ 347
(i) Bundling of Wireless Service Subscriptions with the Purchase of Handsets ........... 347
(ii) Handset Interoperability ........................................................................................... 350
2. Mobile Applications .............................................................................................................. 351
3. Mobile Commerce ................................................................................................................. 354
4. The Impact of Mobile Wireless Services on the U.S. Economy ........................................... 358
VIII.
INTERMODAL DEVELOPMENTS .......................................................................................... 364
A. Voice Services ............................................................................................................................. 364
B. Broadband Services ..................................................................................................................... 367
C. Small Area Wireless Coverage Technologies .............................................................................. 369
IX. URBAN-RURAL COMPARISONS .................................................................................................. 383
A. Mobile Wireless Coverage and Service Provision in Rural Areas .............................................. 385
1. Mobile Voice Network Coverage .......................................................................................... 385

2. Mobile Broadband Network Coverage .................................................................................. 388
B. Spectrum in Rural Areas .............................................................................................................. 397
X. INTERNATIONAL COMPARISONS .............................................................................................. 401
A. Average RPM (Voice Only) ........................................................................................................ 402
B. Usage ........................................................................................................................................... 403
C. Penetration Rates ......................................................................................................................... 404
D. Concentration ............................................................................................................................... 405
XI. CONCLUSION .................................................................................................................................. 407
XII. PROCEDURAL MATTERS ............................................................................................................. 408
APPENDIX A - Spectrum Bands Available for Mobile Wireless Services
APPENDIX B - Tables
APPENDIX C - Maps
APPENDIX D - Index of Acronyms
APPENDIX E - List of Commenters


3


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FCC 13-34




Map 1


Mobile Wireless Broadband Coverage


Map 2

Mobile Wireless Network Coverage




4


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FCC 13-34




I.

EXECUTIVE SUMMARY

1.
The Federal Communications Commission (Commission) is required to report annually
to Congress on the state of competition in the mobile services marketplace, pursuant to section
332(c)(1)(C) of the Communications Act. In June 2011, the Commission released the Fifteenth Report,
which provided an analysis of mobile wireless market conditions during 2009 and, to the extent data were
available, 2010.1 This year’s sixteenth Mobile Wireless Competition Report (Sixteenth Report or Report)
updates the data and analysis presented in the Fifteenth Report, and analyzes mobile wireless service
market conditions during 2010 and 2011, as well as during 2012 to the extent data are available.2 The
analysis includes “competitive market conditions with respect to commercial mobile services” as required
by the Act.3 Like the Fifteenth Report, the Sixteenth Report presents a multitude of industry data on
various aspects of mobile wireless competition.4
2.
Consistent with the Commission’s first seven Annual Commercial Mobile Radio Service
(CMRS) Competition Reports, the Fourteenth and Fifteenth Reports did not reach an overall conclusion
regarding whether or not the CMRS marketplace was effectively competitive, but provided an analysis
and description of the CMRS industry’s competitive metrics and trends. The Sixteenth Report follows the
same analytical framework used in the Fifteenth and Fourteenth Reports, with certain improvements
based on responses to those Reports. The Sixteenth Report also makes no formal finding as to whether
there is, or is not, effective competition in the industry. Rather, given the complexity of the various inter-
related segments and services within the mobile wireless ecosystem, the Report focuses on presenting the
best data available on competition throughout this sector of the economy and highlighting several key
trends in the mobile wireless industry.
Selected developments and key metrics with respect to the current state of mobile wireless competition, as
set forth in the Report, are highlighted below:

Network Deployment

Consistent with the previous four Reports, the Commission has conducted an analysis of service provider
coverage by census block, based on data from Mosaik Solutions, formerly American Roamer,5 and

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, Fifteenth Report, 26 FCC
Rcd 9665 (2011) (Fifteenth Report).
2 The Report includes network coverage data from Mosaik Solutions (formerly American Roamer) from the third
quarter of 2012. In other instances, particularly where year-end metrics are discussed or annual comparisons are
made, the Report uses year-end 2010 and 2011 data. See Section II. Introduction, infra, for an additional discussion
of data timeframes.
3 47 U.S.C. § 332(c)(1)(C). As discussed below, this analysis integrates an analysis of commercial mobile radio
services (CMRS) into an analysis of all mobile wireless services, including voice, messaging, and broadband. See
Section II, Introduction, infra.
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. See, e.g., Fourteenth Report, 25 FCC Rcd at 11429 n. 14
(“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”).
5 This analysis likely overstates the coverage actually experienced by consumers, because Mosaik Solutions, LLC
(Mosaik) reports advertised coverage as reported to it by many mobile wireless service providers, each of which
uses a different definition or determination of coverage. 2012 Eighth Broadband Progress Report, FCC 12-119, at ¶
39-40. We also recognize that an analysis of coverage at the nationwide level provides only a general benchmark.
(continued….)

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FCC 13-34




population data from the 2010 Census.6 While recognizing that this analysis likely overstates the
coverage actually experienced by consumers because of limitations of the Mosaik data, we find that this
analysis is useful because it provides a general baseline that can be compared over time across network
types, technologies, and providers. For the first time, we present estimated coverage in terms of road
miles in addition to population and square miles. We also note that these data estimate the number of
providers with network coverage in these census blocks, which can often differ from the number of
providers actually offering service to consumers who live in these census blocks.


Estimated Mobile Wireless Coverage by Census Block, Oct. 20127



99.9%
1 or more
95.3%
74.3%
i
t
h

s

w )

99.3%
2 or more
87.7%
d
er

63.2%
r
2012

97.2%

P
r
o
vi

3 or more
72.8%
46.4%
c
e ctobe

vi
92.8%
4 or more
56.0%
f
Ser

30.7%
o
% of U.S. Population
er
80.4%

C
o
v
e
r
a
g
e

(
O

5 or more
35.5%
% of U.S. Road Miles
u
mb

16.0%

N

% of U.S. Square Miles
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%

Mobile Wireless Voice Coverage (%)

Source: Mosaik Data, Census 2010














(Continued from previous page)
A nationwide average will mask regional disparities in coverage and create an overall picture that does not capture
variances across the country.
6 Unless otherwise noted, population data in the Report are taken from U.S. Census Bureau (Census Bureau). For
purposes of calculating the extent of service provision based on census blocks, we use 2010 Census population
figures because that is the Census Bureau’s most recent data about population at the census block level.
7 The 80.4 percent estimate for ‘5 or more’ providers represents a marked decline from the figure presented in the
Fifteenth Report, which reported that 89.6 percent of the U.S. population was covered by at least five providers
based on the Commission’s analysis of July/August 2010 Mosaik data. See Fifteenth Report, 26 FCC Rcd at 9705,
Table 5. We believe there is an anomaly in the July/August 2010 data that resulted in unusually high estimates of
the percentage of the population covered by the networks of at least four, five, and six providers (94.3 percent, 89.6
percent, and 76.4 percent, respectively).

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Estimated Mobile Wireless Broadband Coverage by Census Block, Oct. 2012




During the time period covered by this Report, the four nationwide facilities-based mobile wireless
service providers (Verizon Wireless, AT&T, Sprint Nextel, and T-Mobile), as well as other mobile
operators, continued to upgrade and expand their networks with advanced 3G and 4G technologies that
allow for faster mobile broadband connection speeds.8

3G/4G Deployment Reported by Selected Mobile Wireless Service Providers9

Service

HSPA, HSPA+, and EV-DO

LTE and WiMAX Deployment

Provider

Deployment

Verizon
As of May 2012, EV-DO Rev. A
As of Nov. 2012, LTE network
Wireless
network covered 290 million POPs.
covered more than 250 million POPs.
Plans to expand LTE nationwide in
2013 to have LTE coverage similar to
its 3G network.
Verizon

As of March 2013, the program
Wireless – LTE
included 20 small, rural providers that
in Rural
have launched or plan to launch LTE
America
to areas covering approximately 2.8
Partners
million people across 14 states. By
March 2013, 7 of these providers had
launched LTE: Bluegrass Cellular
(Kentucky), Pioneer Cellular
(Oklahoma), Cellcom (Wisconsin),
Thumb Cellular (Michigan), Strata
Networks (Utah), Chariton Valley

8 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.
9 See Section IV.B.1. Network Coverage and Technology Upgrades, infra.

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(Missouri) and Cross Wireless
(Oklahoma).
AT&T Wireless As of mid-year 2012, all of AT&T’s
As of Nov. 2012, LTE network
network is covered by HSPA+,
covered 150 million POPs. AT&T
covering 275 million POPs.
plans to deploy LTE to 80 percent of
the U.S. population, or approximately
250 million POPs, by the end of 2013,
and to 300 million by the end of 2014.
Sprint Nextel
As of January 2012, EV-DO Rev. A
As of September 2012, LTE service is
network covered approximately 274
offered in 19 cities and plans to deploy
million POPs.
LTE to 100 additional cities within the
next several months and to complete
LTE build-out by the end of 2013.
Clearwire

As of June 2012, WiMAX network
covered approximately 134 million
POPs. Plans to launch LTE in 31
urban markets by June 2013.
T-Mobile
As of September 2012, HSPA+ 21
As of December 2012, plans to deploy
network covered over 200 million POPs its LTE network in the United States to
and HSPA+ 42 network covered 184
100 million people by July 2013 and
million POPs.
200 million people by year-end July
2013.
MetroPCS

As of the end of July 2012, LTE
network covered all of the major
metropolitan areas MetroPCS serves,
including Atlanta, Boston, Dallas,
Detroit, Jacksonville, Las Vegas, Los
Angeles, Miami, New York, Orlando,
Philadelphia, Sacramento, San
Francisco, and Tampa.
Leap
EV-DO deployed to entire network
As of October 2012, Leap had
footprint, which covered approximately
launched LTE service in Tucson, AZ
95.3 million POPs at the end of 2011.
and Las Vegas, Nevada. Leap expects
its LTE network to cover
approximately 21 million POPs by the
end of 2012. The company plans to
deploy LTE to approximately two-
thirds of its network footprint over the
next two to three years.
US Cellular
EV-DO network covers 98 percent of
As of June 2012, LTE network covers
its customers.
30 percent of customers and expects to
cover 58 percent by the end of 2012.
C-Spire
EV-DO network covered approximately As of October 2012, C-Spire offered
4.7 million POPs at the end of 2011.
LTE service in 31 cities in Mississippi.
C-Spire plans to further expand its
LTE network to 6 more cities by the
end of 2012.






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Subscribers, Connections, and Net Adds

The Report uses different data sources to estimate the number of mobile wireless subscribers and
connections. One source, Numbering Resource Utilization Forecast (NRUF), tracks the number of phone
numbers that have been assigned to mobile wireless devices. 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 increasingly less useful in measuring the number of individual subscribers. 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.
Based on NRUF data, the number of mobile wireless connections grew four percent from 290.7 million at
the end of 2009 to 317.3 million at the end of 2011. CTIA estimates the total number of mobile wireless
connections based on its industry survey and found that the number of connections grew 11 percent from
285.6 million at the end of 2009 to 316.0 million at the end of the fourth quarter of 2011. Industry-wide
net new mobile wireless subscriber/connection additions (or “net adds”) for 2011 totaled 15.5 million,
based on NRUF data, and 19.7 million based on CTIA data.
The Commission is also able to estimate the number of mobile voice subscribers and mobile Internet
access subscribers using data reported by service providers on Form 477. Based on those data, at the end
of 2011 there were 298.3 million subscribers to mobile telephone, or voice, service, up nearly 4.6 percent
from 285.1 million at the end of 2010. At the same time, there were 142.1 million subscribers to mobile
Internet access services at speeds exceeding 200 kbps in at least one direction, up from the 97.5 million
were reported for the end of 2010, and more than double the 56.3 million reported for year-end 2009.10











10 This figure is based on the Commission’s Form 477 data, which collects subscribership and other data from
providers of Internet access services at speeds exceeding 200 kbps in at least one direction. We believe that only
mobile services provided using 3G or 4G mobile network technologies – including HSPA, EV-DO, LTE, and
mobile WiMAX – would meet this speed threshold. In the Form 477 data, mobile telephone subscribers and mobile
Internet access subscribers are not mutually exclusive.

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FCC 13-34




Estimated Total Mobile Wireless Connections

11

NRUF

CTIA


Connected Increase from Connections
Estimated
Devices
previous year
Per 100
Connections
(millions)
(millions)
People
(millions)
2001
128.5
n/a
45
128.4
2002
141.8
13.3
49
140.8
2003
160.6
18.8
54
158.7
2004
184.7
24.1
62
182.1
2005
213.0
28.3
71
207.9
2006
241.8
28.8
80
233.0
2007
263.0
21.2
86
255.4
2008
279.6
16.6
91
270.3
2009
290.7
11.1
94
285.6
2010
301.8
11.1
97
296.3
2011
317.3
15.5
102
316.0

Total Mobile Wireless Connection Annual Net Additions, 2005-2011 (In millions)


35
NRUF
30
28.3
28.8
CTIA
25.8
25.9
25.1
Form 477
25
22.4
21.2
19.7
19.7
20
16.6
15.5
14.9
15.3
15
13
13.2
12
11.1
11.1 10.7 10.8
10
5
0
2005
2006
2007
2008
2009
2010
2011



11 Commission estimates based on NRUF data. CTIA Year-End 2011 Wireless Indices Report. In the second half of
2012, CTIA revised estimated connections for the years 2009-2011. In describing these revisions, CTIA states in its
forthcoming Wireless Indices Report “Nor do we make an M2M adjustment for participating companies that do not
include their M2M numbers in their reported subscriber counts. Indeed, the mid-year 2012 estimate – and the
revised subscriber connection figures for five previous periods – reflects the exclusion of some M2M and other units
not currently treated as “subscriber connections” which previously had been treated as such connections.” See also
Section V.A.1.Industry Wide Connections, infra

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Quarterly net adds in 2010 and 2011 varied by service segment, with prepaid continuing to take the
largest (but declining) portion, and wholesale and connected device adds seeing significant growth. Net
adds among service providers continue to vary, with AT&T and Verizon Wireless continuing to see the
largest number of net adds. Sprint Nextel also experienced significant growth, reversing a trend of net
losses from previous years. T-Mobile experienced negative net adds in 2011, a year during much of
which the unsuccessful applications for the transfer of control of T-Mobile USA to AT&T were pending
before the Commission.


Quarterly Net Additions by Service Segment: 2009-2011

12
8,000
7,000
5,792
6,000
5,618
5,398
)
s

4,946
4,887
d
5,000
n
4,629
a
s

4,366
4,411
u
o

3,911
4,000

(th
s

3,466
d
d

2,927
t A
3,000
e
2,507

N

2,000
1,000
-
(1,000)
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
Total Net Adds
3,911
2,927
2,507
5,618
4,366
3,466
4,629
5,398
5,792
4,411
4,946
4,887
Prepaid
2,675
1,530
1,018
2,792
2,464
749
1,565
2,633
3,025
1,395
1,787
2,078
Wholesale
308
(50)
132
306
671
483
607
39
846
715
1,061
1,451
Connected Devices
244
758
184
1,345
1,237
1,421
1,634
1,831
1,725
1,452
1,446
76
Postpaid
684
689
1,173
1,175
(6)
813
823
895
196
849
652
1,282
Source: UBS Data













12 US Wireless 411 4Q11, at 10. UBS categorizes Tracfone customers as prepaid, not wholesale.

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Annual Net Additions by Service Provider, 2008-2011 (In thousands)

13




Usage

Trends in mobile wireless services showed continuing evolution from being primarily voice-centric to
data-centric during the time frame covered by this Report. During this period mobile data traffic grew
significantly while average billable minutes of use (MOUs), a measure of monthly mobile voice usage per
subscriber, continued to decline. Following significant increases in previous years, growth rates for SMS
and Multimedia Messaging Service (MMS) usage per customer were steady or declining, although we
note the emergence of data services that provide similar functionality to SMS and MMS. Usage measures
for these services are excluded in these numbers but included in the data consumption chart below. The
Report identifies four trends highlighting the reasons for increased data traffic: (1) the growth in mobile
device connections, including multiple connections held by the same subscriber; (2) the growing use of
data-only mobile devices, such as laptop cards, e-readers, and tablets; (3) the increased popularity of
higher-bandwidth mobile applications; and (4) the deployment of faster networks. It is estimated that
U.S. mobile data traffic increased 270 percent from 2010 to 2011, and that it has more than doubled each
year for the past four years.14


13 These calculations include wholesale subscribers. Pro-forma calculations were made to account for mergers and
show only “organic” net adds generated independent of mergers. For instance, Verizon Wireless’s reported net
additions for 2009, including the subscribers acquired from Alltel, totaled 19,193,000. See Fifteenth Report, 26
FCC Rcd at 9775 Chart 18, n. 544.
14 Cisco Visual Networking Index U.S. Mobile Data Traffic Forecast Update, February 2012.

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Average MOUs Per Subscriber Per Month

15


Average Text and Multimedia Messages Per Subscriber Per Month, CTIA

16

Six-Month

Average Text Average MMS

Period Ending

Messages

Messages

Per User

Per User

Per Month

Per Month

Jun-05
29
0.3
Dec-05
40
0.7
Jun-06
51
0.9
Dec-06
69
1.2
Jun-07
103
1.8
Dec-07
144
2.3
Jun-08
248
3.6
Dec-08
388
5.8
Jun-09
451
6.3
Dec-09
488
14.4

15 CTIA Year-End 2011 Wireless Indices Report, at 215.
16 CTIA’s Wireless Industry Indices, Year-End 2011 Results, released May 2012. Calculations derived from data on
reported subscribers, six-month text/SMS message volumes, and six-month MMS message volumes. CTIA’s
reported subscribers which were not revised in the second half of 2012 when CTIA revised estimated subscribers for
2009-2011.

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Jun-10
566
18.5
Dec-10
598
13.7
Jun-11
606
15.0
Dec-11
594
12.5

Average Monthly Data Consumption per User: Nationwide Providers, 2009-2011

17


Price Metrics and Average Revenue Per User (ARPU)

An examination of two key pricing indicators, the Wireless Telephone Services component of the
Consumer Price Index18 and the per-minute price of voice service, shows that mobile wireless prices
declined overall in 2010 and 2011. The Wireless Telephone Services CPI declined for two consecutive
years, while the per-minute price of voice service remained roughly stable in 2010 and then declined in
2011.

From 2009 to 2010, the annual Wireless Telephone Services CPI decreased by nearly 3 percent while the
overall CPI increased by 1.6 percent and the Telephone Services CPI was unchanged. From 2010 to
2011, the annual Wireless Telephone Services CPI decreased by another 3.6 percent, while the overall
CPI increased by 3.2 percent and the Telephone Services CPI decreased by 1.1 percent. The Wireless
Telephone Services CPI’s back-to-back declines in 2010 and 2011 followed an unchanged Wireless
Telephone Services CPI in 2009 and a series of much smaller declines in the period from 2002 to 2008.

In addition to the Wireless Telephone Services CPI, Voice Revenue per Minute (RPM) offers a proxy for
mobile voice prices. Voice RPM has declined over the past 18 years, from more than $0.40 to the current

17 Validas, 3 Year View of US Wireless Data Consumption: 2009-2011, Prepared for the FCC by Validas. The
Validas estimates are averages calculated from data from a sample of approximately 20,000 customer bills obtained
from customers of the four nationwide providers.
18 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.

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$0.05, with the rate of decline decreasing as Voice RPM has reached the low single digits. Because CTIA
currently aggregates revenue reports for text messaging and data services, it is no longer possible to
derive separate estimates for those two services. An estimate based on Nielsen data suggests, however,
that the unit price for text messages has continued to fall since 2008. We also note that Recon Analytics
estimates that the effective price per megabyte of data declined from $0.47 per megabyte in the third
quarter of 2008 to about $0.05 per megabyte in the fourth quarter of 2010, which is roughly an 89 percent
decrease.

Mobile Wireless Voice Revenue per Minute: 1993-2011




As shown in the following chart, the total revenue generated by the mobile wireless industry continues to
be substantial, with approximately $171.28 billion in service revenues in 2011, and has been growing
consistently.19 Annual voice revenues continued the decline first noted in 2009 from approximately $113
billion to $108 billion in 2011. At the same time, data revenue, including text messaging revenue, has
continued to see significant growth, going from $42 billion to $63 billion in the same period.




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

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Total Mobile Wireless Industry Revenues

20


These trends are reflected in the following chart in changes in the Average Revenue per User (ARPU).
The chart shows an overall decline, with falling voice ARPU not quite counterbalanced by increases in
data revenue.










20 CTIA Year-End 2011 Wireless Indices Report. In 2009, CTIA discontinued the practice of reporting a breakout
data series for text messaging service revenues. The estimates of both wireless data revenues and data ARPU
therefore include text messaging service revenues as well as other mobile data service revenues.

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Monthly ARPU by Type of Service

21


Spectrum

Access to spectrum is perhaps the most important input for the provision of mobile wireless services.
Demand for these services has grown steadily and sharply in recent years and projections indicate such
growth will continue unabated. In order for service providers to meet the demand, they will need to put
new spectrum to use and make more efficient use of existing holdings. Because spectrum bands vary in
their propagation characteristics, service providers may make use of different bands depending on the
nature of the service, geography, density, or other factors in their network build-out.

As a general matter, a provider is best positioned if it holds complementary spectrum bands. Spectrum
below 1 GHz is considered most suitable for establishing base network coverage, especially for wide area
and in-building coverage. Higher frequencies often can best enable providers to increase capacity where
needed, especially to provide higher data rates, and to fill in gaps in coverage. Spectrum from 1 GHz
through 2.7 GHz is currently often used as capacity spectrum. Verizon Wireless and AT&T together hold
approximately 90 percent of Cellular spectrum based on megahertz-POPs (MHz-POPs), which was the
first band to be licensed for commercial mobile services and has the most extensive network buildout. In

21 CTIA Year-End 2011 Wireless Indices Report; Commission analysis. Total and voice ARPU include roaming and
toll revenues. The ARPU calculations are based on CTIA’s total estimated subscriber connection numbers, rather
than its reported subscriber connection numbers. As discussed above, CTIA discontinued the practice of reporting a
breakout data series for text messaging service revenues.

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addition, Verizon Wireless holds 45 percent of the MHz-POPs of Cellular and 700 MHz spectrum
combined, while AT&T holds approximately 39 percent. No licensee holds more than 25 percent of the
combined MHz-POPs in the Broadband PCS (PCS) and Advanced Wireless Services (AWS) spectrum
between 1 GHz and 2.5 GHz. T-Mobile holds the greatest amount of those bands. Clearwire, in which
Sprint holds a majority interest, has access to the predominant amount of 2.5 GHz spectrum, comprised of
the BRS and EBS bands.

Population-Weighted Average Megahertz Under/Over 1 GHz*


* Estimates include all transactions consummated as of August 15, 2012, as well as the transactions approved in the
Verizon Wireless-SpectrumCo Order.


On February 22, 2012, Congress passed the Spectrum Act.22 Section 6403 of the Spectrum Act requires
the Commission to conduct an incentive auction of broadcast television spectrum and sets forth specific
requirements for the auction.23

The Commission has proposed to make the recovered spectrum available for flexible use in fixed and
mobile wireless communications services, including mobile broadband.24 Repurposing this spectrum will
serve to further address the nation’s growing demand for wireless broadband services, promote ongoing

22 47 U.S.C. § 309(j)(8)(G); Spectrum Act at § 6402.
23 See Spectrum Act at § 6403. Section 6402 of the Spectrum Act, codified at 47 U.S.C. 307(J)(8)(G)(i) authorizes
the Commission to conduct incentive auctions in which a licensee may voluntarily relinquish its spectrum usage
rights, in order to permit the assignment by auction of new initial licenses subject to flexible-use service rules, in
exchange for a portion of the resulting auction.
24 Innovation in the Broadcast Television Bands: Allocations, Channel Sharing and Improvements to VHF, ET
Docket No. 10-235, Report and Order, 27 FCC Rcd 4616, 4617 ¶ 1 (2012).

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innovation and investment in mobile communications, and help to ensure that the United States keeps
pace with the global wireless revolution.25

In addition to the incentive auction of broadcast television spectrum, the Commission has taken other
measures to enable more efficient use of spectrum, including converting 40 megahertz of spectrum from
satellite to terrestrial use, changing technical rules to permit the rollout of LTE in the 800 MHz band and
make the WCS band useable for mobile broadband, and pursuing opportunities for innovative use of
small cells in the 3.5 GHz band, as well as exploring potential opportunities for sharing with government
users in a manner that frees up additional spectrum for commercial use.

Market Concentration

The Herfindahl-Hirschman Index (HHI) employed by the Commission to measure market concentration is
the most 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. 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).26

In the mobile wireless services industry, the weighted average of HHIs (weighted by population across
the 172 Economic Areas in the United States) was 2873 at the end of 2011, essentially unchanged from
2868 at the end of 2010, and an increase from 2811 at the end of 2009. At the end of 2011, the value of
the HHI for individual Economic Areas (EAs) ranged from a low of 2008 in EA 108 (covering parts of
Wisconsin) to a high of 7178 in EA 146 (covering parts of Montana).

Average HHI Across EAs in 2011



25 Innovation in the Broadcast Television Bands: Allocations, Channel Sharing and Improvements to VHF, ET
Docket No. 10-235, Report and Order, 27 FCC Rcd 4616, 4617 ¶ 1 (2012).
26 See Horizontal Merger Guidelines, U.S. Department of Justice and the Federal Trade Commission,
http://www.justice.gov/atr/public/guidelines/hmg-2010.pdf">http://www.justice.gov/atr/public/guidelines/hmg-2010.pdf .

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Investment

CTIA reports that incremental capital investment by wireless operators rose to $24.9 billion in 2010, a 22
percent increase from the $20.4 billion spent in 2009, and then increased another 1.7 percent to $25.3
billion in 2011.27 The increases in 2010 and 2011 follow a one percent increase in capital investment by
mobile wireless service providers in 2009, which followed a trend of declining investment from 2006
through 2008. Estimates by the U.S. Census Bureau likewise show an 11 percent increase in total
wireless industry capital expenditures to $23 billion in 2010 following an 18 percent decline to $20.7
billion in 2009.28 This pattern of a period of declining investment followed by a period of rising
investment is consistent with the cyclical nature of technological adoption in the mobile wireless service
industry, with the upswing in capital investment since 2009 likely reflecting the transition from third- to
fourth-generation wireless network technologies. The following chart presents capital investment by the
four current nationwide providers for the past six years.

Capital Expenditures by Service Provider

29


27 CTIA Year-End 2010 Wireless Indices Report, at 137, 139; CTIA Year-End 2011 Wireless Indices Report, at 139,
141. CTIA’s figure includes incremental investment in currently operational systems, including expenditures for
building operating systems, land and capital leases, and all tangible non-system capital investment, but does not
include the cost of spectrum licenses purchased at auctions or other acquisition processes or greenfield builds. CTIA
Year-End 2010 Wireless Indices Report
, at 137-138.
28 See U.S. Census Bureau, Annual Capital Expenditures Survey,http://www.census.gov/econ/aces/index.html"> http://www.census.gov/econ/aces/index.html,
(visited Feb. 9, 2011)
29 Verizon Communications, Inc., SEC Forms 10-K, filed Feb. 14, 2012, filed Feb. 28, 2011, filed Feb. 26, 2010,
and Feb. 24, 2009; AT&T Inc., SEC Forms 10-K, filed Feb. 24, 2012, filed Mar. 1, 2011, filed Feb. 25, 2010, filed
Feb. 25, 2009, filed Feb. 27, 2008; Sprint Nextel, SEC Forms 10-K, filed Feb. 27, 2012; filed Feb. 24, 2011; filed
Feb. 26, 2010; US Wireless 411 4Q11, at 37.

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Profitability Metrics


In the absence of the data necessary to estimate economic profits, there are various measures used by
industry observers to estimate accounting profits in the wireless industry. One such metric, based on
company data reported to the Securities and Exchange Commission, is EBITDA (Earnings before
Interest, Taxes, Debt, and Amortization) – which equals accounting profits before deducting interest
expenses, corporate income taxes, depreciation, and amortization. In 2011, EBITDA per subscriber
ranged from a low of $4.11 (Sprint Nextel) to a high of $19.66 (Verizon Wireless). The EBITDA per
subscriber of Sprint Nextel has declined significantly over the past several years. The EBITDA minus
CAPEX per subscriber of AT&T and Verizon Wireless have decreased relative to 2009, but are above the
levels of Sprint Nextel and T-Mobile.
A second indicator of mobile wireless segment profitability is EBITDA margin, which is EBITDA as a
percentage of service revenue. Standardizing EBITDA by service revenues facilitates cross-provider
comparisons. The EBITDA margin of a number of the larger mobile providers for the past several years
is shown in the following chart:

Reported EBITDA Margins (Selected Providers), 2002-2011

30
Source: UBS


As shown in the chart, among the selected providers, the difference in 2011 between the provider with the
highest EBITDA margin (Verizon Wireless) and the provider with the lowest (Sprint Nextel) was 32.7

30 UBS, US Wireless 411 Reports, 2002 – 2011.

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percent. Verizon Wireless has remained above 40 percent since 2006. AT&T’s EBITDA margin has
decreased after 2009, dropping to 28.7 percent in 2011, while T-Mobile’s EBITDA margin increased to
30.2 percent in 2011.

The following graph of EBITDA per subscriber versus net adds of the four nationwide service providers
shows that the EBITDA per subscriber and net adds of AT&T and Verizon have been stable over the past
four years. During the same period, the EBITDA per subscriber and net adds of T-Mobile have been
decreasing, and the EBITDA per subscriber of Sprint has been decreasing while its net adds have been
increasing.

Subscriber Additions vs. EBITDA Per Subscriber, 2008-2011




Handsets and Devices

Handsets and devices are a central part of consumers’ mobile wireless experience, and a key way by
which providers differentiate their offerings. During June 2011, 20 handset manufacturers offered a total
of 297 handset models to mobile wireless service providers in the United States. In 2012, smartphone
adoption increased, with 55.5 percent of mobile wireless consumers reported to have smartphones as of
July 2012, up from 41 percent in July 2011.31 Popular smartphone operating systems such as the Android
and the Apple iOS are available from multiple service providers, permitting consumers to pair their
preferred operating systems with different service providers. During 2011, the iPhone exclusive handset
arrangement between Apple and AT&T ended, and multiple service providers began offering the iPhone

31 Nielsenwire, The Nielsen Company, Young Adults and Teens Lead Growth Among Smartphone Owners,
September 10, 2012. See alsohttp://blog.nielsen.com/nielsenwire/online_mobile/young-adults-and-teens-lead-growth-among-smartphone-owners/"> http://blog.nielsen.com/nielsenwire/online_mobile/young-adults-and-teens-lead-
growth-among-smartphone-owners/ (visited Nov.19, 2012).

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on their networks.32 Innovative smartphones are available at a variety of price points and with both post-
paid and pre-paid service plans.

Smartphone Penetration Rates in the United States, Q4 2009 – Q2 2012

33



Apple’s iOS and Google’s Android have emerged as the two leading mobile operating systems.
According to comScore, Android’s share of the smartphone operating system grew from 3 percent in May
2009 to 51 percent in March 2012, while iOS’s market share increased from 20 percent to 32 percent over
the same period. Over the same period, RIM’s market share has declined from the top position to
commanding less than ten percent of the market. In September 2011, 98.5 percent of smartphones in use
had an operating system from a top-five mobile operating system provider, while the remaining 1.5
percent of smartphones in use had other operating systems.







32 Prior to 2011, Apple distributed its iPhone through AT&T (and its affiliates) only. An exclusive handset
arrangement (EHA) is an arrangement in which a handset manufacturer or vendor agrees to sell a particular handset
model to only one wireless service provider, usually for a specified period of time. See Fifteenth Report, 26 FCC
Rcd at 9857 ¶ 341.
33 Nielsenwire, The Nielsen Company, Two Thirds of New Mobile Buyers Now Opting for Smartphones, July 12,
2012. See alsohttp://blog.nielsen.com/nielsenwire/online_mobile/two-thirds-of-new-mobile-buyers-now-opting-for-smartphones/"> http://blog.nielsen.com/nielsenwire/online_mobile/two-thirds-of-new-mobile-buyers-now-opting-
for-smartphones/ (visited Nov. 19, 2012).

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Smartphone Operating System U.S. Market Share, 2009-2012

34


Mobile Applications

The number of mobile applications launched and the number of applications downloaded by consumers
has grown significantly over the past three years. According to BGR, a leading source for mobile news in
the U.S., by the end of 2011 U.S. consumers had access to more than 989,863 applications, a number that
has grown to over 1,000,000 by mid-2012.35 Application stores offer thousands of applications that can
be downloaded to mobile devices that have mobile broadband connections. By September 2012, there
were more than 700,000 applications available from the Apple App Store for the Apple iOS, a number
that nearly doubled in less than a year.36 The total number of applications downloaded from Apple’s
App Store grew from 100,000 in 2008 to 25 billion in March 2012. By October 2012, Google Play for
the Android operating system offered over 675,000 applications and had more than 25 billion total
downloads. The major categories of applications include: web searching, news and information, e-mail
and messaging, games, social networking, location-based services, photo sharing, music and video
streaming, and VoIP. In addition, thousands of niche applications have been designed for specific uses,

34 comScore, Press Release, comScore Reports July 2012 U.S. Mobile Subscriber Market Share, Sept. 4, 2012.
http://www.comscore.com/Insights/Press_Releases/2012/9/comScore_Reports_July_2012_US_Mobile_Subscriber_Market_Share">http://www.comscore.com/Insights/Press_Releases/2012/9/comScore_Reports_July_2012_US_Mobile_Subscriber_
Market_Share (visited Nov. 19, 2012).
35 See Available apps across major mobile platforms approaching million-app milestone, available at
http://www.bgr.com/2011/12/05/available-apps-across-major-mobile-platforms-approach-million-app-milestone/">http://www.bgr.com/2011/12/05/available-apps-across-major-mobile-platforms-approachmillion-app-milestone/
(visited Nov. 30, 2012).
36 See Applehttp://www.apple.com/iphone/from-the-app-store/">, http://www.apple.com/iphone/from-the-app-store/ (visited Nov. 30, 2012).

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hobbies, interests, and industries by various third-party application developers.

Estimated Number of Applications Available, 2010-2012

Application Store

2010
2011
2012
Apple App Store
250,000
425,000
700,000
Google Play
80,000
200,000
675,000
Blackberry App World
12,000
50,000
70,000
Nokia Ovi Store
13,000
30,000
50,000
Windows Mobile
1,350
20,000
30,000
Marketplace


Intermodal Competition

The number of adults who rely exclusively on mobile wireless for voice service has increased
significantly in recent years. According to the National Health Interview Survey (NHIS), approximately
32.3 percent of all adults in the U.S. lived in wireless-only households during the second half of 2011.37
This compares to 27.8 percent of all adults in the second half of 2010 and 22.9 percent in the second half
of 2009.38 The percentage of households that are wireless-only has been steadily increasing as well. As
of the second half of 2011, just over one-third, or approximately 34 percent, of all U.S. households were
wireless only, up from 29.7 percent in the second of 2010 and 24.5 percent in the second half of 2009.39

Approximately half of all adults aged 18-24 and aged 30-34 lived in wireless-only households, while
nearly 60 percent of adults aged 25-29 did so.40 The percentage of adults living in households with only
wireless telephones decreased as age increased beyond 35 years.41 Nevertheless, the percentage of older
adults living in wireless-only households has been gradually increasing over time. The percentage of 35-
to 44-year-olds that are wireless only rose from 23.9 percent in the second half of 2009 to 36.8 percent in
the second half of 2011, while the percentage of 45- to 64-year-olds that are wireless only rose from 14.9
percent to 23.8 percent during the same period.42

37 Stephen J. Blumberg and Julian V. Luke, Wireless Substitution: Early Release of Estimates from the National
health Interview Survey, July- December 2011,
National Center for Health Statistics, Centers for Disease Control,
June 2012, available athttp://www.cdc.gov/nchs/data/nhis/earlyrelease/wireless201206.pdf"> http://www.cdc.gov/nchs/data/nhis/earlyrelease/wireless201206.pdf (visited Nov. 29, 2012).
38 Stephen J. Blumberg and Julian V. Luke, Wireless Substitution: Early Release of Estimates from the National
health Interview Survey, July- December 2011,
National Center for Health Statistics, Centers for Disease Control,
June 2012, available athttp://www.cdc.gov/nchs/data/nhis/earlyrelease/wireless201206.pdf"> http://www.cdc.gov/nchs/data/nhis/earlyrelease/wireless201206.pdf (visited Nov. 29, 2012).
39 Stephen J. Blumberg and Julian V. Luke, Wireless Substitution: Early Release of Estimates from the National
health Interview Survey, July- December 2011,
National Center for Health Statistics, Centers for Disease Control,
June 2012, available athttp://www.cdc.gov/nchs/data/nhis/earlyrelease/wireless201206.pdf"> http://www.cdc.gov/nchs/data/nhis/earlyrelease/wireless201206.pdf (visited Nov. 29, 2012).
40 Stephen J. Blumberg and Julian V. Luke, Wireless Substitution: Early Release of Estimates from the National
health Interview Survey, July- December 2011,
National Center for Health Statistics, Centers for Disease Control,
June 2012, available athttp://www.cdc.gov/nchs/data/nhis/earlyrelease/wireless201206.pdf"> http://www.cdc.gov/nchs/data/nhis/earlyrelease/wireless201206.pdf (visited Nov. 29, 2012).
41 Id.
42 Stephen J. Blumberg and Julian V. Luke, Wireless Substitution: Early Release of Estimates from the National
health Interview Survey, July- December 2011,
National Center for Health Statistics, Centers for Disease Control,
June 2012, available athttp://www.cdc.gov/nchs/data/nhis/earlyrelease/wireless201206.pdf"> http://www.cdc.gov/nchs/data/nhis/earlyrelease/wireless201206.pdf (visited Nov. 29, 2012).

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Wireless-Only Households, 2003-2012

43


Mobile wireless connections represented approximately 62 percent of the 230.4 million data connections
with speeds exceeding 200 kbps in the United States in December 2011. In addition, at the end of 2011,
there were an estimated 184 million mobile devices in use capable of sending or receiving information at
speeds exceeding 200 kbps in at least one direction, up from an estimated 152 million at the end of 2010.

The extent to which wireless broadband services can impose competitive discipline on wireline providers
depends on many factors, including technologies, prices, consumer preferences, and the business
strategies of providers that offer both wireless and wireline Internet access services.44 Mobile wireless
Internet access service could provide an alternative to wireline service for consumers who are willing to
trade speed for mobility, as well as consumers who are relatively indifferent with regard to the attributes,
performance, and pricing of mobile and fixed platforms.45

Urban-Rural Comparisons

Approximately 59 million people, or 19 percent of the U.S. population, live in rural counties46

43 Wireless Substitution: Early Release of Estimates From The Data from the National Health Interview Survey,
January – June 2012
). Adults and children with “no telephone service” include those in households with neither
wireline nor wireless service.
44 National Broadband Plan, at 42; National Broadband Plan, at 42-44; U.S. Department of Justice Ex Parte, GN
Docket No. 09-51 (filed Jan. 4, 2010), at 8, 10, 11.
45 National Broadband Plan, at 43 and 64, note 3; National Broadband Plan, at 42-44; U.S. Department of Justice
Ex Parte, GN Docket No. 09-51 (filed Jan. 4, 2010), at 8.
46 In its 2004 Report and Order concerning deployment of wireless services in rural areas, the Commission has
adopted a “baseline” definition of rural as a county with a population density of 100 persons or fewer per square
mile. See 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 ¶¶ 11-12 (2004).

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comprising 3.1 million square miles, or 86 percent of the geographic area of the United States.47 In
addition, 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.

County Density in the United States

48

Although mobile voice and mobile broadband network coverage in rural areas has improved since the
Fifteenth Report, according to data from Mosaik Solutions (formerly American Roamer) more than
400,000 people in rural areas still had no mobile wireless voice coverage as of October 2012, and 1.3
million lacked access to mobile broadband as of October 2012.49 In addition while 99.3 percent of the
rural population is covered by at least one mobile voice provider, and 96.6 percent has coverage by at
least two providers as of October 2012, there is a disparity in the percentage of rural and U.S. population
covered by more than two mobile voice provider networks. This disparity is even more pronounced when
considering mobile broadband provider networks: 97.7 percent of the total U.S. population in non-rural
area is covered by three or more mobile broadband providers, compared to only 65.4 percent of the rural
population.

47 Based on 2010 Census data. Includes the population of Puerto Rico.
48 A larger version of this map may be found in Appendix C.
49 As mentioned earlier, we recognize that Mosaik data likely overstates the coverage actually experienced by
consumers.

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In addition, 63.6 percent of rural square miles and 87.3 percent of rural road miles in the U.S. were
covered by at least one broadband provider, while 90.9 percent of non-rural square miles and 98.7 percent
of non-rural road miles were covered by at least one broadband providers.
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.50 As stated earlier, these coverage data may not represent the number of choices actually
available to consumers living in particular areas, as service providers provide network coverage in certain
areas to serve customers resident elsewhere.

Estimated Mobile Broadband Coverage in Rural and Non-Rural Areas by Census Block, Oct.

201251

% of U.S. POPs
% of U.S. Square Miles
% of U.S. Road Miles

Total Number of

Rural Areas

Non-Rural

Rural

Non-Rural

Rural

Non-Rural

Providers with

Areas

Areas

Areas

Areas

Areas

Coverage in a Block

1 or more
97.8%
99.9%
63.6%
90.9%
87.3%
98.7%
2 or more
89.9%
99.7%
45.2%
84.4%
67.7%
95.8%
3 or more
65.4%
97.7%
20.6%
69.4%
35.7%
86.6%
4 or more
37.4%
92.4%
7.1%
49.7%
14.2%
71.8%
5 or more
15.8%
81.3%
1.7%
29.8%
4.0%
52.4%

As part of the USF/ICC Transformation Order adopted in October 2011, the Commission created
Mobility Fund Phase I, a universal service support mechanism dedicated to the deployment of mobile
broadband networks.52 Mobility Fund Phase I will accelerate new mobile infrastructure deployment by
awarding up to $300 million in one-time support to recipients that commit to provide 3G or better mobile
voice and broadband services in census blocks that currently lack such services.53 Phase I of the Mobility
Fund used a reverse auction, which took place on September 27, 2012 to assign $300 million in support to
33 winning bidders, which will be obligated to provide services covering up to approximately 83,500 road
miles.54 In Phase II of the Mobility Fund, the Commission will provide up to $500 million per year in

50 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.
51 Commission estimates based on census block analysis of Mosaik CoverageRight coverage maps, October 2012.
Population data are from the 2010 Census, and include the United States (50 states plus the District of Columbia)
and Puerto Rico. Square miles include the United States and Puerto Rico. There are approximately 11 million
census blocks and a population of 312 million people.
52 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; Federal-State Joint Board on Universal Service; Lifeline and Link-Up; Universal Service Reform—
Mobility Fund
, WC Docket Nos. 10-90, 07-135, 05-337, 03-109, GN Docket No. 09-51, CC Docket Nos. 01-92, 96-
45, WT Docket No. 10-208, Report and Order and Further Notice of Proposed Rulemaking, 26 FCC Rcd 17663
(2011) (USF/ICC Transformation Order), available at http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-11-
161A1_Rcd.pdf, pets. for review pending sub nom. In re FCC 11-161, No. 11-9900 (10th Cir. filed Dec. 8, 2011);
Order on Reconsideration, 26 FCC Rcd 17633 (2011); Second Order on Reconsideration, 27 FCC Rcd 4648 (2012);
Third Order on Reconsideration, 27 FCC Rcd 5622 (2012).
53 “Mobility Fund Phase I Auction Scheduled for September 27, 2012, Notice and Filing Requirements and Other
Procedures for Auction 901,” Public Notice, AU Docket No. 12-25, DA 12-641 (WTB rel. May 2, 2012).

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ongoing support to expand deployment and sustain mobile voice and broadband services in areas in which
such service would be unavailable absent USF support.55

International Comparisons

As in past years the Commission reviewed data from a variety of international markets to identify trends,
and compare market structure and performance in the US with selected European and Asian countries
with similar income levels. This comparison shows the following: First, market structure is converging
to three or four national competitors per market in most countries. Second, the calling party pays system
used in most other countries tends to result in lower average voice usage (MOUs) and higher revenue per
minute of voice service than the receiving party pays system used in the United States.56 Third,
international differences in regulatory policy and business environment have produced a wide variety of
successful models for the mobile sector, with no one model dominating on all dimensions of market
performance.

Mobile Market Performance in Selected Countries, Global Wireless Matrix, 2011

57
Country
Penetration
Prepaid
MOUs
RPM ($)
ARPU
Data
(% of Pops) (% of Subs)
Voice Only
($)
(% of ARPU)

Receiving Party Pays

USA
106
29
945
0.033
50.88
39.9
Canada
77
19
372
0.091
56.32
34.7
Singapore
148
48
352
0.064
36.85
39.1

Calling Party Pays

UK
123
50
192
0.083
27.07
37.0
Germany
139
56
130
0.092
19.81
40.4
Italy
152
86
162
0.093
23.30
31.9
Sweden
146
31
242
0.085
32.05
31.8
France
99
30
235
0.101
35.23
28.0
Finland
171
13
205
0.093
26.65
30.1
Japan
99
1
134
0.205
59.70
56.5
South Korea 107
0
303
0.069
30.81
32.3
Australia
132
39
268
0.106
47.97
44.4




(Continued from previous page)
54 “Mobility Fund Phase I Auction Closes, Winning Bidders Announced For Auction 901.” Public Notice, DA 12-
1566 (WTB rel. Oct. 3, 2012). For further information on the Mobility Fund Phase I auction, see Auction 901,
Mobility Fund Phase I, availablehttp://wireless.fcc.gov/auctions/default.htm?job=auction_summary&id=901"> at http://wireless.fcc.gov/auctions/default.htm?job=auction_summary&id=901
(visited Nov. 30, 2012). In the USF/ICC Transformation Order, the Commission also designated an additional $50
million in Phase I of the Mobility Fund for one-time support targeted exclusively for mobile service on Tribal lands,
which is to be awarded by auction in 2013. See USF/ICC Transformation Order, 26 FCC Rcd at 17819-20, ¶ 481.
55 USF/ICC Transformation Order, 26 FCC Rcd at 17824, ¶¶ 493-494.
56 See 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, Thirteenth Report, 24
FCC Rcd 6185, 6290 ¶ 223 (Thirteenth Report).
57 Global Wireless Matrix 4Q11.

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II.

INTRODUCTION

3.
In 1993, Congress created the statutory classification of “commercial mobile services” to
promote the consistent regulation of mobile radio services that are similar in nature.58 Commission
regulations refer to these services as the Commercial Mobile Radio Services, or “CMRS.”59 At the same
time, Congress established the promotion of competition as a fundamental goal for CMRS policy
formation and regulation. To measure progress toward this goal, Congress required the Commission to
submit annual reports that analyze competitive conditions in the industry.60
4.
Congress called on the Commission to report on “competitive market conditions with
respect to commercial mobile services.”61 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.62

Beginning with the Fourteenth Report, the Commission, while complying with Congress’s mandate to
assess competitive market conditions, has undertaken a more expansive and detailed analysis of the entire
mobile wireless industry to better represent fundamental shifts in the mobile marketplace.63 To reflect
this broader focus, the Commission changed the name of the Report from the “Annual CMRS
Competition Report” to the current “Annual Mobile Wireless Competition Report.” As in the past, this
Report bases its analysis on a consumer-oriented view of mobile services by focusing on specific product
categories, regardless of their regulatory classification, and integrates an analysis of CMRS into an
analysis of all mobile wireless services, such as voice, messaging, and broadband. In some cases, this
includes an analysis of offerings outside the umbrella of services that have been specifically classified as

58 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).
59 See 47 C.F.R. § 20.9(a); Implementation of Sections 3(n) and 332 of the Communications Act, Second Report and
Order,
9 FCC Rcd 1411, 1413 (1994). CMRS includes a large number of terrestrial services and also some mobile
satellite services.
60 47 U.S.C. § 332(c)(1)(C).
61 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).
62 47 U.S.C. § 332 (c)(1)(C).
63 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, Fourteenth Report, 25 FCC Rcd
11407(2010) (Fourteenth Report).

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CMRS.64 For example, many providers of CMRS offer mobile broadband Internet access service, which
has not been classified as “CMRS.”65 Such services often jointly use the same spectrum and network
facilities, and many mobile service providers have integrated the marketing of some of these services,
offering some of them in bundles. Consumers are increasingly substituting among voice, messaging, and
some data services, and, in particular, are willing to move from voice to messaging or data services for an
increasing portion of their communication needs. Because consumers view these other services as
interchangeable with or substitutes for certain CMRS services, service providers compete for these
customers using CMRS services as well as non-CMRS services. As a result, the Commission has
indicated that it is important to consider such substitute services in analyzing the competitive landscape
for these services and thus considers the mobile wireless industry, rather than just the provision of CMRS
services.66
5.
In addition, as the mobile wireless services industry has transitioned from one centered
on interconnected mobile voice communications to one that produces an array of voice, messaging, and
data services, the number of related mobile wireless industry segments involved in bringing these
information products to mobile consumers has grown and evolved. These interrelated market segments
form the mobile wireless ecosystem, which includes the various parts of the supply and production
network that bring thousands of mobile wireless products to Americans every day. Each of the segments
in the mobile wireless ecosystem has the potential to affect competition by providers and consumer
demand for mobile wireless services. As the ecosystem has evolved, so have the Commission’s
Competition Reports.67 This Report analyzes competition across the entire mobile wireless ecosystem,
including the “upstream” and “downstream” market segments, such as spectrum, infrastructure, devices,
and applications. As discussed in detail below, this Report’s detailed assessment of competitive market
conditions required by statute considers developments across the entire mobile wireless ecosystem.

64 Note that the regulatory classification of a particular wireless service offered by a CMRS carrier is determined on
a case-by-case basis. See Amendment of the Commission’s Rules to Permit Flexible Service Offerings in the
Commercial Mobile Radio Service, WT Docket No. 96-6, Second Report and Order and Order on Reconsideration,
15 FCC Rcd 14680, 14683, ¶ 7, 14687, ¶ 15 (2000). See IP-Enabled Services, WC Docket No. 04-36, Notice of
Proposed Rulemaking
, 19 FCC Rcd 4863 (2004); “Wireless Telecommunications Bureau Seeks Comment on
Petition for Declaratory Ruling That Text Messages and Short Codes Are Title II Services or Are Title I Services
Subject to Section 202 Non-Discrimination Rules,” Public Notice, 23 FCC Rcd 262 (WTB 2008).
65 In 2007, the Commission classified wireless broadband Internet access service as an information service under the
Communications Act and also found that mobile wireless broadband Internet access service was not a “commercial
mobile service” as defined in the Act. Appropriate Regulatory Treatment for Broadband Access to the Internet over
Wireless Networks, WT Docket No. 07-53, Declaratory Ruling, 22 FCC Rcd 5901 (2007).
66 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 Electronics Corporation
(Transferors) and Echostar Communications Corporation (Transferee), Hearing Designation Order, 17 FCC Rcd
20559, 20606 ¶ 106 (2002).
67 See 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, First Report, 10 FCC
Rcd 8844 (1995); Second Report, 12 FCC Rcd 11266 (1997); Third Report, 13 FCC Rcd 19746 (1998); Fourth
Report
, 14 FCC Rcd 10145 (1999); Fifth Report, 15 FCC Rcd 17660 (2000); Sixth Report, 16 FCC Rcd 13350
(2001); Seventh Report, 17 FCC Rcd 12985 (2002); Eighth Report, 18 FCC Rcd 14783 (2003); Ninth Report, 19
FCC Rcd 20597 (2004); Tenth Report, 20 FCC Rcd 15908 (2005); Eleventh Report, 21 FCC Rcd 10947 (2006);
Twelfth Report, 23 FCC Rcd 2241; Thirteenth Report, 24 FCC Rcd 6185 (2009) (Thirteenth Report); Fourteenth
Report
, 25 FCC Rcd 11407 (2010) (Fourteenth Report); Fifteenth Report, 26 FCC Rcd 9664 (2011) (Fifteenth
Report
). The reports can also be found on the Commission’s website, available at
http://wireless.fcc.gov/index.htm?job=cmrs_reports">http://wireless.fcc.gov/index.htm?job=cmrs_reports. (visited Nov. 19, 2012).

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6.
Figure 1 below provides an overview of the mobile wireless ecosystem and the
corresponding sections of the Sixteenth Report in which each of the ecosystem segments is discussed.
The input segments are divided into spectrum, towers, network equipment, and backhaul facilities.68
These segments can affect entry, competition, output, or prices in the provision of mobile wireless
services. Following these inputs, the transmission of mobile wireless services includes voice services,
messaging services,69 and data services (including broadband). The downstream segments include mobile
devices, device operating systems, and mobile applications, content, and mobile commerce.70 Mobile
devices, the endpoints of mobile networks, connect consumers to the network. They can include
traditional voice-centric handsets, devices that offer both voice and data services, as well as devices that
provide data but not circuit-switched voice service, such as modem cards for portable computers and e-
readers. Riding on the networks of the mobile wireless ecosystem are the information products that are
consumed directly by subscribers – mobile applications, content (e.g., video and music files, web sites,
photos, and documents), and mobile commerce (e.g., electronic shopping and financial transactions using
a mobile device). The importance of the downstream segments to consumers’ mobile wireless experience
is increasing with the deployment of mobile broadband networks that support Internet-based applications.

Figure 1

Mobile Wireless Ecosystem



7.
In this Report, the discussion of the middle part of the mobile wireless ecosystem –

68 Spectrum, towers, network equipment, and backhaul facilities can be viewed as input or upstream markets
because of their input relation to mobile wireless networks.
69 Messaging includes text and multimedia (photo and video) message services, also referred to as SMS (Short
Message Service) and MMS (multimedia messaging services), respectively.
70 Mobile devices, device operating systems, and mobile applications, content, and mobile commerce can be viewed
as edge or downstream markets because they are products that utilize mobile wireless services.

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mobile wireless services – includes a detailed analysis of mobile wireless service market conditions in the
CMRS marketplace, as required by Section 332(c) of the Act. As discussed above, the statute requires an
identification of the number of competing providers of the various commercial mobile services, an
analysis of whether there is effective competition, an analysis of whether any of the competitors has a
dominant share of the market for the services, and a statement of whether additional providers or classes
of providers in the services would be likely to enhance competition. Therefore, this Report’s competitive
analysis of mobile wireless services considers data that provide information on whether any wireless
service provider is exercising undue market power – the ability to profitably charge prices above cost for
a sustained period of time due to a lack of competitive constraints.71 This analysis has been organized
into four distinct categories: an overview of the mobile wireless services industry, provider conduct,
market performance and outcomes, and consumer behavior.
8.
First, within the overview of the mobile wireless services industry, we analyze the
number of competitors and calculate measures of concentration. Markets with few providers or high
concentration measures raise concerns that firms may be able to exercise market power, i.e., without
competitors or potential entry, there may not be sufficient constraints to prevent the exercise of market
power. At year-end 2011, the four nationwide service providers accounted for just over 90 percent of the
nation’s mobile wireless subscribers (including wholesale connections and machine-to-machine
connections), with AT&T and Verizon Wireless together accounting for 64 percent. The Report also
examines the entry and exit of wireless service providers in the mobile wireless services market. Entry
and exit conditions may affect the number of competitors that can enter and compete in the market, and,
as discussed above, this in turn may influence whether any firm can exercise undue market power. The
Commission closely reviews mergers, a type of exit. A merger can potentially form a stronger provider
that restrains competitors from engaging in anticompetitive behavior, or may increase the likelihood that
the merged firm may itself, or in coordination with other firms, obtain or maintain market power.72 Last,
spectrum conditions and spectrum policy are discussed as an extension of entry conditions. Spectrum is a
critical input to mobile wireless services that affects entry conditions and overall industry capacity, and its
availability is influenced by regulatory policy and market conditions.
9.
Second, in our analysis of provider conduct, we describe significant changes in providers’
prices and service offerings that may affect a consumer’s choice of a provider or may lead other providers
to competitively respond by changing their own prices and service offerings. We discuss product
differentiation, network investment and technology upgrades, advertising and marketing, and innovation
because many non-price choices by providers determine the qualities and characteristics of their wireless
services. Such non-price rivalry can significantly influence a customer’s choice of a provider and impose
significant competitive constraints, especially in high technology industries that experience rapid
innovation.
10.
Third, the section on market performance and outcomes evaluates evidence from
essential metrics for evaluating market competition and consumer welfare in the mobile wireless industry:
quantities consumed, total and new connections, prices, and qualities of different services. This section
focuses on the benefits to consumers of competition among rivals – lower prices, more connections and
usage, and better quality services – while the other sections examine the various input, strategic,
technological, and informational factors that determine such market outcomes. As a result, market
performance metrics provide more direct evidence of competitive outcomes and the strength of
competitive rivalry than intermediate factors, such as concentration measures. 73 Analysis of data relating

71 See Dennis W. Carlton and Jeffrey M. Perloff, Modern Industrial Organization (4th ed.), Addison, Wesley,
Longman, Inc., 2005, at 8, 249-251 (Modern Industrial Organization).
72 See Section III.D.3.b, Exit, infra, for further discussion of the potential competitive benefits and harms of
mergers.
73 See Ernest Gellhorn, Antitrust Law and Economics (4th ed.), West Publishing, 1994, at 117 (stating “[m]arket
shares are not synonymous with market power; they should mark the beginning for careful analysis, not the end of
(continued….)

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to prices and quantities of services consumed can reveal whether there are any upward trends or
movements in prices, or observable restrictions on the quantities of services produced, that may indicate
that the market is lacking competition or that there is collusive behavior among providers.74 Analyses of
data on the qualities of different services are particularly useful in high technology industries that
experience rapid innovation to gauge whether the quality of service received for a given price is
increasing or stagnating over time.
11.
Fourth, the Report examines consumer behavior. The willingness and ability of
consumers to switch mobile wireless service providers in response to changes in the prices, service
offerings, and qualities of service offerings is one indicator of the level of competition in the industry.
The more informed consumers are about mobile wireless services, and the more easily a consumer can
switch service providers in response to a change in price or non-price factors, the more providers must
take efforts to improve their services or lower their prices in order to retain their customers and attract
new customers. This section analyzes consumer decisional factors in choosing a service provider,
consumer access to information concerning mobile wireless services, and consumer satisfaction with
mobile wireless service providers.
12.
In addition to analyzing competition within the mobile wireless services sector, the
Report analyzes competition in other market segments that constitute the mobile wireless ecosystem and
their relationships with the mobile wireless industry. The main non-spectrum input segments of the
mobile wireless services market – infrastructure and backhaul – are analyzed in Section VII.A, and the
mobile wireless handset/device sector, mobile applications, and mobile commerce are analyzed in Section
VII.B. Intermodal Services are discussed in Section VIII. Differences across geographic markets,
including urban-rural comparisons and international comparisons, are addressed in Sections IX and X.
The Appendices discuss spectrum available for mobile wireless services (Appendix A) and present tables
and maps (Appendices B and C).
13.
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 the extent of, and trends over time in, competitive rivalry
present in the mobile wireless industry and the benefits received by consumers. This competitive analysis
also tries to identify areas where competition is strong, as well as areas that could benefit from increased
competition.
14.
Given the Report’s expansive view of mobile wireless services and its examination of
competition across the entire mobile wireless ecosystem, we find that the mobile wireless ecosystem is
sufficiently complex and multi-faceted that it would not be meaningful to try to make a single, all-
inclusive finding regarding effective competition that adequately encompasses the level of competition in
the various interrelated segments, types of services, and vast geographic areas of the mobile wireless
industry.
15.
We note as well that there is no definition of “effective competition” widely accepted by
economists or competition policy authorities such as the U.S. Department of Justice (DOJ).75 Rather, the
DOJ’s position on competition policy is in agreement with the approach taken in this Report.76 The DOJ
(Continued from previous page)
it.”). See also Michael Whinston, “Antitrust Policy toward Horizontal Mergers,” in Handbook of Industrial
Organization, Vol. 3
, ed. Mark Armstrong and Robert Porter (Elsevier, 2007), at 2411-2414; Massimo Motta,
Competition Policy: Theory and Practice, Cambridge University Press, 2004, at 117 (Competition Policy).
74 See, e.g. Jonathan Baker and Timothy Bresnahan, Economic Evidence in Antitrust: Defining Markets and
Measuring Market Power
, in Handbook of Antitrust Economics, edited by Paolo Buccirossi, at 8-16.
75 See Ex Parte Submission of the United States Department of Justice, GN Docket No. 09-51 at 11 (filed Jan. 4,
2010).
76 See id.

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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.”77 We take an approach consistent with the Commission’s first seven Annual CMRS
Competition Reports, which did not reach an overall conclusion regarding whether or not the CMRS
marketplace was effectively competitive, but provided an analysis and description of the CMRS
industry’s competitive metrics and trends.78 This Report, like the previous two Reports, adopts an
approach similar to the earlier reports, but undertakes an expanded and more detailed competitive analysis
of the entire mobile wireless ecosystem. We provide an analysis of whether or not there is effective
mobile wireless competition, but 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.
16.
The Commission is continuously seeking to improve its analysis of mobile wireless
competition. In November 2011, the Commission’s Wireless Telecommunications Bureau (Bureau)
sought comment on the data and analytical framework used for its analysis in this Sixteenth Report.79 In
March 2012, the Bureau sought updated, year-end 2011 data for its analysis.80
17.
Data Timeframes. The Sixteenth Report focuses on conditions prevailing in the mobile
wireless industry during 2010, 2011, and 2012. In cases where our analysis relies on annual year-end
metrics – such as with subscriber/connection levels or pricing levels– we use, and have included in the
Report, year-end 2011 data. The Report’s analysis of network coverage and the number of providers is
based on data provided by Mosaik Solutions, formerly American Roamer, in October 2012. Many
sections of the Report also discuss major industry developments, where relevant, that have occurred
during 2012.
18.
Dollar Amounts. Dollar figures stated in this Report have not been adjusted for inflation
(i.e., they are nominal dollars) unless stated otherwise.

III.

OVERVIEW OF THE MOBILE WIRELESS SERVICES INDUSTRY

A.

Introduction to Mobile Wireless Services

19.
The Sixteenth Report provides an analysis of competition in the mobile wireless services
industry. Providers of mobile wireless services 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. The Report considers information and data on all mobile wireless services as well as on
individual services and segments where appropriate and when the data are available.
20.
In its competitive analysis, the Report considers, for the reasons described below, all
mobile wireless services. First, the bundling of some mobile wireless services in the same service plan
and the prevalence of devices that support multiple services shift the focus of competition and consumer
choice from individual services to bundles of services. Many handsets, especially smartphones, can send

77 See id.
78 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.
79 “Wireless Telecommunications Bureau Seeks Comment on the State of Mobile Wireless Competition,” WT
Docket No. 11-186, Public Notice, 26 FCC Rcd 15595 (WTB 2011). A list of comments and reply comments is
included as Appendix E.
80 “Wireless Telecommunications Bureau Seeks Updated, Year-end 2011 Data for its Sixteenth Report on Mobile
Wireless Competition,” WT Docket No. 11-186, Public Notice, 27 FCC Rcd 2570 (WTB 2012).

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and receive both mobile voice and data communications. Service providers offer bundles of services in
the same service plan to meet the voice and data communication needs of customers.81 Although mobile
data services are not offered in conjunction with mobile voice service for some devices, mobile wireless
customers who use smartphones typically purchase data services as either an add-on to voice services or
as part of a bundled voice and data plan. Many mobile wireless service providers offer data-only services
that are not bundled in a service plan with a mobile voice service, i.e. are not packaged with a voice plan
through a handset – for example, mobile wireless Internet access for tablets, portable computers, and e-
readers.
21.
Second, the availability of certain data employed in this Report reflects the entire mobile
wireless services industry and not the individual segments. For example, the NRUF data provide an
estimate of all mobile wireless devices in use that have a telephone number assigned to them, but do not
distinguish by the type of device used.82 This includes traditional mobile handsets used primarily or
exclusively for voice calls, smartphones that are used for both voice and data services, some devices used
exclusively for data services,83 and some machine-to-machine services. In addition, data on service
provider network coverage is organized by the type of network technology, and some services may be
available on different network technologies.
22.
Geographic Areas. Defining the appropriate geographic area for mobile wireless services
has a useful role to play in assessing the level of competition.84 When undertaking a competitive analysis,
one of the basic economic principles for defining the scope of the relevant geographic area is to include
all of the competing service providers in the geographic area from which various consumers may choose
similar substitutes. Many consumers shop for competitive mobile wireless alternatives in the areas where
they live, work, and travel.
23.
Defining the appropriate geographic area for mobile wireless services is complex.
Relevant factors to be considered include: (1) the variety of geographic schemes used to license different
spectrum bands; (2) the wide variation in service providers’ geographic license areas and coverage
footprints; (3) the difficulty of collecting accurate information on the geographic area(s) covered by each
mobile operator’s network; (4) a consumer’s willingness and ability to purchase services in one or more
geographic areas; and (5) the extent to which providers offer different terms or service quality in different
locations.
24.
We estimate overall network coverage and the number of providers with coverage in an
area using census blocks, and we provide concentration measures and regional penetration rates at the
level of Economic Areas (EAs).85 We recognize that such geographic areas may be broader or narrower
than the relevant geographic markets employed in other analyses conducted by the Commission. For
instance, the Commission has historically used narrower geographic areas to calculate HHIs when it has
evaluated the competitive consequences of certain transactions. We use EAs in this Report to maintain
continuity with past Reports and to ensure that we do not compromise the confidential information found

81 Service bundles primarily include mobile voice, text, and data services, but many machine-to-machine services
(also called connected devices) are not bundled with other services and may not even be marketed together with
mobile services for handsets. Some examples of machine-to-machine services are fleet management, home security
management, and smart grid devices.
82 See Section V.A, Numbers of Mobile Wireless Connections and Customers, infra.
83 Even though data-only devices – such as wireless modem cards and e-readers – are not used to make circuit-
switched voice calls, they are often assigned telephone numbers because that is the method wireless service
providers use to establish accounts and provide access to their networks.
84 See United States Department of Justice and the Federal Trade Commission, Horizontal Merger Guidelines, issued
Aug. 19, 2010 at 7-8, 13-15.
85 EAs are geographic units defined by the U.S. Department of Commerce that define geographic economic markets
using data on commuting patterns.

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in the NRUF data.86 We analyze both the local markets in which consumers purchase mobile wireless
services and aspects of competition that occur at the national level. For instance, defining local
geographic markets for retail wireless services does not preclude us from analyzing variables, such as
prices and service plan offerings, that may not vary for some providers across the various geographic
markets they serve.87

B.

Overview of Service Providers

1.

Facilities-Based Providers

25.
Facilities-based mobile wireless service providers offer mobile voice, messaging, and/or
data services using their own network facilities. 88 Most facilities-based providers currently offer circuit-
switched mobile voice services that are interconnected with the public switched telephone network
(PSTN).89 Some data and messaging services offered by facilities-based providers rely only on IP-based,
packet-switched networks, while other services may continue to connect to the PSTN. Many facilities-
based providers have deployed, or are currently deploying, Internet Protocol (IP)-based networks.
26.
Nationwide Service Providers. As of year-end 2011, there were four facilities-based
mobile wireless service providers in the United States that industry observers typically describe as
“nationwide”: AT&T, Sprint Nextel,90 T-Mobile,91 and Verizon Wireless.92 In 2011, AT&T applied to
acquire T-Mobile, a transaction which would have reduced the number of nationwide service providers to
three. After careful evaluation, both the DOJ and Commission staff found that the proposed acquisition
was likely to lead to a substantial lessening of competition in the market93 and the parties abandoned the

86 See Section III.D.2, Herfindahl-Hirschman Index, infra.
87 See AT&T and Qualcomm Order, 26 FCC Rcd 17589. Tables 2 and 3 below indicate that most providers’ voice
networks cover more people than their broadband networks, implying that there is likely some variation in services
and plan offerings across the geographic areas that providers serve. See Section IV.A, Price Rivalry: Developments
in Mobile Service Pricing Plans,
which generally treats pricing plans at the national level.
88 Fixed wireless services, such as those offered by Stelera Wireless, are currently not included in our analysis of
mobile wireless services.
89 Certain mobile wireless service providers, such as Clearwire Corporation (Clearwire), offer mobile broadband
data services but do not offer circuit-switched mobile voice services. See Clearwire Corporation, SEC Form 10-K
for the fiscal year ended December 31, 2011 at 7. Clearwire also offers fixed wireless VoIP services, Id.
90 Sprint Nextel was created by the merger of Sprint Corp. and Nextel Communications, Inc. See Tenth Report, 20
FCC Rcd at 15931 ¶ 60. According to Clearwire SEC filings, Sprint holds the largest interest in Clearwire with an
effective voting interest of approximately 48.6% and an economic interest in Clearwire of approximately 51.5% as
of December 31, 2011. On November 15, 2012, SoftBank Corp. and Sprint Nextel filedan application with the
Commission seeking consent for SoftBank to acquire approximately 70 percent of Sprint Nextel. The Commission
is currently reviewing this proposed transaction. See Softbank And Sprint Seek Fcc Consent To The Transfer Of
Control Of Various Licenses, Leases, And Authorizations From Sprint To Softbank, And To The Grant Of A
Declaratory Ruling Under Section 310(B)(4) Of The Communications Act. Public Notice, IB Docket No. 12-343,
DA 12-1924 (rel. Nov. 30, 2012).
91 T-Mobile USA is a wholly-owned subsidiary of Deutsche Telekom AG (Deutsche Telekom).
92 Verizon Wireless is a joint venture of Verizon Communications, Inc. (Verizon) and Vodafone Group PLC
(Vodafone). Verizon owns 55 percent of Verizon Wireless, and Vodafone owns 45 percent. See Verizon
Communications, Inc., SEC Form 10-K, filed Feb. 24, 2012, at 2.
93 See Complaint, United States of America v. AT&T, Inc., 11-cv-1560 (D.D.C.Aug. 31, 2011); Application of
AT&T and Deutsche Telekom AG for Consent to Assign or Transfer Control of Licenses and Authorizations, WT
Docket No. 11-65, Order, 26 FCC Rcd 16184 (2012).
(continued….)

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transaction.94 Although these four providers do not have networks that cover the entire land area or
population of the United States, they do cover a significant portion of both, and will be referred to as the
nationwide providers throughout this Report.95 These four nationwide service providers each have
mobile wireless networks that cover in excess of 91 percent of the U.S. population in large proportions of
the western, mid-western, and eastern United States.96 A map of the combined coverage areas of these
four facilities-based nationwide providers can be found in Appendix D.
27.
Multi-Regional and Multi-Metro Service Providers. Other facilities-based providers offer
mobile wireless services on a multi-regional or multi-metro basis. Three such providers – Clearwire,
Leap Wireless International, Inc. (Leap) and MetroPCS Communications Inc. (MetroPCS) – provide
service in multiple large and medium-sized metropolitan areas across the nation.97 Leap states “Our
Cricket service offerings provide customers with unlimited nationwide wireless services for a flat rate
without requiring a fixed term contract or a credit check.”98 MetroPCS states that it provides mobile
wireless services in “selected major metropolitan areas in the United States.”99 United States Cellular
Corporation (U.S. Cellular) is a large regional provider that serves regions in the western, mid-western,
and eastern United States.100 U.S. Cellular states, “Since 1985, when it began providing wireless
telecommunications service in Knoxville, Tennessee and Tulsa, Oklahoma, U.S. Cellular has expanded its
wireless networks and customer service operations to cover five geographic market areas in portions of 26
states, which collectively represent a total population of 46.9 million as of December 31, 2011.”101 Multi-
metro and multi-regional service providers typically rely on roaming agreements with nationwide
facilities-based providers to provide service to their customers in areas not covered by their networks.
28.
Regional and Local Service Providers. There are dozens of small 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. Based on Mosaik data, we estimate that there were
approximately 95 smaller, facilities-based providers in the continental United States, Alaska, and Hawaii
(Continued from previous page)

94 In December 2011, AT&T formally ended its bid to acquire T-Mobile USA. See Letter, filed by AT&T Inc., Re:
Applications of AT&T Inc. & Deutsche Telekom AG for Consent to Assign or Transfer Control of Licenses &
Authorizations, filed Dec. 23, 2011, WT Docket No. 11-65, (2011).
95 Throughout this Report, we attribute Clearwire to Sprint Nextel when discussing spectrum holdings and network
coverage. When analyzing concentration and performance metrics, the two firms are treated as separate entities
because the NRUF data used for the concentration analysis do not include Clearwire, and Sprint Nextel does not
consolidate Clearwire in its SEC filings and financial/operational data.
96 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. These nationwide providers have spectrum holdings in different
bands, including cellular, SMR, PCS, AWS-1, 700 MHz, and 2.5 GHz (both BRS licenses and EBS spectrum
leases). Their respective holdings are discussed in more detail, See Section III.F, Spectrum and Mobile Wireless
Services, infra. See Appendix A, infra.
97 Leap states “The combined network footprint in our operating markets covered approximately 95.3 million POPs
as of December 31, 2011.” See SEC, Leap Wireless Form 10-K for the fiscal year ended December 31, 2011, at 4.
Section III.E, Entry and Exit Conditions, infra. See SEC, MetroPCS Form 10-K for the fiscal year ended December
31, 2011, at 6 (stating, “We currently provide our wireless broadband mobile services primarily in selected major
metropolitan areas in the United States, including the Atlanta, Boston, Dallas/Fort Worth, Detroit, Las Vegas, Los
Angeles, Miami, New York, Orlando/Jacksonville, Philadelphia, Sacramento, San Francisco, and Tampa/Sarasota
metropolitan areas.”).
98 Leap Wireless, SEC Form 10-K for the fiscal year ended December 31, 2011 at 4.
99 MetroPCS Communications Inc., SEC Form 10-K for the fiscal year ended December 31, 2011, at 6.
100 United States Cellular Corp., SEC Form 10-K for the fiscal year ended December 31, 2011, at 1.
101 United States Cellular, SEC Form 10-K for the fiscal year ended December 31, 2011at 1.

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as of October 2012. For example, Cincinnati Bell Wireless, one of the larger of these providers, provides
service in the areas surrounding Cincinnati, Ohio. C Spire Wireless (formerly Cellular South) provides
service in Mississippi, as well as Memphis and parts of Alabama and Louisiana. Regional and local
service providers include publicly-traded companies, privately-owned companies, and cooperatives.
2.

Resale and MVNO Providers

29.
Resellers and mobile virtual network operators (MVNOs) generally do not own any
network facilities but instead purchase mobile wireless services wholesale from facilities-based providers
and resell the services to consumers.102 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. For instance, TracFone, the largest MVNO,
states “Our formula for success is simple — exclusive focus on “No-Contract” cell phones and
service.”103
30.
Some facilities-based providers buy capacity wholesale and engage in resale to
complement their own service offerings. A facilities-based provider that also resells services may be
motivated by the desire to expand its geographic coverage outside of its network coverage area or to add
service offerings that are not available on its own network by reselling the services of another provider.
As of August 2010, Leap (Cricket) entered into a wholesale agreement with Sprint Nextel that allows
Cricket to offer some products and services on Sprint Nextel’s EV-DO network throughout the United
States.104 Cricket states that “this agreement will allow us to offer enhanced products and services and to
strengthen and expand our distribution.”105 Another hybrid reseller and facilities-based model is the one
employed by Sprint Nextel that supplies EV-DO mobile wireless voice and data services using its own
networks and resells WiMAX services purchased wholesale from its business partner Clearwire.106
Selling capacity on a wholesale basis factors significantly into Clearwire’s business model.107
31.
The development of a partnership 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,

102 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">http://www.verizonwireless.com/b2c/aboutUs/reseller/authorizedAgentIndex.jsp (visited Nov. 18, 2012).
103 See TracFone,http://www.tracfone.com/facelift/tour.jsp#a_about"> http://www.tracfone.com/facelift/tour.jsp#a_about (visited April 30, 2012).
104 Leap Wireless, Press Release, Cricket Introduces its Cricket Products Into Kmart Locations Nationwide, June 11,
2012 availablehttp://leapwireless.mediaroom.com/press-releases"> at http://leapwireless.mediaroom.com/press-releases (visited Nov. 18, 2012). Fiercewireless, Leap:
We won't make $75M payment to Sprint for 2012 network access, Aug. 6, 2012, available at fiercewireless.com.
105 See Leap Wireless, SEC Form 10-K for the fiscal year ended December 31, 2011, filed Feb. 21, 2012, at 21.
106 See Clearwire, SEC Form 10-K for the fiscal year ended December 31, 2011, filed Feb. 16, 2012, at 2, 6.
107 See Clearwire, SEC Form 10-K, filed Feb. 16, 2012, at 3 (stating “Over the long term, we will need to greatly
expand our revenue base by increasing sales to our existing wholesale partners, primarily Sprint, and by adding
additional wholesale partners.”). Over 85% of Clearwire’s connections at the end of 2011 were wholesale
connections. See SEC, Clearwire Form 10-K, For the fiscal year ended December 31, 2011, at 3 (stating “We
believe that, as the demand for mobile broadband services continues its rapid growth, Sprint and other service
providers will find it difficult, if not impossible, to satisfy their customers' demands with their existing spectrum
holdings. By deploying LTE, we believe that we will be able to take advantage of our leading spectrum position to
offer offload data capacity to Sprint and other existing and future mobile broadband service providers for resale to
their customers on a cost effective basis.”)

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or business model.108 MVNOs often increase the range of services offered by the host facilities-based
provider by targeting certain market segments, including segments previously not served by the hosting
facilities-based provider.109 Hence, the relationship between an MVNO and its hosting facilities-based
provider is a mutually beneficial strategic partnership.110
32.
Comprehensive data on MVNO subscribers are generally not reported by either MVNOs
or facilities-based providers that host MVNOs. Estimates of the number of MVNOs operating in the
United States vary considerably. Many MVNOs are privately-held companies that do not publicly report
financial or subscriber data. It is a standard practice of many facilities-based providers to include the
subscribers of providers reselling their services in their own subscriber counts.111 Similarly, CTIA and
many industry analyst reports include MVNO subscribers with the subscribers of the host facilities-based
providers. 112 Some facilities-based providers report wholesale connections in combination with other
connections, such as (data centric) connected device connections (e.g. Sprint), and others report them
separately (e.g. AT&T and T-Mobile).113 No provider disaggregates wholesale connections to the level of
the individual MVNOs hosted on their networks. For instance, in its 2011 annual report, AT&T reported
MVNO subscribers as its own subscribers and did not attribute them to its MVNO relationships.114 For
the above reasons, the reported data on MVNOs are generally inadequate for identifying the host

108 See P. Kalmus and L. Wiethaus, On the Competitive Effects of Mobile Virtual Network Operators,
Telecommunications Policy, Vol. 34, 2010 at 263, 266, 268.
109 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
).
110 See, The Yankee Group, Jason Armitage, Yankee Group’s 2011 Predictions: 4G Fuels the Decade of Disruption,
at 7 (stating, “Like a small bird on an elephant’s back, if an MVNO can establish a symbiotic relationship with its
host and provide some direct commercial benefits, it can flourish.”) See Voluntary Relationships Among Mobile
Network Operators and Mobile Virtual Network Operators: An Economic Explanation
, at 75, 76, 82. See On the
Competitive Effects of Mobile Virtual Network Operators
, at 263, 268.
111 See SEC, AT&T Inc. 2011 Annual Report, filed Feb. 24, 2012. See T-Mobile USA, T-Mobile USA Reports
Fourth Quarter 2011 Operating Results
, at 2, 12. In their SEC forms, Sprint Nextel and Clearwire both count some
Sprint Nextel 4G customers as subscribers (those on dual mode 3G/4G devices) since Sprint Nextel and Clearwire
are separately providing the 3G and 4G services, respectively, to these customers. See Sprint Nextel, SEC Form 10-
K, filed Feb. 27, 2012, at 2-3, 38. See Clearwire, SEC Form 10-K for the fiscal year ended December 31, 2011,
filed Feb. 16, 2012, at 2, 6.
112 CTIA, CTIA’s Wireless Industry Indices, Semi-Annual Data Survey Results: A Comprehensive Report from CTIA
Analyzing the U.S. Wireless Industry, Year-end 2011 Results
, released May 2012, at 11 (stating “Companies that
hold licenses but have not yet begun to offer commercial services, and companies that provide service only on a
resale basis (i.e., that are not facilities-based) are not included in the general pool of companies surveyed for the
bulk of this report. Nonetheless, subscribers to such resellers or MVNOs are accounted for in the results reported by
the facilities-based companies that support the reseller/MVNO offerings.”). UBS Investment Research, US
Wireless411,Version 43.0
, March 7, 2012, at 14. Bank of America Merrill Lynch, Global Wireless Matrix 4Q11,
released Dec. 21, 2011 at 3.
113 Because a (data centric) connected device could be a retail connection or a wholesale connection, the reporting
conventions of some providers for such connected devices lack consistency. Additionally, because some connected
devices (such as those reported by AT&T: eReaders, home security monitoring, fleet management systems, and
smart grid devices) differ significantly from standard handsets and smartphones, some providers choose to
categorize connected devices separately from their consumer connections.
114 See SEC, EX-13 AT&T Inc. 2011 Annual Report, filed Feb. 24, 2012. See SEC, EX-13 Portions of Verizon's
Annual Report to Shareholders, filed Feb. 24, 2012.

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facilities-based providers of all the MVNOs and the customer figures of the MVNOs.
33.
Some nationwide providers and Clearwire reported their wholesale connections for year-
end 2011 (Table 1). In addition, according to Commission Form 477 data, an estimated ten percent of all
mobile wireless connections were reseller connections in December 2011 and the figure was nine percent
in December 2010115

Table 1


Estimated Wholesale Connections, Year-end 2011 (In thousands)

116

Service Provider Number of Wholesale Connections

AT&T
13,644
Clearwire117
9,123
Sprint118
7,218
T-Mobile
3,569

34.
In 2011, the largest MVNO was TracFone Wireless (TracFone), which had more than 19
million subscribers in the United States at year’s end, giving it a subscriber base in the United States that
is larger than every facilities-based provider other than the four nationwide providers.119 TracFone is
owned by América Móvil, S.A.B. de C.V. 120 a telecommunications service provider in Latin America and

115 FCC, Industry Analysis and Technology Division, Local Telephone Competition: Status as of December 31,
2010
, October 2011.
116 Reported by the providers to the SEC, 2011 Form 10-K filings. Verizon Wireless did not disaggregate
connections for wholesale and connected devices in 2011, and stopped reporting wholesale connections in 2012.
See SEC, Verizon, 2011 Form 10-K Exhibit 13 (stating “Total connections represent the total of our retail customers
and wholesale and other connections. Wholesale and other connections include customers from our reseller channel
as well as connections from non-traditional wireless-enabled devices, such as those used to support vehicle tracking,
telematics services and machine-to-machine connections.”).
117 Clearwire states that “Sprint accounts for substantially all of our wholesale sales to date.” See SEC, Clearwire
Form-10K for the fiscal year ended 2011, at 50, 52. RCR Wireless reports that Clearwire’s other wholesale
agreements include Prepayd Wireless, FreedomPop, and NetZero. See RCR Wireless, Prepayd enters white-hot
prepaid space with WiMAX data
, available at http://www.rcrwireless.com/article/20120502/carriers/prepayd-enters-white-hot-prepaid-space-with-wimax-data/"> http://www.rcrwireless.com/article/20120502/carriers/prepayd-
enters-white-hot-prepaid-space-with-wimax-data/ (visited May 2, 2012).
118 Some of the Sprint wholesale connections are at Sprint affiliates. Sprint states that “Wholesale and affiliate
subscribers represent customers that are served on our networks through companies that resell our wireless services
to their subscribers, customers residing in affiliate territories and connected devices that utilize our network.” and
“End of period connected devices are included in total retail postpaid or wholesale and affiliates end of period
subscriber totals for all periods presented.” Regarding its wholesale subscribers, Sprint states “Subscribers through
some of our MVNO relationships have inactivity either in voice usage or primarily as a result of the nature of the
device, where activity only occurs when data retrieval is initiated by the end-user and may occur infrequently.
Although we continue to provide these customers access to our network through our MVNO relationships,
approximately 1.7 million subscribers through these MVNO relationships have been inactive for at least six months,
with no associated revenue as of December 31, 2011.” SEC, Sprint Form 10-K filing for the fiscal year ended
December 31, 2011.
119 América Móvil, S.A.B. De C.V., SEC Form 6-K, filed Feb. 3, 2010, at 4. TracFone prepaid service is marketed
and sold under the “TracFone,” “Net10” and “SafeLink” wireless brands and is the largest operator in the U.S.
prepaid cellular market, SEC Form 20-F, at 57.
120 TracFone, About Ushttp://www.tracfone.com/about.jsp?nextPage=about.jsp&task=about">, http://www.tracfone.com/about.jsp?nextPage=about.jsp&task=about, (visited Nov. 4,
2010).

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Puerto Rico, and offers mobile wireless services through agreements with various service providers in the
United States, including AT&T, T-Mobile, Sprint-Nextel, and Verizon Wireless.121 Tracfone targets the
prepaid customer segment as well as low-usage customers whom other prepaid service providers are
reluctant to target because the ARPU they generate is so low.122
35.
MVNOs engage in some price rivalry and some forms of non-price rivalry. The strategic
partnerships between MVNOs and facilities-based providers increase competition and consumer welfare
by providing service to various market segments using the capacity of the hosting facilities-based
provider and the marketing strategy and distribution network of the MVNO.123 Some facilities-based
providers, especially those that specialize in pre-paid plans, state that they compete with MVNOs,
including TracFone.124 Furthermore, TracFone makes wholesale agreements with multiple nationwide
providers, which may increase the competition between nationwide providers for TracFone’s wholesale
customers.125
36.
Unlike facilities-based providers, MVNOs do not engage in the full range of non-price
rivalry such as creating capacity through network investments, network upgrades, or network coverage.
As discussed above, many nationwide providers, in their public financial reports, attribute MVNO
subscribers to themselves. Industry analyst reports state that service providers use strategic partnerships
with TracFone, for example, to compete with each other for customers.126 Hence, while MVNOs
compete for retail customers with some facilities-based providers, facilities-based providers compete with
each other for wholesale customers. 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.127
3.

Narrowband Data Providers

37.
Narrowband data and paging services comprise a specialized market segment of the
mobile wireless industry. These services include two-way messaging, as well as machine-to-machine and
other telemetry communications, and are consumed primarily by businesses, government users, and other
institutions. According to Commission licensing databases, there is approximately seven megahertz of

121 See FierceWireless, Straight Talk MVNO TracFone Adds 515K Subs in Q3, Oct. 31, 2011. See Phil Cusick, et
al
., Prepaid Wireless Services, Just Who is TracFone Anyway?, Macquarie Research, June 10, 2009, at 1
(Macquarie - Just Who is TracFone Anyway?). See alsohttp://www.straighttalk.com/"> http://www.straighttalk.com/ (visited Sep. 28, 2010). See
also
América Móvil, S.A.B. De C.V., SEC Form 20-F, filed May 25, 2010, at 57.
122 Phil Cusick et al., Slumdog Millionaires, Macquarie Capital, Equity Research, May 1, 2009, at 4, 24. See also
Footnote 845.
123 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.”)
124 SEC, Form 10-K, Leap Wireless, For the Fiscal Year Ended December 31, 2011, at 9. SEC, Form 10-K,
MetroPCS, For the Fiscal Year Ended December 31, 2011, at 11.
125 AT&T argues that competition among nationwide providers at the wholesale level to sell to TracFone results in
lower wholesale and retail prices; i.e. TracFone exerts competitive pressure on its hosting nationwide providers.
AT&T comments at 17. However, see, also, On the Competitive Effects of Mobile Virtual Network Operators
(stating, “It is found that MNOs host MVNOs if and only if the latter do not exert a competitive constraint on
MNOs’ retail businesses. Thus, absent access regulation, MVNO entry may happen but is unlikely to reduce
consumer prices”).
126 Macquarie - Just Who is TracFone Anyway? (stating that Verizon is “teaming up” with TracFone because
“…Verizon is specifically targeting the ~8 million prepaid customers who are now on AT&T’s network…”). See
also
TracFone’s Prepaid Offer Raises Price War Fears, Morgan Stanley Research, Telecom Services, June 4, 2009
(Stating that Verizon has formed a partnership with TracFone because “they want to use TracFone to get more of the
prepaid market”).
127 See Section III.D.2. Herfndahl-Hirschman Index, infra.

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spectrum allocated to narrowband and paging services, and there are hundreds of licensees for these
services. Licensees include citizens, firms, and local and state governments. For instance, USA Mobility
provides paging and two-way messaging products to the business, government, and health care sectors.128
USA Mobility states that, due to competition from mobile wireless service providers (using Cellular and
Broadband PCS spectrum), they expect demand for their messaging services to continue to decline.129
Another narrowband provider, Space Data Corp., provides commercial telemetry services across the
south-central United States to energy, utility, and transportation companies.130 SkyTel offers machine-to-
machine services including tracking services, automated reading of utility meters, power grid
communication services, wireless security services, and point of sale communication services.131
4.

Mobile Satellite Service Providers

38.
Mobile Satellite Services (MSS) providers offer satellite-based communications to
mobile devices. Traditionally, MSS has involved voice and narrowband data services. MSS services are
generally targeted at users requiring service in remote areas, in disaster response situations, or other
places where terrestrial mobile wireless network access may be limited.132 Examples of MSS customers
include the oil industry, maritime users, public safety agencies, and other government/military
operations.133
39.
In the Fifteenth Report, we noted that the mobile satellite service industry has been
undergoing major technological and structural changes, shifting consumer demand and industry growth to
broadband services.134 In this regard, certain of the MSS licensees also have sought to augment their
satellite services with terrestrial mobile services pursuant to Ancillary Terrestrial Component (ATC)
authority. However, the path toward deployment of ATC services has been a slow process, and no such
services are offered at this time.135 In addition, as of November 2012, there remains little commercial use

128 See USA Mobility, Wireless Messaging – Products and Services,
http://www.usamobility.com/products/messaging/">http://www.usamobility.com/products/messaging/ (visited May. 4, 2012); Tenth Report, 20 FCC Rcd at 15923 ¶ 33.
129 USA Mobility Inc., SEC Form 10-K, filed Feb. 23, 2012, at 4.
130 Space Data Corp., Overview of SkySite Networkhttp://www.spacedata.net/commercial_coverage.html">, http://www.spacedata.net/commercial_coverage.html (visited
May 4, 2012) ahttp://www.spacedata.net/company.html">nd http://www.spacedata.net/company.html (visited May 4, 2012); Tenth Report, 20 FCC Rcd at
15923 ¶ 34.
131 See SkyTel, Powering Innovations using SkyTel’s Network-on-Demand Communications Platform,
http://www.skytel.com/index.html">http://www.skytel.com/index.html (visited Apr. 26, 2012).
132 See Thirteenth Report, 24 FCC Rcd at 6301 ¶ 247.
133 AT&T has teamed up with TerreStar Networks to offer the first cellular/satellite smartphone, the Genus, which
can operate on AT&T’s terrestrial network or TerreStar’s satellite network. See TerreStar Genus Dual-Mode
Cellular/Satellite Smartphone Now Available from AT&T
, Press Release, AT&T, Sept. 21, 2010, available at
http://www.att.com/gen/press-room?pid=18505&cdvn=news&newsarticleid=31218&mapcode=enterprise">http://www.att.com/gen/press-room?pid=18505&cdvn=news&newsarticleid=31218&mapcode=enterprise (visited
May 4, 2012). As of September 2010, the Genus is available for enterprise, government, and small business
customers.
134 See Fifteenth Report, 26 FCC Rcd at 9702 ¶ 39.
135 Initially, four MSS providers, SkyTerra (later LightSquared), Globalstar, DBSD and TerreStar (now Dish
Network), were granted ATC authority by the Commission. In 2010, Globalstar’s ATC authority was suspended
for failure to come into compliance with the ATC “gating criteria.” LightSquared also is not deploying terrestrial
services at this time, and on February 15, 2012, the International Bureau proposed to modify LightSquared’s satellite
license “to suspend indefinitely LightSquared’s underlying ATC authorization.” See International Bureau Invites
Comment on NTIA Letter Reqarding LightSquared Conditional Waiver, IB Docket No. 11-109, Public Notice, 27
FCC Rcd 1596 (IB 2012). In March 2012, Dish Network consummated its transactions to acquire DBSD and
Terrestar, neither of which had offered any ATC services. See Fixed and Mobile Services in the Mobile Satellite
Service Bands at 1525-1559 MHz and 1626.5-1660.5 MHz, 1610-1626.5 MHz and 2483.5-2500 MHz, and 2000-
2020 MHz and 2180-2200 MHz, ET Docket No. 10-142, Report and Order, 26 FCC Rcd 5710 ¶ 5 (2011) (MSS
(continued….)

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of the 2 GHz band spectrum for MSS service.136 In the AWS-4 NPRM, the Commission proposed
eliminating the ATC rules for the 2 GHz band.137 In December of 2012, the Commission eliminated the
ATC rules for the 2 GHz band, granted terrestrial authority to the existing MSS licensee, and established
terrestrial service, technical, and licensing rules that generally follow the Commission’s Part 27 flexible
use rules, modified as necessary to account for issues unique to the AWS-4 band.138
40.
In response to the increasing demand for additional spectrum for wireless broadband
services, the National Broadband Plan recommended that the Commission “accelerate terrestrial
deployment in 90 megahertz” of spectrum allocated to MSS spectrum and proposed different approaches
to expanding terrestrial services in different MSS bands.139 For the 2 GHz MSS band, for example, the
Plan recommended that the “FCC should add a primary ‘mobile’ (terrestrial) allocation to the S-Band,
consistent with the international table of allocation, which will provide the option of flexibility to
licensees to provide stand-alone terrestrial services using the spectrum.”140
41.
In the AWS-4 NPRM, the Commission proposed to free up 40 megahertz of 2 GHz MSS
spectrum for mobile broadband service by removing regulatory barriers and providing for flexible use of
MSS spectrum, thus carrying out the National Broadband Plan’s recommendation that the Commission
enable the provision of stand-alone terrestrial services in this spectrum. In December 2012, the
Commission adopted the AWS-4 Report and Order, which provides for flexible use of this spectrum to
encourage innovation and investment in mobile broadband, and to provide a stable regulatory
environment in which broadband deployment could develop.141 Due to the unique characteristics of each
band, the Commission intends to address its ATC rules for Big LEO and L-band MSS separately.142

C.

Mobile Wireless Network Coverage

42.
Network Coverage. Our analysis of mobile wireless network coverage in this section is
based on U.S. census blocks143 overlaid on provider coverage maps provided to the Commission through
(Continued from previous page)
Report and Order); see also Service Rules for Advanced Wireless Services in the 2000-2020 MHz and 2180-2200
MHz Bands, Notice of Proposed Rule Making and Notice of Inquiry, 27 FCC Rcd 3561, 3563-4 ¶ 5-9 (2012)(AWS-4
NPRM and NOI
).
136 Service Rules for Advanced Wireless Services in the 2000-2020 MHz and 2180-2200 MHz Bands, Notice of
Proposed Rule Making and Notice of Inquiry
, 27 FCC Rcd 3564 ¶ 8 (2012)(AWS-4 NPRM and NOI).
137 AWS-4 NPRM at ¶ 136.
138 See Service Rules for Advanced Wireless Services in the 2000-2020 MHz and 2180-2200 MHz Bands, WT
Docket No. 12-70, Fixed and Mobile Services in the Mobile Satellite Service Bands at 1525-1559 MHz and 1626.5-
1660.5 MHz, 1610-1626.5 MHz and 2483.5-2500 MHz, and 2000-2020 MHz and 2180-2200 MHz, ET Docket No.
10-142, Service Rules for Advanced Wireless Services in the 1915-1920 MHz, 1995-2000 MHz, 2020-2025 MHz
and 2175-2180 MHz Bands, WT Docket No. 04-356, Report and Order and Order of Proposed Modification, FCC
12-151 (rel. Dec. 17, 2012) (AWS-4 Report and Order).
139 National Broadband Plan, Recommendation 5.8.4 at 87-88.; Three MSS frequency bands are currently available
to support terrestrial mobile broadband service: the 2 GHz band (S-band) from 2000-2020 MHz and 2180-2200
MHz, the Big LEO Band from 1610-1626.5 MHz and 2483.5-2500 MHz, and the L-band from 1525-1559 MHz and
1626.5-1660.5 MHz. See Appendix A, Fixed and Mobile Services in the Mobile Satellite Service Bands at 1525-
1559 MHz and 1626.5-1660.5 MHz, 1610-1626.5 MHz and 2483.5-2500 MHz, and 2000-2020 MHz and 2180-2200
MHz, ET Docket No. 10-142, Report and Order, 26 FCC Rcd 5710 (2011) (MSS Report and Order).
140 National Broadband Plan, Recommendation 5.8.4, at 87-88.
141 See AWS-4 Report and Order.
142 See Service Rules for Advanced Wireless Services in the 2000-2020 MHz and 2180-2200 MHz Bands, Notice of
Proposed Rule Making and Notice of Inquiry
, 27 FCC Rcd 3563 ¶ 1 (2012)(AWS-4 NPRM and NOI).
143 A census block is the smallest geographic unit for which the Census Bureau tabulates decennial census data. See
U.S. Census Bureau, 2010 Census Summary File 1 – 2010 Census of Population and Housing, Technical
(continued….)

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a contract with Mosaik Solutions (formerly American Roamer), an independent consulting firm144 that
tracks coverage footprints of mobile voice and mobile data networks.145 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. We then aggregate the population and
land area of the covered census blocks. While recognizing that this analysis likely overstates the
coverage experienced by consumers because of limitations in Mosaik data, we find that this analysis is
useful because it provides a general baseline that can be compared over time across network technologies,
and providers. We present our analysis in terms of coverage by population, square miles, and road miles.
43.
We first present network coverage in terms of population covered by the mobile wireless
networks of the top facilities-based providers. Table 2 provides information on mobile wireless voice
network coverage, and Table 3 provides information on mobile wireless broadband network coverage for
the top facilities-based providers. The term population coverage by a mobile wireless provider means
only that a mobile wireless network has been deployed in areas where the Census Bureau records indicate
that people reside. A provider’s having network coverage in an area does not mean that a provider
actually offers its service to residents in all of that area.

Table 2

Estimated Mobile Wireless Network Coverage, Selected Facilities-Based Providers: Voice Networks

,
2009-2012 (Covered POPs, in millions) 146

Service Provider Oct. 2009 Oct. 2010 Apr. 2011 Jan. 2012 Oct. 2012



AT&T
262.8
281.9
306.3
306.6
307.2
Verizon Wireless
270.5
284.9
299.5
299.5
300.0
Sprint Nextel
258.0
263.2
292.1
291.2
290.3
(Continued from previous page)
Documentation, Mar. 2010, at 2-1, available at http://www.census.gov/prod/cen2010/doc/sf1.pdf#page=504.
Census blocks in cities often correspond to individual city blocks bounded by streets. Blocks in suburban or rural
areas “may be large, irregular, and bounded by a variety of features, such as roads, streams, and transmission lines.
In remote areas, census blocks may encompass hundreds of square miles.” Id. at A-10. While the past several
Reports relied on 2000 Census population data at the census block level, this Report uses 2010 Census population
data. The 2010 Census identified over 11 million blocks covering the entire United States and its territories. U.S.
Census Bureau, Question & Answer Center, http://www.census.gov/ (visited Oct. 2, 2010). The mean size of a
census block is 0.0460 square miles, and its median size is 0.016 square miles with a range of 0.0000001 to 8,081
square miles; its mean population is 34.3 people, while its median population is 8.0 people, with a range of 0 to
23,373 people.
144 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. Mosaik began as
American Roamer in 1985 as the original vendor of custom printed roaming guides for Cellular carriers, but has
since evolved into a provider of data and mapping for the mobile wireless industry. See Fifteenth Report, 26 FCC
Rcd at 9703 ¶ 41 n. 106; Mosaik, About Us, http://www.mosaik.com/about-us/ (visited Apr. 27, 2012).
145 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.
146The estimates in this Table are based on our census block analysis of Mosaik CoverageRight coverage maps using
the April 2011, January 2012, and October 2012 data. The population data are from the 2010 Census. Estimates for
2009 and 2010 are obtained from the Fifteenth Report. Fifteenth Report, 25 FCC Rcd at 9702 ¶ 45.

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T-Mobile
246.2
249.5
282.5
284.8
281.4
MetroPCS
84.6
92.1
105.0
105.4
108.1
Leap
80.5
82.7
94.0
93.4
94.2
US Cellular
41.7
41.5
44.2
44.0
44.0

Table 3

Estimated Mobile Wireless Network Coverage, Selected Facilities-Based Providers: Broadband

Networks

, 2009-2012 (Covered POPs, in millions)147

Service Provider Nov. 2009 Aug. 2010 Apr. 2011 Jan. 2012 Oct. 2012

Verizon Wireless
266.7
270.0
298.0
299.2
300.4
AT&T
212.3
228.6
276.1
289.9
296.7
Sprint Nextel
226.9
239.4
276.4
273.7
275.1
T-Mobile
133.9
183.8
214.7
227.6
235.4
MetroPCS
-
-
62.2
72.4
108.3
Clearwire
-
-
108.9
105.1
105.3
Leap
79.2
81.5
92.6
92.3
93.4
US Cellular
26.6
30.0
40.7
41.1
43.2
44.
We next 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 based on the Mosaik
data (Tables 4-5).148 Map 3 below depicts an estimate of the areas of the United States covered by a
certain number of facilities-based providers. More detailed regional maps, as well as an enlarged version
of Map 3 below, are available in Appendix C. As stated above, these estimates of coverage represent
deployment of mobile wireless networks and do not indicate the extent to which providers actually offer
service to residents in the covered areas.




147For purposes of this, and earlier, Mobile Wireless Competition Reports, we include coverage by WCDMA/HSPA,
HSPA+, EV-DO, WiMAX, and LTE networks within our estimate of mobile broadband network coverage.
Commission estimates based on census block analysis of Mosaik CoverageRight coverage maps, April 2011,
January 2012, and October 2012. Population data are from the 2010 Census. Estimates for 2009 and 2010 are
obtained from the Fifteenth Report. Fifteenth Report, 25 FCC Rcd at 9702 ¶ 45. The recent Broadband Progress
Report
did not include WCDMA/HSPA or EV-DO networks in its definition of mobile broadband networks. 2012
Eighth Broadband Progress Report, WN Docket No. 11-121 (rel. Aug. 21, 2012) ¶ 40.
148 Our analysis of road miles includes the following road miles categories from census: Primary Road (S1100),
Secondary Road (S1200), Local Neighborhood Road, Rural Road, City Street (S1400), Vehicular Trail [4WD]
(S1500), Service Drive usually along a limited access highway (S1640), and Private Road for service vehicles
(S1740) as defined in MAF/TIGER Feature Class Code (MTFCC) Definitions, pages F-186 and F-187 at
http://www.census.gov/geo/www/tiger/tgrshp2010/documentation.html">http://www.census.gov/geo/www/tiger/tgrshp2010/documentation.html (last visited Sep 26, 2012). In calculating
the number of road miles associated with each census block, we also used two tables (“Faces” and “Edges”),
published by the US Census Bureau as part of the TIGER database. A description of these relationship tables can be
found ahttp://www.census.gov/geo/www/tiger/rel_file_desc.pdf">t http://www.census.gov/geo/www/tiger/rel_file_desc.pdf. The datasets themselves are available in the
FACES and EDGES directories aftp://ftp2.census.gov/geo/tiger/TIGER2010/">t ftp://ftp2.census.gov/geo/tiger/TIGER2010/ (visited Nov. 19, 2012).

46


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Map 3: Coverage by Mobile Wireless Competitors


Table 4

Estimated Mobile Wireless Coverage by Census Block, Jan. 2012

149

Number of

Number

POPs

% of

Square

% of

Road

% of

Providers

of Blocks

Contained

Total

Miles

Total US

Miles

Total

with
(Thousands)
in Those

US

Contained

Square

Contained

US

Coverage

Blocks

POPs

in Those

Miles

in Those

Road

in a Block
(Thousands)

Blocks

Blocks

Miles

(Thousands)
(Thousands)
US Total
11,155
312,471
100.0%
3,802
100.0%
6,821
100.0%
1 or more
10,927
312,010
99.9%
2,821
74.2%
6,498
95.3%
2 or more
10,554
310,306
99.3%
2,393
62.9%
5,977
87.6%
3 or more
9,629
303,843
97.2%
1,756
46.2%
4,949
72.6%
4 or more
8,315
290,478
93.0%
1,165
30.7%
3,814
55.9%
5 or more
6,054
248,820
79.6%
596
15.7%
2,380
34.9%



149 Includes Federal lands. Commission estimates based on census block analysis of Mosaik CoverageRight
coverage maps, January 2012. Population data are from the 2010 Census, and include the United States (50 states
plus the District of Columbia) and Puerto Rico. Square miles include the United States and Puerto Rico. Our
analysis of road miles includes the following road miles categories from census: Primary Road (S1100), Secondary
Road (S1200), Local Neighborhood Road, Rural Road, City Street (S1400), Vehicular Trail [4WD] (S1500), Service
Drive usually along a limited access highway (S1640), and Private Road for service vehicles (S1740) as defined in
MAF/TIGER Feature Class Code (MTFCC) Definitions, pages F-186 and F-187 at
http://www.census.gov/geo/www/tiger/tgrshp2010/documentation.html (last visited Sep 26, 2012). In calculating
the number of road miles associated with each census block, we also used two tables (“Faces” and “Edges”),
published by the US Census Bureau as part of the TIGER database. A description of these relationship tables can be
found at http://www.census.gov/geo/www/tiger/rel_file_desc.pdf. The datasets themselves are available in the
FACES and EDGES directories aftp://ftp2.census.gov/geo/tiger/TIGER2010/">t ftp://ftp2.census.gov/geo/tiger/TIGER2010/ (visited Nov. 19, 2012).


47


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Table 5

Estimated Mobile Wireless Coverage by Census Block, Oct. 2012

150

Number of

Number

POPs

% of

Square

% of

Road

% of

Providers

of Blocks

Contained

Total

Miles

Total US

Miles

Total

with
(Thousands)
in Those

US

Contained

Square

Contained

US

Coverage

Blocks

POPs

in Those

Miles

in Those

Road

in a Block
(Thousands)

Blocks

Blocks

Miles

(Thousands)
(Thousands)
US Total
11,155
312,471
100.0%
3,802
100.0%
6,821
100.0%
1 or more
10,932
312,044
99.9%
2,824
74.3%
6,499
95.3%
2 or more
10,560
310,291
99.3%
2,402
63.2%
5,985
87.7%
3 or more
9,626
303,678
97.2%
1,764
46.4%
4,963
72.8%
4 or more
8,281
290,114
92.8%
1,167
30.7%
3,817
56.0%
5 or more
6,097
251,071
80.4%
607
16.0%
2,421
35.5%

45.
Table 5 shows that as of October 2012, approximately 312 million people, or 99.9
percent of the total U.S. population, were covered by at least one facilities-based provider offering mobile
voice and/or data service. Equivalently, approximately 427 thousand people, or 0.1 percent of the U.S.
population, lived in areas with no mobile wireless coverage. Looking at areas with multiple providers,
the October 2012 data show that approximately 97 percent of the U.S. population is covered by the
networks of at least three mobile voice providers, close to 93 percent is covered by the networks of at
least four mobile voice providers, and about 80 percent is covered by five. We believe there is an
anomaly with the July/August 2010 data presented in the Fifteenth Report that resulted in unusually high
estimates of the percentage of the population covered by the networks of at least four, five, and six
providers (94 percent, 90 percent, and 76 percent, respectively).151
46.
Tables 4 and 5 also show the approximate percentage of the U.S. land area and road miles
covered by a certain number mobile wireless providers. These tables may overstate coverage to the
extent that a provider’s reported coverage is greater than its actual coverage. Additionally, coverage does
not quantify network quality variables such as signal strength, bit rate, and in-building coverage. While
we estimate that over 90 percent of the U.S. population lives in census blocks with coverage by at least 4
mobile voice providers, these census blocks account for only 30 percent of the total land area of the
United States and 55 percent of road miles. Furthermore, while we estimate that only 0.1 percent of the
U.S. population lives in areas with no mobile wireless coverage, these areas cover more than a quarter of
the U.S. land area and approximately 5 percent of U.S. road miles.
47.
The percentage of land area covered increases however, when federally-owned or
administered lands area is excluded from the analysis due to the vast quantities of sparsely-populated
Federal lands in the United States (Table 6, Table 7).152

150 Includes Federal lands. Commission estimates based on census block analysis of Mosaik CoverageRight
coverage maps, October 2012. Population data are from the 2010 Census, and include the United States and Puerto
Rico. Square miles include the United States and Puerto Rico.
151 See Fifteenth Report, 26 FCC Rcd at 9705 Table 5. The 80.4 percent estimate for ‘5 or more’ providers as of
October 2012 represents a marked decline from the figure presented in the Fifteenth Report, which reported that
89.6 percent of the U.S. population was covered by at least five providers based on the Commission’s analysis of
July/August 2010 Mosaik data. The estimates in this Report are more consistent with the Commission’s estimates
based on the October/November 2009 data presented in the Fourteenth Report, which showed that approximately 91
percent of the U.S. population was covered by at least four providers’ networks, 74 percent by five, and 25 percent,
by six. See Fourteenth Report, 25 FCC Rcd at 11447 Table 4.
152 Federally-owned lands constitute nearly 30 percent of the approximately 3.6 million square mile land area of the
United States. See Fifteenth Report, 26 FCC Rcd at 9705 ¶ 43. A map showing the extent of Federal lands, with
(continued….)

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Table 6

Estimated Mobile Wireless Coverage by Census Block, Excluding Federal Land

, Jan. 2012153

Number of

Number

POPs

% of

Square

% of

Road

% of

Providers

of Blocks

Contained

Total

Miles

Total US

Miles

Total

with
(Thousands)
in Those

US

Contained

Square

Contained

US

Coverage

Blocks

POPs

in Those

Miles

in Those

Road

in a Block
(Thousands)

Blocks

Blocks

Miles

(Thousands)
(Thousands)
US Total
10,449
307,209
100.0%
2,431
100.0%
5,893
100.0%
1 or more
9,865
306,863
99.9%
2,183
89.8%
5,751
97.6%
2 or more
9,615
305,402
99.4%
1,956
80.5%
5,426
92.1%
3 or more
8,862
299,415
97.5%
1,501
61.7%
4,607
78.2%
4 or more
7,727
286,659
93.3%
1,029
42.3%
3,616
61.4%
5 or more
5,696
246,015
80.1%
542
22.3%
2,293
38.9%









(Continued from previous page)
American Indian Reservations and Alaska Native Village Statistical Areas, can be found in Appendix C. The
Commission has recognized, “[i]n many locations, covering certain government land may be impractical, because
these lands are subject to restrictions that prevent a licensee from providing service or make provision of service
extremely difficult. We also note that government lands often include only very small portions of the population in
a license area.” Service Rules for the 698-746, 747-762 and 777-792 MHz Bands; Revision of the Commission’s
Rules to Ensure Compatibility with Enhanced 911 Emergency Calling Systems; Section 68.4(a) of the Commission's
Rules Governing Hearing Aid-Compatible Telephones; Biennial Regulatory Review – Amendment of Parts 1, 22,
24, 27, and 90 to Streamline and Harmonize Various Rules Affecting Wireless Radio Services; Former Nextel
Communications, Inc. Upper 700 MHz Guard Band Licenses and Revisions to Part 27 of the Commission’s Rules;
Implementing a Nationwide, Broadband, Interoperable Public Safety Network in the 700 MHz Band; and
Development of Operational, Technical and Spectrum Requirements for Meeting Federal, State and Local Public
Safety Communications Requirements Through the Year 2010, Second Report and Order, 22 FCC Rcd 15289,
15350 ¶ 160 (2007).
153 Commission estimates based on Mosaik, Jan. 2012. Population and land area are based on census blocks. POPs
are from the 2010 Census, and square miles include the United States and Puerto Rico. Excludes Federal lands. In
this analysis, Federal lands consist of lands owned or administered by the Federal Government, including the Bureau
of Land Management, the Bureau of Reclamation, the United States Department of Agriculture Forest Service, the
Department of Defense, the United States Fish and Wildlife Service, the National Park Service, the Tennessee
Valley Authority, and other agencies. Only areas of one square mile (640 acres) or more are included. Indian lands
are not included in Federal lands. See United States Department of the Interior, Federal Lands of the United States,
http://www.nationalatlas.gov/mld/fedlanp.html">http://www.nationalatlas.gov/mld/fedlanp.html (visited Sep. 18, 2012). Our analysis of road miles includes the
following road miles categories from census: Primary Road (S1100), Secondary Road (S1200), Local Neighborhood
Road, Rural Road, City Street (S1400), Vehicular Trail [4WD] (S1500), Service Drive usually along a limited
access highway (S1640), and Private Road for service vehicles (S1740) as defined in MAF/TIGER Feature Class
Code (MTFCC) Definitions, pages F-186 and F-187 available at
http://www.census.gov/geo/www/tiger/tgrshp2010/documentation.html">http://www.census.gov/geo/www/tiger/tgrshp2010/documentation.html (last visited Sep 26, 2012). In calculating
the number of road miles associated with each census block, we also used two tables (“Faces” and “Edges”),
published by the US Census Bureau as part of the TIGER database. A description of these relationship tables can be
found ahttp://www.census.gov/geo/www/tiger/rel_file_desc.pdf">t http://www.census.gov/geo/www/tiger/rel_file_desc.pdf. The datasets themselves are available in the
FACES and EDGES directories aftp://ftp2.census.gov/geo/tiger/TIGER2010/">t ftp://ftp2.census.gov/geo/tiger/TIGER2010/. (visited Nov. 19, 2012).

49


Federal Communications Commission

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Table 7

Estimated Mobile Wireless Coverage by Census Block, Excluding Federal Land

, Oct 2012154

Number of

Number

POPs

% of

Square

% of

Road

% of

Providers

of Blocks

Contained

Total

Miles

Total US

Miles

Total

with
(thousands)
in Those

US

Contained

Square

Contained

US

Coverage

Blocks

POPs

in Those

Miles

in Those

Road

in a Block
(Thousands)

Blocks

Blocks

Miles

(Thousands)
(Thousands)
US Total
10,449
307,209
100.0%
2,431
100.0%
5,893
100.0%
1 or more
9,871
306,901
99.9%
2,185
89.9%
5,756
97.7%
2 or more
9,622
305,393
99.4%
1,964
80.8%
5,434
92.2%
3 or more
8,868
299,261
97.4%
1,511
62.2%
4,622
78.4%
4 or more
7,708
286,289
93.2%
1,035
42.6%
3,619
61.4%
5 or more
5,747
248,242
80.8%
555
22.8%
2,331
39.6%
48.
Mobile Broadband Coverage. Tables 8 and 9 below show the estimated mobile
broadband coverage as of January 2012 and October 2012. 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. Mobile broadband network
deployment by multiple providers has continued and, as of October 2012, approximately 311 million
people, or 99.5 percent of the U.S. population, lived in areas with coverage by at least one mobile
broadband provider, up from approximately 98.5 percent in August 2010. We estimate that the
percentage of the population covered by at least three mobile broadband providers increased from 82
percent in August 2010 to 87 percent in April 2011 to nearly 92 percent in October 2012. Finally, in
October 2012, 82 percent of the U.S. population lived in areas with coverage by at least four mobile
broadband providers, up from 68 percent in August 2010.

Table 8

Estimated Mobile Wireless Broadband Coverage by Census Block, Jan. 2012

155

Number of

Number

POPs

% of

Square

% of

Road

% of

Providers

of Blocks

Contained

Total

Miles

Total US

Miles

Total

with
(Thousands)
in Those

US

Contained

Square

Contained

US

Coverage

Blocks

POPs

in Those

Miles

in Those

Road

in a Block
(Thousands)

Blocks

Blocks

Miles

(Thousands)
(Thousands)
1 or more
10,620
310,519
99.4%
2,517
66.2%
6,115
89.6%
2 or more
9,570
302,620
96.8%
1,786
47.0%
4,954
72.6%

154 Commission estimates based on Mosaik, Oct. 2012. Population and land area are based on census blocks. POPs
are from the 2010 Census, and square miles include the United States and Puerto Rico. Excludes Federal lands.
155 Includes Federal lands. Commission estimates based on census block analysis of Mosaik CoverageRight
coverage maps, Jan. 2012. The estimates include coverage by all EVDO, EVDO Rev. A, HSPA/UMTS/WCDMA,
HSPA+, LTE, and mobile WiMAX networks. Population data are from the 2010 Census, and square miles include
the United States and Puerto Rico. 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. Our analysis of road miles includes the following road miles categories from census: Primary Road
(S1100), Secondary Road (S1200), Local Neighborhood Road, Rural Road, City Street (S1400), Vehicular Trail
[4WD] (S1500), Service Drive usually along a limited access highway (S1640), and Private Road for service
vehicles (S1740) as defined in MAF/TIGER Feature Class Code (MTFCC) Definitions, pages F-186 and F-187 at
http://www.census.gov/geo/www/tiger/tgrshp2010/documentation.html">http://www.census.gov/geo/www/tiger/tgrshp2010/documentation.html (last visited Sep 26, 2012). In calculating
the number of road miles associated with each census block, we also used two tables (“Faces” and “Edges”),
published by the US Census Bureau as part of the TIGER database. A description of these relationship tables can be
found ahttp://www.census.gov/geo/www/tiger/rel_file_desc.pdf">t http://www.census.gov/geo/www/tiger/rel_file_desc.pdf. The datasets themselves are available in the
FACES and EDGES directories aftp://ftp2.census.gov/geo/tiger/TIGER2010/">t ftp://ftp2.census.gov/geo/tiger/TIGER2010/ (visited Nov. 19, 2012).

50


Federal Communications Commission

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3 or more
7,459
280,104
89.6%
895
23.6%
3,186
46.7%
4 or more
5,444
246,180
78.8%
395
10.4%
1,920
28.1%
5 or more
3,095
165,191
52.9%
139
3.7%
1,009
14.8%

Table 9

Estimated Mobile Wireless Broadband Coverage by Census Block, Oct. 2012

156

Number of

Number

POPs

% of

Square

% of

Road

% of

Providers

of Blocks

Contained

Total

Miles

Total US

Miles

Total

with
(Thousands)
in Those

US

Contained

Square

Contained

US

Coverage

Blocks

POPs

in Those

Miles

in Those

Road

in a Block
(Thousands)

Blocks

Blocks

Miles

(Thousands)
(Thousands)
1 or more
10,708
311,025
99.5%
2,577
67.8%
6,209
91.0%
2 or more
9,889
305,590
97.8%
1,950
51.3%
5,245
76.9%
3 or more
7,954
286,121
91.6%
1,070
28.1%
3,570
52.3%
4 or more
5,977
256,191
82.0%
521
13.7%
2,252
33.0%
5 or more
4,222
215,375
68.9%
228
6.0%
1,353
19.8%


49.
Areas with Service Offered. We have also estimated – using a different set of data that
indicates where providers have customers instead of where they have network coverage – the number of
people living in Cellular Market Areas with a certain number of mobile wireless providers offering
service in that CMA.157 These estimates are likely to overestimate the number of facilities-based
providers available for selection by any individual customer living in that CMA. Because many CMAs
are made up of several counties and because a facilities-based service provider may offer service in only
part of a CMA,158 many consumers, especially in rural areas, likely have fewer service provider choices
where they live or work than the total number of providers offering service somewhere in their CMA. As
one example, Map 4 below shows coverage in a rural CMA in eastern Oregon. Because mobile providers
generally screen the eligibility of potential customers by zip code, a more accurate estimation of the
competitive choices available to individual consumers would be based on zip codes. Another depiction of
the choices effectively available to a consumer would be based on an assessment of a service provider’s
retail presence in an area.

156 Includes Federal lands. Commission estimates based on census block analysis of Mosaik CoverageRight
coverage maps, Oct. 2012. The estimates include coverage by all EVDO, EVDO Rev. A, HSPA/UMTS/WCDMA,
HSPA+, LTE, and mobile WiMAX networks. Population data are from the 2010 Census, and square miles include
the United States and Puerto Rico.
157 In recent transactions orders, the Commission has primarily used CMAs as the local geographic markets in which
to analyze the potential competitive harms arising from the spectrum concentration as a result of the transaction, but
it has also found it appropriate to analyze the potential national competitive impacts of transactions. See Application
of AT&T Inc. and Qualcomm Incorporated for Consent to Assign Licenses and Authorizations, WT Docket No. 11-
18, Order, 26 FCC Rcd 17589, 17591 ¶ 34 (2011) (AT&T-Qualcomm Order); Applications of Cellco Partnership
d/b/a Verizon Wireless and SpectrumCo LLC and Cox TMI, LLC For Consent To Assign AWS-1 Licenses, WT
Docket No. 12-4, Applications of Verizon Wireless and Leap for Consent To Exchange Lower 700 MHz, AWS-1,
and PCS Licenses, ULS File Nos. 0004942973, 0004942992, 0004952444, 0004949596, and 0004949598,
Applications of T-Mobile License LLC and Cellco Partnership d/b/a Verizon Wireless for Consent to Assign
Licenses, WT Docket 12-175, FCC 12-95 ( rel. Aug. 23, 2012) (Verizon Wireless-SpectrumCo Order); Applications
of AT&T Inc. and Centennial Communications Corp. for Consent to Transfer Control of Licenses, Authorizations,
and Spectrum Leasing Arrangements, WT Docket No. 08-246, Memorandum Opinion and Order, 24 FCC Rcd
13915 (2009) (AT&T-Centennial Order); See also Section II, Introduction, supra.
158See Fifteenth Report, 26 FCC Rcd at 9707 ¶ 47.

51


Federal Communications Commission

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50.
We estimate the number of providers serving at least portions of each of the 716 CMA in
the U.S. (excluding territories). In this Report, we consider a provider to be a competitor 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
within the CMA.159 As shown in Table 10, using a two percent market share threshold shows that in all
but one of the 716 CMAs that make up the United States (excluding territories), there are at least two
mobile wireless service providers offering service in at least a portion of that CMA. With this threshold,
approximately 93 percent of such CMAs have three or more providers offering service, and
approximately 72 percent have four or more providers. Also as shown in Table 10, using a five percent
market share threshold shows that in all but two of the 716 CMAs that make up the United States
(excluding territories), there are at least two mobile wireless service providers offering service in at least a
portion of that CMA. Approximately 83 percent of such CMAs have three or more providers offering
service, and approximately 53 percent have four or more providers.

Table 10

Estimated Mobile Wireless Providers Offering Service by CMA, Excluding Territories, December

2011160

Two Percent Market Share

Five Percent Market Share


Threshold

Threshold

Number of Providers

Number of

Total CMAs

Number of

Total CMAs

Offering Service

CMAs


(Percent)

CMAs

(Percent)

Anywhere in a CMA


Total for U.S.,

716
100%
716
100%
excluding territories
1 provider
1
0.1%
2
0.3%
2 providers
51
7.1%
120
16.8%
3 providers
152
21.2%
213
29.7%
4 providers
210
29.3%
246
34.4%
5 or more providers
302
42.2%
135
18.9%















159 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, Numbers of Mobile Wireless Connections and Customers, infra.
160 Commission analysis based on December 2011 NRUF data.

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Map 4

Service Provider Coverage in an Illustrative Rural CMA, Jan. 2012



D.

Horizontal Concentration

51.
The level of market concentration can be measured by the number of competitors, shares
of subscribers or sales, or the distribution of competitors’ respective shares of subscribers or sales.
Market concentration measures that are derived from market shares can indicate when a small number of
competitors each possess a relatively large share of subscribers or sales. 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 nonetheless find that a market
with high concentration levels is competitive. Data on the number of competitors were reported in the
previous section (Mobile Wireless Network Coverage), market share data and the Herfindahl-Hirschman
Index (HHI) are discussed below.
1.

Market Shares

52.
Service provider service revenues and market shares by service revenues are shown in
Table 11 and Table 12. Table 12 provides market share estimates of the seven largest facilities-based
service providers, showing that the four nationwide service providers accounted for about 92 percent of
the nation’s mobile wireless service revenue in the first half of 2012. The service revenues of Verizon
Wireless and AT&T accounted for about 67 percent of total service revenue.


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Table 11

Facilities–Based Mobile Wireless Service Providers by Service Revenues, Publicly-Traded

Companies, Reported by Provider, 2008-2012161


(In millions of dollars)
2012

2008
2009
2010
2011 Q1-Q2
Verizon Wireless
42,602 52,046 55,629 59,157 31,186
AT&T
44,249 48,563 53,510 56,726 29,331
Sprint Nextel
28,435 25,832 25,894 27,390 14,302
T-Mobile
19,242 18,926 18,733 18,481
8,825
MetroPCS
2,437
3,130
3,690
4,428
2,318
US Cellular
3,428
3,430
3,534
3,782
2,054
Leap Wireless
1,782
2,242
2,483
2,829
1,525
Clearwire
213
252
505
1,208
640
Atlantic Tele-Network
105
147
453
572
283
Ntelos
392
400
383
396
222
Cincinnati Bell Wireless
291
284
269
252
117

Table 12

Estimated Facilities-Based Service Provider Share of Service Revenues, 2008-2012 (Percent)

162

2012

2008 2009 2010 2011 Q1-Q2
Verizon Wireless
27.8
33.4
33.7
33.8
34.3
AT&T
28.9
31.2
32.4
32.4
32.3
Sprint Nextel
18.6
16.6
15.7
15.6
15.8
T-Mobile
12.6
12.1
11.3
10.5
9.7
MetroPCS
1.6
2.0
2.2
2.5
2.6
US Cellular
2.2
2.2
2.1
2.2
2.3
Leap Wireless
1.2
1.4
1.5
1.6
1.7
Other
7.2
1.1
1.0
1.4
1.4




161 Service revenues are reported publicly by most publicly-traded service providers in SEC 10-K filings. Atlantic
Tele-Network service revenues for 2010 and 2011 are for U.S wireless operations. Atlantic Tele-Network, SEC
Form 10-K, filed March 15, 2012. Atlantic Tele-Network service revenues for 2008 and 2009 are for U.S and
Caribbean wireless operations. Atlantic Tele-Network, SEC Form 10-K, filed March 16, 2010.
162 “Other” is the sum of service revenues from Clearwire, Cincinnati Bell Wireless, Ntelos, Atlantic Tele-Network,
Rural Cellular, Alltel, and Centennial. Hence, “Other” excludes service revenues of all non-publicly traded
facilities-based companies, the largest being C-Spire. The relatively large 7.2 percent “Other” for 2008 in largely
accounted for by Alltel. To the extent that not all service revenues are accounted for in “Other”, the shares
attributed to some of the listed service providers may be overstated in this estimation method. Deriving “Other”
using UBS estimates of total service revenue yields similar estimates.

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53.
Reported total connections for the top service providers are shown in Table 13.163
Service providers do not follow the same reporting conventions for their connections. Some providers,
such as AT&T, Sprint, and T-Mobile, reported all the connections served by their networks, including
retail and wholesale connections, and connected devices. Verizon Wireless, which recently revised its
reported connections for 2009, 2010, and 2011, now includes only its retail connections.164 Industry
analysts often calculate market shares by reported total connections,165 a method which attributes all
industry connections to facilities-based providers. However, if Verizon does not report all of its
connections then its market share would be underestimated with this method.

Table 13


Top-12 Facilities–Based Mobile Wireless Service Providers Reported Connections, Year-end 2008-

2012 Q2 (In thousands) 166

Service Provider

2008
2009
2010
2011
2012 Q2
AT&T
77,009
85,120
95,536
103,247
105,206
Verizon Wireless
72,056
85,445
87,535
92,167
94,154
Sprint Nextel167
48,338
48,133
49,910
55,021
56,386
T-Mobile
32,758
33,790
33,734
33,185
33,168
Clearwire168
475
688
4,345
10,415
10,957
MetroPCS
5,367
6,640
8,155
9,347
9,292
Leap
3,845
4,954
5,518
5,934
5,903
US Cellular
6,196
6,141
6,072
5,891
5,799
C Spire Wireless169
≈800
≈800
NA
≈1,000
≈1,000
Atlantic Tele-Network
NA
NA
718
582
584
Cincinnati Bell Wireless
551
533
509
459
430
NTELOS
435
439
438
415
425


163 Verizon Wireless acquired Alltel in Jan. 2009 (the 5th largest firm in 2008, with an estimated 13.2 million
subscribers). AT&T acquired Centennial in Nov. 2009 (the 9th largest firm in 2008 with an estimated 1.1 million
subscribers).
164 In its 2012 Q2 10Q, Verizon Wireless stated “Retail (non-wholesale) customers are customers directly served
and managed by Verizon Wireless that use its branded services.” See Verizon Wireless, SEC Form 10Q for the
quarter ended June 30, 2012, filed July 30, 2012. Verizon last reported the wholesale connections of Verizon
Wireless in 2011 when it reported approximately 15.6 million wholesale and other connections. Verizon, SEC Form
10-K for the fiscal year ended December 31, 2011, Exhibit 13.
165 Well-known industry analyst reports attribute all connections to facilities-based providers. See, e.g., Bank of
America Merrill Lynch, 3Q12 US Wireless Matrix: Verizon sweeps the quarter, Nov. 15, 2012; UBS Investment
Research, US Wireless 411: Version 44.0, Aug. 14, 2012.
166 Sources include publicly-available company documents such as annual reports and SEC filings. Verizon revised
its reported subscribers for 2009, 2010 and 2011and now only reports retail connections. Claro, a facilities-based
provider that serves Puerto Rico, has substantial connections. Currently, América Móvil reports Claro mobile
wireless connections for its entire Caribbean service area and does not break out Puerto Rico. See also Claro,
http://www.telefonicapr.com/">http://www.telefonicapr.com/ (reporting total subscribers for combined wireless and wireline operations.).
167 Sprint customers include customers on Sprint’s iDEN and CDMA networks.
168 Clearwire customers include 9,123,000 wholesale connections, most of which are also Sprint retail connections
Some Sprint data plans include coverage on both Sprint’s CDMA network and Clearwire’s WiMAX network.
Clearwire customers include a small, unknown number of customers on Clearwire’s legacy fixed wireless network.
169 See C Spire Wirelesshttp://www.cspire.com/company_info/about/more_info.jsp">, http://www.cspire.com/company_info/about/more_info.jsp, visited Nov. 21, 2012 (stating,
“The company has nearly 1 million subscribers and continues to experience strong, steady growth.”).

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2.

Herfindahl-Hirschman Index

54.
The Commission employs the Herfindahl-Hirschman Index (HHI), the most widely-
accepted measure of concentration in competition analysis. In particular, it allows a comparison of
different distributions of providers’ shares of subscribers. The range of the HHI is from zero to 10,000,
with 10,000 representing a monopoly, the highest possible level of industry concentration. Fewer
providers or a higher inequality in providers’ shares of subscribers result in higher HHI values.170 As a
benchmark for comparison, the value of the HHI for a hypothetical market in which there are four
facilities-based providers with equal shares of subscribers is 2500. If there are three facilities-based
providers with equal shares of subscribers, the value would increase to 3333.171 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).172
55.
HHI Methodology. As in previous Reports, we calculate the HHI in each EA using the
shares of mobile wireless connections held by facilities-based mobile wireless providers, deriving
providers’ shares of connections from their respective number of connections.173 Hence, we use a
facilities-based provider’s number of connected devices as a proxy for the provider’s actual output (i.e.,
minutes of use, MBs, etc.). The number of mobile wireless connections for each provider is determined
based on the Commission’s year-end 2011 NRUF data, which track phone number usage information for
the United States.174
56.
Certain limitations of the NRUF data may affect the accuracy of the HHI estimates.175

170 The HHI is calculated by summing the squares of all provider subscriber shares in the EA. Thus, if a single firm
supplies the market, the HHI = 10,000 (100 x 100). If there are ten providers, each with ten percent of the market,
the value of HHI would be 1,000 [(10)2 x 10]. As the structure of a market becomes progressively more atomistic,
the value of HHI approaches 0. For a given number of firms, the value of the HHI increases as the inequality in
subscriber shares increases. For example, if four carriers are identified as participants in the relevant markets and
each carrier accounts for 25 percent of total sales, the value of HHI would be 2500 [(25)2 x 4]. If there are still only
four carriers but the top carrier has a 40 percent subscriber share while each of the remaining three carriers has 20
percent, the value of HHI increases from 2500 to 2800 [(40)2 + ((20)2 x 3)].
171 The antitrust authorities (Department of Justice and the Federal Trade Commission) as well as the Commission
use HHIs in their competitive review of mergers. On August 19, 2010, the DOJ and FTC issued new merger
guidelines whereby the proposed transaction would come under scrutiny if the HHI is currently above 2500, and the
merger would lead the HHI to increase by 100 – 200 points, Horizontal Merger Guidelines, U.S. Department of
Justice and the Federal Trade Commission,http://www.justice.gov/atr/public/guidelines/hmg-2010.pdf"> http://www.justice.gov/atr/public/guidelines/hmg-2010.pdf (visited Dec
13, 2012). In reviewing mobile wireless applications the Commission has also applied an HHI screen. 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).
172 See Horizontal Merger Guidelines, United States Department of Justice and the Federal Trade Commission,
http://www.justice.gov/atr/public/guidelines/hmg-2010.pdf%20%20(visited">http://www.justice.gov/atr/public/guidelines/hmg-2010.pdf (visited Dec. 12, 2012).
173 See Section III.A, Introduction, supra. As discussed in Section V.A, Numbers of Mobile Wireless Connections ,
infra, the NRUF data used to calculate the HHIs provide an estimate of the number of mobile wireless connections
or connected devices, rather than an estimate of the number of individual subscribers.
174 The methodology used to compile NRUF data is described in Section V.A, Numbers of Mobile Wireless
Connections , infra. Clearwire reported that it had 1,292,000 retail customers and 9,123,000 wholesale customers at
the end of 2011. Clearwire states that “Sprint accounts for substantially all of our wholesale sales to date.” See
SEC, Clearwire Form-10K for the fiscal year ended 2011, at 50, 52.
175 See Section V.A, Numbers of Mobile Wireless Connections , infra.

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First, not all providers assign telephone numbers to the mobile devices on their networks. Thus, the
NRUF data do not include connections of Clearwire (which does not assign telephone numbers to its
devices) that are not also Sprint connections, and Clearwire is not counted as a separate provider in the
Report’s HHI calculations.176 Second, some data-only mobile devices are assigned telephone numbers by
some providers, but some providers do not assign telephone numbers to many of these data-only devices.
The inconsistent application of telephone numbers by different providers to the same or similar data-only
devices may decrease a provider’s number of connections (in the NRUF data) relative to the provider’s
publicly-reported number of connections. This may cause variation across providers’ market shares that
would not be present if a consistent accounting of devices were available at the sub-national level.
57.
Wholesale customers are included with the customers of their hosting facilities-based
providers, except for the wholesale customers of Clearwire, virtually all of whom are already included in
Sprint’s connections.177 Therefore, market shares of MVNOs are not quantified separately in the Report’s
concentration metrics.178 Leading industry analyst reports on the mobile wireless industry also include
wholesale subscribers with retail subscribers when they calculate market concentration metrics.179
58.
A national weighted average HHI across EAs is obtained by averaging the HHIs of all
172 EAs, with more (less) importance attached to EAs that have a higher (lower) population.180 Although
we calculate the HHI on an EA geographical market for this Report, as shown in Table 14 and Chart 1,
we do not conclude that EAs are the appropriate geographic market for other purposes.181 The value of
the HHI depends on the assumed geographical market. Basing the HHI on broader (narrower) geographic
markets will generally result in lower (higher) HHI values. Calculating the HHI at the level of a CMA,
for example, which is the geographic market typically used in the Commission’s review of transfers and
assignments of mobile wireless licenses, would generally result in an average market HHI that is higher
than one based on EAs. Calculating the HHI based on a single nationwide geographical market would
result in a national HHI that is lower than for a national weighted average HHI across EAs, because the
total number of providers in the entire United States far exceeds the number of providers that compete in
any single local area. Applying the HHI to a single nationwide geographical market would assume that
every American is able to choose from more than one hundred facilities-based providers.182
59.
Current HHI Values. As shown in Table 14 and Chart 1, the weighted average of the

176 Based on publicly available information about Clearwire’s customers, see Section III.D.2 supra, its exclusion is
not likely to have a material effect on the HHI estimates.
177 See Table 1, n.122. See Section III.D.1. Market Shares, supra, for a discussion of how service providers do not
follow the same reporting conventions for wholesale connections.
178 See Section III.B.2, Resale and MVNO Providers, supra, for a discussion of the degree to which the
competitiveness of the mobile wireless market is increased by the presence of resellers and MVNOs relative to a
market scenario in which they are absent.
179 See, e.g., Glen Campbell, Get Ready for the Wireless Revenue Bounce, Bank of America, Global Wireless Matrix
4Q09, Dec. 13, 2009, at 10, 198 (Bank of America Global Wireless Matrix 4Q09); John C. Hodulik, et al., US
Wireless 411, Version 43.0
, UBS, UBS Investment Research, Mar. 7, 2012 at 18 (US Wireless 411 4Q11).
180 Letting Pi be the population in the ith EA, P be the total population in all 172 EAs, and Hi be the HHI in the ith
EA, then the population weighted HHI is given by (P1 H1+ P2 H2+… P172 H172)/P.
181 Although the Commission typically uses 734 CMAs and 354 Component Economic Areas (CEAs) to calculate
the HHI screen in evaluating mobile wireless transactions, we use 172 EAs to calculate HHIs in this Report. We use
EAs in this Report to maintain continuity with past Reports and to avoid compromising the confidential information
found in the NRUF data.
182 As discussed in Section II.A, the consumer searches for a mobile wireless provider in the local area where he
lives, works, and travels. In 2009, for example, MetroPCS’s and Leap Wireless’s networks had very little
overlapping coverage, and MetroPCS and Leap Wireless were not competitors in the same geographic areas. See
22, infra.

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HHIs (weighted by EA population) was 2873 at the end of 2011, up from 2868 at the end of 2010, an
increase of approximately 0.2 percent.183 From 2003 (the first year the Commission calculated HHIs
using this methodology) to year-end 2011, the average HHI has increased from 2151 to 2873, an increase
of 722 points. For 2011, the value of the HHI for individual EAs ranges from a low of 2008 in EA 108
(covering parts of Wisconsin) to a high of 7178 in EA 146 (covering parts of Montana).

Table

14

Mobile Wireless Market Concentration: Herfindahl-Hirschman Index, 2006-2011

184

Year

2006
2007 2008185 2009
2010
2011
Average 2,674 2,674
2,842
2,811 2,868 2,873
High
6,551 6,272
6,801
6,572 6,512 7,178
Low
1,609 1,795
2,123
1,903 1,878 2,008

















183 See Appendix B, Table B-3, infra, for EA subscribership levels, penetration rates, and population densities.
184 Population-weighted average of 172 EAs based on Commission estimates using year-end NRUF data and Census
Bureau 2010 population data. The HHI calculated with a simple average across EAs (not weighted by population) is
3435 in 2010 and 3458 in 2011.
185 In the Fourteenth Report, the weighted average HHI for 2008 was reported as 2848, with a maximum of 8263.
When calculating these HHIs, the Verizon/Alltel divestitures were accounted for as follows: those Alltel subscribers
that were not to be divested were allocated to Verizon Wireless, and divestiture markets were not allocated to
Verizon Wireless but were accounted for as an independent business entity. During 2008, Verizon Wireless also
acquired Rural Cellular (August 2008). The 2008 HHI has been recalculated to account for the divestiture markets
from the Verizon Wireless/Rural Cellular acquisition. We adopted the same methodology, whereby the divestiture
markets were not allocated to Verizon Wireless, but instead were treated as an independent entity. This
recalculation reduced the weighted average 2008 HHI by six points. In addition, the maximum HHI was revised
down from 8263 (EA 4 – Burlington VT-NY, a divestiture marketfrom the Rural Cellular acquisition) to 6801 (EA
142 which covers parts of Nebraska and Wyoming).

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Chart 1

Average HHI Across EAs, 2004-2011 (In thousands)

186

60.
HHI values tend to vary with the population density of different markets. Specifically,
market concentration in EAs tends to increase as the EA population declines. Chart 2 below shows the
relationship between EA population densities and HHI values, and indicates that the most concentrated
EAs tend to be in rural areas, while major metropolitan areas lie within the least concentrated EAs. Chart
3
below shows that the median HHI value of EAs that lie within population density bands decreases as
the population density increases, where the nationwide median value of the HHI by EA is 3230. This
observed decrease in the median value in more highly-populated areas likely reflects greater demand and
greater cost efficiencies (per-user mobile wireless network deployment costs tend to decrease with
increases in the population density) in more densely-populated areas.187 Apart from differences in
population, EAs also vary significantly with regard to other determinants of market demand and facilities-
based provider costs, such as per-capita income, the age distribution of the population, and the size and
composition of the business sector.188 Some of the economic determinants of industry concentration are
discussed further in Section III.E, Entry and Exit Conditions.


186 Chart 1 is based on the data shown in Table 14. According to the U.S. antitrust authorities (DOJ and FTC),
markets are generally classified 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"> http://www.justice.gov/atr/public/guidelines/hmg-2010.pdf.
187 See also M. Kende and M. Starling, White Paper for Mobile Future, Rural Mobile Services Deployment in the
US: the Challenges in an International Context
, May 2012.
188 The Commission conducted a regression analysis of data at the EA level in September 2008, which indicates that
concentration in the mobile wireless market (measured by the HHI) tends to decline with increases in market size,
population density, per capita income, and percentage of the population living in urban areas.

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Chart 2

Plot of 2011 EA HHI Values on EA Population Densities, 2011

189
Source: NRUF, Census

Chart 3

Median HHI of EAs in Population Density Bands, 2011

Source: NRUF, Census


61.
Relation Between HHI and Competition. High market concentration is not synonymous
with a non-competitive market or with market power – the ability to charge prices above the competitive
level for a sustained period of time.190 High market concentration may indicate that a firm or firms
potentially may be able to exercise market power, but market concentration measures alone are

189 Population density is measured as Population/Square Mile (2010 Census). The highest population density, 1107,
occurs in EA 34 (Tampa-St. Petersburg-Clearwater, FL), and the lowest population density, 1, occurs in EA 171
(Anchorage, AK). Water area is excluded in the calculation of the areas of EAs.
190 See Jonathan B. Baker and Timothy Bresnahan, “Economic Evidence in Antitrust: Defining Markets and
Measuring Market Power” in Handbook of Antitrust Economics, ed. Paolo Buccirossi (Cambridge: MIT Press,
2008), 15. See also See Ernest Gellhorn, Antitrust Law and Economics (4th ed.), West Publishing, 1994, at 117
(stating “Market shares…should mark the beginning for careful analysis, not the end of it”). See also Department of
Justice, Horizontal Merger Guidelines, Section 5.3, 2010 (“Horizontal Merger Guidelines”).

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insufficient to draw such a conclusion.191 Therefore, this Report analyzes other indicators and measures
of competition in the mobile wireless services market. These include mainly price and non-price rivalry
by competitors and price and output data.192
3.

Recent Entry and Exit

62.
Entry and exit of service providers can lead to significant changes in market
concentration. When a service provider exits the market through a merger or acquisition, subscribers of
the exiting service provider may be acquired by the purchasing provider unless divestitures occurred.
Entry normally proceeds through several stages that require a significant period of time to complete,
including raising financial capital, acquisition of spectrum rights,193 deployment of the mobile wireless
network, and a product launch stage during which a customer base is gained. Estimating the date of
potential entry is one factor in a comprehensive entry analysis that predicts how soon there will be new
rivals who are in a position to place competitive constraints on existing competitors.194 Below we
summarize recent entry commitments that are large enough to be consistent with entry that could
introduce new competitive constraints at a regional or national level. We also summarize recent exit of
service providers and selected applications to the Commission for the acquisition of other service
providers. Recent acquisitions that are mainly spectrum-only transactions are discussed in section 108.
a.

Entry

63.
SoftBank. On November 15, 2012, SoftBank Corp. and Sprint Nextel filed an application
with the Commission seeking consent for SoftBank to acquire approximately 70 percent of Sprint Nextel
and invest over $20 billion in Sprint.195 The Applicants state that the proposed transaction will benefit
consumers by promoting greater wireless competition and broadband innovation and deployment. The
Applicants seek Commission consent to the transfer of control of various wireless licenses and leases,
domestic section 214 authority, international section 214 authorizations, earth station authorizations,
interests in submarine cable licenses, and cable television relay service station licenses held by Sprint and
its subsidiaries, and by Clearwire, to SoftBank. The Commission is currently reviewing this proposed
transaction.196

191 See, e.g., Horizontal Merger Guidelines, Section 5.3 (stating, “By contrast, even a highly concentrated market
can be very competitive if market shares fluctuate substantially over short periods of time in response to changes in
competitive offerings.”)
192 The Report does not provide an estimate of market power for the mobile wireless industry, i.e., a numerical
estimate of price mark-up over cost, due to the complexities of estimating market power in an industry with high
fixed costs that are recovered gradually over time, difficulties with analyzing pricing plans for bundles of services,
and the difficulties in obtaining accurate and suitable cost data. The Report does discuss mobile wireless services
price and price margins. See Section IV.A, Price Rivalry: Developments in Mobile Service Pricing Plans, infra.
193 We note that acquisition of spectrum, in itself, is not necessarily a good predictor of timely entry into a market.
For a discussion of the discrepancy between the spectrum license coverage of some facilities-based providers and
their network coverage, see Section VII.A.1, Infrastructure Facilities, infra.
194 Malcolm B. Coate, Theory Meets Practice: Barriers to Entry in Merger Analysis, Review of Law and
Economics, vol. 4, Feb. 2008, at 190, 206. Data and information about the stages a firm has completed in the entry
process can provide valuable information for estimating the timeframe during which entry will be completed.
Analysis of when entry will occur can be likened to a “pipeline” that is marked by increasing financial commitments
and the completion of the various stages.
195 See Applications of Sprint Nextel Corporation, Transferor, and SoftBank Corp., and Starburst II, Inc.,
Transferees, for Consent to Transfer of Control of Licenses and Authorizations, Public Interest Statement, IB
Docket No. 12-343.
196 See “Softbank and Sprint Seek FCC Consent to the Transfer Of Control of Various Licenses, Leases, and
Authorizations From Sprint to Softbank, and to the Grant of a Declaratory Ruling Under Section 310(B)(4) of the
Communications Act.” IB Docket No. 12-343, Public Notice, DA 12-1924 (rel. Nov. 30, 2012).

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64.
SoftBank is a publicly traded holding company organized and existing under the laws of
Japan. SoftBank and its subsidiaries are engaged in various information technology and Internet-related
businesses in Japan, including mobile communications, broadband infrastructure, fixed-line
telecommunications, e-commerce, and web portals. SoftBank also invests in Internet-based companies
throughout the world.197 At present, SoftBank does not offer wireless services in the U.S.
65.
Atlantic Tele-Network (ATN). ATN acquired 26 of the divestiture markets from the
Verizon- Alltel transaction, which was consummated in April 2010. Through this acquisition, ATN
became a new retail entrant that replaced certain existing Alltel operators that the Commission required
be divested by Verizon. ATN offers wireless voice and data services to retail customers under the ‘Alltel’
name in rural markets located principally in the Southeast and Midwest. Through another affiliate,
Commnet, ATN continues to offer wholesale wireless voice and data roaming services to national,
regional and local wireless carriers in rural markets located principally in the Southwest and Midwest
U.S. As of December 31, 2011, ATN had approximately 582,000 wireless subscribers with a network
footprint covering approximately 4.5 million POPs, making it the tenth largest facilities-based provider in
terms of connections.198
66.
Entry of Existing Service Providers Into New Geographic Markets. The entry of existing
facilities-based providers into new geographic markets is an important form of entry when competition is
evaluated at a sub-national or regional market level.199 The metrics presented above on the estimated
population covered by the networks of the major providers and the estimated percentage of the population
covered by a certain number of providers can indicate network expansion by providers into new
geographic markets.200 The year-to-year change in the population covered by a provider’s network can
estimate the degree to which a provider increased its population coverage by entering new geographic
markets. We note, however, that an increase in population coverage can also be partly attributed to an
increase in population in already-served markets. In addition, Section IV.B.1.a, Service Provider
Technology Deployments,
discusses provider upgrades of network technologies to newer, faster, and
more spectrally-efficient technologies.201 Investment in new network technologies and network coverage
are forms of non-price rivalry in which providers design product offerings and choose quality
characteristics to compete with each other for customers.
b.

Exit

67.
Exit of service providers – whether through mergers, acquisitions, or discontinuance –
affects the number of competitors in the mobile wireless market and potentially exerts both negative and
positive effects on competitive performance and consumer welfare, depending on details of the pre- and
post-exit competitors in the market.202 The main potential negative effects of the exit of a competitor is
that with fewer competitors remaining in the market, there is an increased possibility of higher prices and

197 See “Softbank and Sprint Seek FCC Consent to the Transfer Of Control of Various Licenses, Leases, and
Authorizations From Sprint to Softbank, and to the Grant of a Declaratory Ruling Under Section 310(B)(4) of the
Communications Act.” IB Docket No. 12-343, Public Notice, DA 12-1924 (rel. Nov. 30, 2012).
198 See Atlantic Tele-Network, SEC Form 10-K, filed March 15, 2012, at 4.
199 For example, the Twelfth Report discusses how, following the acquisition of new spectrum holdings in 2006, T-
Mobile, Leap, and MetroPCS entered new markets. See Twelfth Report, 23 FCC Rcd at 2265 ¶ 75. See also
Cellular South, About Ushttps://www.cellularsouth.com/aboutus/index.html">, https://www.cellularsouth.com/aboutus/index.html (visited Jan. 4, 2010) (stating that,
since 2006, Cellular South has significantly increased the size of its regional coverage).
200 See Section III.B.1, Facilities-Based Providers, Tables 1-2; Section III.C, Mobile Wireless Network Coverage,
Tables 6-7, supra; Appendix C, Maps.
201 See Section IV.B.1, Network Coverage and Technology Upgrades, infra.
202 Spectrum transfers (i.e., the assignment of licenses from one firm to another) are discussed further in Section
VII.A.1, Non-Spectrum Input Segments, infra.

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sometimes reduced quality of service or a slower rate of innovation. The main potential positive effects
of the exit of a competitor occur in the context of a merger or acquisition that creates a stronger post-
merger entity due to cost efficiencies or greater network coverage.203
68.
Mergers and Acquisitions. Since mergers and acquisitions can simultaneously exhibit
both these positive and negative effects, merger analysis typically involves a detailed analysis to evaluate
the magnitude of the opposing effects and determine whether, on balance, the effects of the merger are
positive or negative. If the cost savings generated by consolidation endow the merged provider with the
ability to compete more effectively, consolidation could result in lower prices and new and innovative
services for consumers.204 However, if the consolidation substantially decreases competition, there may
be reduced competitive pressure on the firm, potentially leading to higher consumer prices and/or lower
incentive to improve its consumer services.205 Service providers in non-overlapping geographic markets
are not considered competitors for present purposes.
69.
Facilities-based providers have expanded their network coverage and capacity through
mergers and acquisitions, as well as through increased investment and expansion of their existing assets.
Over the years, the four current nationwide facilities-based providers have all employed mergers or
acquisitions as a growth strategy to realize nationwide networks.206 A summary of significant mergers or
acquisitions since 2005 involving a nationwide facilities-based provider and the exit of another facilities-
based provider appears in Table 15 below.207 This table indicates the extent to which each of the four
nationwide facilities-based providers has used mergers or acquisitions to expand coverage since 2005. In
many instances, the entities that were combined had not previously competed in the same geographic
market. As a result, these transactions resulted in the expansion of the coverage of the newly combined
entity. In markets where the entities were significant competitors, the Commission may have required
divestitures in specified markets as conditions of the transaction in order to prevent competitive harm.208
Below we summarize these transactions and report on the status of divestitures that were required in some
recent transactions.209

Table 15

Selected Mergers and Acquisitions, 2005-2010

Year of Commission

Merger or Acquisition

Approval

2005
Sprint/Nextel
Alltel/Western Wireless
2006
Altell/Midwest
2007
AT&T/Dobson
2008
AT&T/Aloha
T-Mobile/Suncom

203 See Competition Policy, at 238. See also Daniel Birke and G. M. Peter Swann, Network Effects and the Choice
of Mobile Phone Operator
, Journal of Evolutionary Economics, 2006, 16: 65 – 84.
204 See Baker, J. B., Developments in Antitrust Economics, Journal of Economic Perspectives, 1999, 13: 1, 182.
205 See Economics of Regulation and Antitrust, at 126.
206 See Section III.B.1, Facilities-Based Providers, supra, for a discussion of the term “nationwide.”
207 The Commission must consent to the transfer of control or assignment of all non pro-forma spectrum licenses
used to provide wireless telecommunications services. 47 C.F.R. § 1.948.
208 See, e.g., AT&T-Centennial Order, 24 FCC Rcd 13915.
209 In addition, in December 2010, AT&T announced its intention to acquire Qualcomm’s licenses in the Lower 700
MHz band, which cover more than 300 million people, for $1.925 billion. Specifically, the Commission approved
the assignment of 11 licenses in the D and E Block of the Lower 700 MHz band from Qualcomm to AT&T, subject
to certain conditions. Application of AT&T Inc. and Qualcomm Incorporated for Consent to Assign Licenses and
Authorizations, WT Docket No. 11-18, Order, 26 FCC Rcd 17589, 17591 ¶ 5 (2011) (AT&T-Qualcomm Order).

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Verizon Wireless/Rural Cellular
Verizon Wireless/Alltel
Sprint Nextel/Clearwire
2009
AT&T/Centennial
2010
AT&T/Verizon Wireless-Alltel
ATN/Verizon Wireless-Alltel

70.
AT&T's Applications for Transfer of Control of T-Mobile USA. On March 20, 2011,
AT&T announced an agreement with Deutsche Telekom (DT) for AT&T to acquire all of the stock of T-
Mobile USA for $39 billion. On April 21, 2011, AT&T and DT filed a series of applications seeking the
Commission’s consent to the transfer of control of the licenses and authorizations held by T-Mobile USA
and its wholly-owned and controlled subsidiaries from DT to AT&T. On November 29, 2011, the
Wireless Telecommunications Bureau granted the Applicants’ request to withdraw the applications and
the Commission released a Staff Report on the applications stating that the proposed acquisition raised
serious competitive concerns.210 On December 19, 2011, DT announced that AT&T and DT had
terminated the agreement they announced on March 20, 2011. As a result of a break-up provision in the
terminated agreement between AT&T and DT, AT&T transferred $3 billion to DT and assigned 20 AWS-
1 licenses in full and partitioned portions of 27 AWS-1 licenses to T-Mobile.211
71.
Cox Communications. Cox Communications (Cox) invested more than $500 million in
spectrum in the AWS-1 and 700 MHz bands and the development of infrastructure in 2006 and 2008.212
In 2009, Huawei Technologies announced that it had signed a contract with Cox to supply CDMA 1x and
EV-DO network infrastructure and equipment for a Cox mobile wireless network,213 and Cox began
market testing its mobile wireless service.214 However, in May 2011, Cox announced that it would
abandon its plans to build its own wireless network,215 and on November 15, 2011 Cox announced that it
would discontinue selling Cox Wireless, its wireless phone service, effective November 16, 2011.216 Cox

210 Applications of AT&T Inc. and Deutsche Telekom AG for Consent to Assign or Transfer Control of Licenses
and Authorizations, WT Docket No. 11-65, Staff Analysis and Findings, at
http://hraunfoss.fcc.gov/edocs_public/attachmatch/DA-11-1955A2.pdf">http://hraunfoss.fcc.gov/edocs_public/attachmatch/DA-11-1955A2.pdf.
211 Applications of T-Mobile License LLC, AT&T Mobility Spectrum LLC and New Cingular Wireless PCS, LLC
For Consent to Assign AWS-1 Licenses, WT Docket No. 12-21, Order, 27 FCC Rcd 4124 (2012).
212 Cox to Launch Next Generation Bundle with Wireless in 2009, Press Release, Cox, Oct. 27, 2008. Cox holds the
spectrum through the SpectrumCo LLC joint venture, the entity that purchased the AWS spectrum at the
Commission’s 2006 AWS-1 Auction and originally included three other cable operators. The other operators
subsequently left the SpectrumCo venture, and Cox is the only remaining member. Marguerite Reardon, Cox
Wireless Coming in March
, CNET News, Jan. 14, 2010, available ahttp://news.cnet.com/8301-30686_3-10434831-266.html.(visited">t http://news.cnet.com/8301-30686_3-
10434831-266.html.(visited Dec 12, 2012).
213 See Huawei to Provide CDMA Technology for Cox Communications’ Wireless Network, Press Release, Huawei
Technologies, Apr. 1, 2009. See also Amol Sharma and Sarah Silver, Huawei Tries to Crack U.S. Market, Wall
Street Journal, Mar. 26, 2009, at B2.
214 See Cox Enterprises, 2009 Annual Reporthttp://www.coxenterprises.com/media/35045/cox_09_annual.pdf">, http://www.coxenterprises.com/media/35045/cox_09_annual.pdf
(visited Oct. 21, 2010). Cox also announced that it conducted LTE trials in Phoenix and San Diego in 2010. Cox
Successfully Demonstrates the Delivery of Voice Calling, High Definition Video Via 4G Wireless Technology,
Press
Release, Cox, Jan. 25, 2010, available athttp://coxenterprises.mediaroom.com/index.php?s=43&item=841%20%20(visited"> http://coxenterprises.mediaroom.com/index.php?s=43&item=841 (visited
Nov. 30, 2012).
215 See Ed Hansberry, Cox Abandons 3G Network, InformationWeek, May 25, 2011, at
http://www.informationweek.com/news/mobility/3G/229625643">http://www.informationweek.com/news/mobility/3G/229625643; Alex Sherman, Cox Communications Stops
Building 3G Network, Will Use Sprint’s
, Bloomberg, May 24, 2011, athttp://www.bloomberg.com/news/2011-05-24/cox-communications-stops-building-3g-network-will-use-sprint-s.html"> http://www.bloomberg.com/news/2011-05-
24/cox-communications-stops-building-3g-network-will-use-sprint-s.html (visited Nov. 30, 2012).
216 Cox Communications, Press Release, Cox Communications to Discontinue Cox Wireless Service, Effective
March 30, 2012
, November 15, 2011.

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stated it would continue providing service for its wireless customers through March 30, 2012.217 Verizon
Wireless and Cox TMI Wireless, LLC filed an application on December 21, 2011 to assign 30 20-
megahertz AWS-1 licenses from Cox to Verizon Wireless, which was granted subject to conditions on
August 21, 2012.218
72.
MetroPCS. On October 18, 2012, Deutsche Telekom AG, T-Mobile USA, Inc., and
MetroPCS filed applications seeking Commission consent to the transfer of control of PCS and AWS-1
licenses and leases, and authorizations, as well as one lower 700 MHz license, held by MetroPCS and by
T-Mobile to a newly formed entity that would combine T-Mobile and MetroPCS. The Applicants stated
that the proposed transaction would result in Deutsche Telekom and existing MetroPCS shareholders
ultimately holding 74 percent and 26 percent ownership interests, respectively, in a newly formed entity
that would continue to offer both MetroPCS brand and T-Mobile USA brand services.219 On March 12,
2013, the Wireless Telecommunications Bureau and the International Bureau jointly approved the
proposed transaction.220

E.

Entry and Exit Conditions

73.
Entry and exit conditions are important in helping to understand the degree to which
incumbent firms may or may not possess market power, i.e. the ability to set prices above marginal cost
without attracting entry. Entry and exit occurs in the context of underlying regulatory and market
conditions that directly influence the total number of firms that can compete successfully in a market.
Such conditions are relevant for determining if actual entry or exit will occur, and when actual entry or
exit will occur – both of which are important for evaluating how the market structure will evolve in the
future. Service provider entry and exit decisions are primarily determined by regulatory entry and exit
conditions, the costs of entry, and expected post-entry market profitability.221
74.
We distinguish between regulatory and non-regulatory entry and exit conditions in order
to consider the effects of the Commission’s spectrum and infrastructure policies from basic market
conditions. Regulatory entry conditions primarily affect access to the inputs necessary to offer mobile
wireless services. 222 They include spectrum policy, which affects the spectrum capacity available for
mobile wireless services, and tower-siting regulations, which affect whether and how quickly mobile
wireless networks can be deployed or expanded. They also include Federal policies for the funding of
network deployment and operations, such as the Mobility Fund programs of the Connect America

217 Cox Communications, Press Release, Cox Communications to Discontinue Cox Wireless Service, Effective
March 30, 2012
, November 15, 2011.
218 Application of Cellco Partnership d/b/a Verizon Wireless and Cox TMI Wireless, LLC for Consent to Assign
Licenses, File No. 0004996680 (filed Dec. 21, 2011).
219 See FCC, Office of General Counsel, Transaction Team, T-Mobile/MetroPCS, WT Docket No. 12-301,
http://transition.fcc.gov/transaction/tmobile-metropcs.html">http://transition.fcc.gov/transaction/tmobile-metropcs.html (visited Mar. 13, 2013).
220 See generally Applications of Deutsche Telekom AG, T-Mobile USA, Inc. and MetroPCS Communications, Inc.
for Consent to Transfer of Control of Licenses and Authorizations, WT Docket No. 12-301, Memorandum Opinion
and Order
, DA 13-384 (WTB and IB rel. Mar. 12, 2013).
221 High economic profits encourage entry into the market, low economic profits discourage entry, and prolonged
negative economic profits induce exit from the market. See Intermediate Microeconomics, at 394-395, 503; Modern
Industrial Organization
, at 61, 76. See also Competition After Unbundling, at 334.
222 Regulatory delay can, in turn, lead to entry delay. One example of a regulatory delay would be the clearing of a
spectrum band. Economists argue that some operating licenses and other legal restrictions that serve to limit access
to the market are barriers to entry, i.e., they create positive economic profits for incumbents which are not bid away
by new entry. See Jean Tirole, The Theory of Industrial Organization, MIT Press, 1988, at 305. See also Hal R.
Varian, Intermediate Microeconomics: A Modern Approach, W. W. Norton and Company, 1999, at 395
(Intermediate Microeconomics).

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Fund.223 Non-regulatory or market conditions that influence entry and exit can be summarized by
expected post-entry profitability and its associated risk factors, which in turn have several main market
determinants that are discussed below.224 Major costs that may determine the number of providers that
can operate in the market or may deter entry include efficiencies of size and scale, permanent
asymmetries across service providers’ costs, and capital cost requirements.
1.

Regulatory Entry and Exit Conditions

75.
Spectrum. Spectrum bandwidth is a necessary input to the supply of mobile wireless
services. If a potential entrant were to attempt to enter the mobile wireless services market, obtaining
access to spectrum is crucial. The effective supply of spectrum capacity that is available for mobile
wireless service depends on several aspects of spectrum policy, including allocation and licensing
policies, as well as interference and technical rules. First, increasing the total supply of spectrum
bandwidth that the Commission allocates and licenses to mobile wireless service providers can increase
network capacity and reduce the degree of frequency reuse required to achieve a given capacity.225
Second, interference and technical rules can affect both spectrum access and spectrum efficiency, and,
hence, overall network capacity.226 Therefore, spectrum policies affect the ability of potential entrants to
access spectrum and to build out or expand capacity.227
76.
Tower and Antenna Siting. State and local zoning rules for erecting wireless towers or
attaching equipment to pre-existing towers and other structures (e.g., rooftops, water tanks, power lines,
and utility poles) can affect the deployment of mobile wireless networks. In particular, delays in zoning
approvals can lengthen the process of cell site acquisition and deployment, thereby increasing costs for
new or existing providers to enter into new markets. The Commission reported that in 2009, of 3,300
pending zoning applications for wireless facilities, over 760 (nearly one quarter) had been pending for
more than a year and 180 had been pending for more than three years.228 In November 2009, the
Commission issued a Declaratory Ruling that sets time frames for state and local zoning authorities to act
on a zoning application – 90 days for collocations and 150 days for all other towers.229 If a zoning
authority does not act within the appropriate time period, and the parties have not agreed to extend the
review period, the applicant can file for relief in federal court.230 Furthermore, the Declaratory Ruling
reduced regulatory barriers to entry by finding that it is a violation of the Communications Act for a state

223 See Connect America Fund, Report and Order and Further Notice of Proposed Rulemaking, released November
11, 2011.
224 See Modern Industrial Organization at 12, 61-62. See also The Theory of Industrial Organization, at 34; George
S. Ford, et al., Competition After Unbundling: Entry, Industry Structure, and Convergence, Federal
Communications Law Journal, 2007, 59: 2, at 342 (Competition After Unbundling).
225 See Rappaport, T. S., Wireless Communications: Principles and Practice (2nd ed.), Prentice Hall, 2002, at 58.
226 See FCC, Spectrum Policy Task Force, Report of the Spectrum Efficiency Working Group, 2002, at 16,
(Spectrum Policy Task Force Report). A discussion of the Commission’s flexible licensing policies and their effects
on network deployment can be found in Section IV.B.1, Network Coverage and Technology Upgrades, infra.
227 Further discussion and data on the market for spectrum, recent spectrum auctions, upcoming spectrum auctions,
and spectrum policy can be found in Section III.F, Spectrum for Mobile Wireless Services, infra and Appendix A,
infra.
228 Petition for Declaratory Ruling to Clarify Provisions of Section 332(c)(7)(B) to Ensure Timely Siting Review
and to Preempt Under Section 253 State and Local Ordinances that Classify All Wireless Siting Proposals as
Requiring a Variance, WT Docket No. 08-165, Declaratory Ruling, 24 FCC Rcd 13994, 14005 ¶ 33 (2009), pet. for
recon. denied,
25 FCC Rcd 11157 (2010), pet. for review denied sub nom. City of Arlington, Texas v. FCC, 668 F.3d
229 (5th Cir. 2012); cert granted 133 S.Ct. 524 (Oct 5, 2012), oral argument Jan 16, 2013.
229 Id. at 13995 ¶ 4.
230 Id. at 13995 ¶ 4, 14013 ¶ 49.

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or local government to deny a wireless service facility-siting application because service is available from
another provider.231 In addition, on February 22, 2012, President Obama signed into law the Middle
Class Tax Relief and Job Creation Act of 2012 (Tax Relief Act).232 Section 6409 of the Tax Relief Act
provides that a state or local government may not deny, and shall approve, any request for collocation,
removal, or replacement of equipment on a wireless tower or base station that does not substantially
change the physical dimensions of the tower or base station.233 Section 6409 also includes provisions to
facilitate access to Federal buildings and other property for wireless facilities.234 On June 14, 2012,
President Obama released an Executive Order to facilitate broadband deployment on Federal buildings,
lands, and rights-of-way.235
77.
In a 2011 Report and Order and Order on Reconsideration (Pole Attachment Order), the
Commission revised its pole attachment rules to improve the efficiency and reduce the costs of deploying
telecommunications networks.236 In particular, the Pole Attachment Order adopted rule changes to help
facilitate deployment on utility poles of Distributed Antenna Systems (DAS) and small cell solutions that
are especially useful for providing wireless broadband service.
2.

Non-Regulatory Entry and Exit Conditions

78.
Non-regulatory entry and exit conditions are market conditions that directly affect a
firm’s ability to enter into or exit from a market. The major sources of market-determined entry costs that
affect the propensity to enter include: (1) the cost of acquiring spectrum licenses or spectrum leases; (2)
network coverage costs such as site acquisition and preparation costs, site construction and leasing costs,
network equipment costs, backhaul transport costs237 and other potential interconnection and roaming
costs; (3) the costs of offering customers a portfolio of attractive wireless devices; and (4) the costs of
marketing and distributing wireless services and devices. On the demand side, population, population
density, income, other socioeconomic variables, and macroeconomic conditions affect the service revenue
projections of potential entrants. The market-determined entry conditions factor into an entrant’s
expected post-entry market profitability. Expected post-entry market profitability also depends on market
growth projections, market supply and capacity projections, and the intensity of inter-firm rivalry,
including the level of price competition and the extent of product differentiation.238
79.
Market-determined entry conditions, like regulatory entry conditions, can affect both if
entry will occur and when entry will occur. Entry costs, on a per subscriber basis, are significant in the
mobile wireless industry, although they are generally lower than in the wireline industry.239 A high level

231 Id. at 13995-96 ¶ 5.
232 Middle Class Tax Relief and Job Creation Act of 2012, P.L. 112-96.
233 Id. § 6409(a).
234 Id. § 6409(b), (c).
235 Accelerating Broadband Infrastructure Deployment, Executive Order 13616, 77 Fed. Reg. 36903 (June 16, 2012).
236 See Implementation of Section 224 of the Act – A National Broadband Plan for Our Future, Report and Order
and Order on Reconsideration
, WC Docket No. 07-245, FCC 11-50, released April 7, 2011.
237 The backhaul transport link generally refers to the communications link between the cell site radio equipment and
the core network.
238 See Competition After Unbundling, at 344. See also Andreu Mas-Colell, et al., Microeconomic Theory, Oxford
University Press, 1995, at 383-384, 423. See also Park, E and Taylor, R., “Barriers to Entry Analysis of Broadband
Multiple Platforms: Comparing the U.S. and South Korea,” Paper presented at the Telecommunications Policy
Research Conference, 2006.
239 See, e.g., Ex Parte Submission of the United States Department of Justice, GN Docket No. 09-51 (Economic
Issues in Broadband Competition, A National Broadband Plan for our Future), at 14; and Jonathan E. Nuechterlein
and Philip J. Weiser, Digital Crossroads, American Telecommunications Policy in the Internet Age, MIT Press,
2005, at 274.

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of network deployment costs (a type of fixed cost 240 of building network capacity) in relation to the
number of customers may limit the number of firms that can enter and survive in a market.241 For
example, areas with a low population density tend to have fewer facilities-based competitors (and higher
concentration) than areas that have a high population density.242 For an entrant to survive in the market,
the market must be large enough, and profits high enough, for a potential entrant to recoup its network
deployment costs over time from service revenues. Costs that delay entry, sometimes referred to as
“adjustment costs,” are relevant for estimating exactly when entry will occur. 243 One role of competition
policy is to estimate how the timing of entry depends on various costs and to determine whether there are
any relevant regulatory policy tools that can reduce entry delay.244 Below, we briefly discuss the major
costs of setting up a network and gaining a customer base.
80.
Spectrum. A potential facilities-based entrant to a wireless service market can obtain
spectrum in several ways including purchasing licenses at Commission auctions, purchasing licenses in
the secondary market, and leasing spectrum in the secondary market.245 For instance, in two major
spectrum auctions in 2006 and 2008, the average price ranged from $0.53/MHz-POP for the AWS-1
(Advanced Wireless Service) band (1700/2100 MHz band) in Auction 66 to $1.28/MHz-POP for the 700
MHz band in Auction 73.246 At these prices, aggregating a significant regional spectrum footprint would
involve an outlay of hundreds of millions of dollars and a national footprint would require billions of
dollars. Additional information about spectrum can be found in Section III.F.

240 The fixed costs to produce a range of output are costs that are generally incurred independently of the quantity of
output produced within the range. They can be financed in many ways, including over time. See Intermediate
Microeconomics
, at 353.
241 See W. Kip Viscusi, et al., Economics of Regulation and Antitrust (3rd ed.), MIT Press, 2000, at 150. See also
Competition Policy, at 51, 76. See also Sutton, J., Sunk Costs and Market Structure, 1991, MIT Press. See also
Competition After Unbundling, at 332, 337. For the use of fixed costs to estimate market concentration, see, e.g.,
Modern Industrial Organization, at 41; Economics of Regulation and Antitrust, at 150. For the relevance of the size
of sunk costs to predict market concentration, see Competition Policy, at 76-79; Competition After Unbundling, at
337; and Dennis W. Carlton, Why Barriers to Entry are Barriers to Understanding, American Economic Review,
2004, 94: 2, at 467. See also Written Statement of George S. Ford, Ph.D., Chief Economist, Phoenix Center for
Advanced Legal & Economic Public Studies, Before the House of Representatives, Committee on Energy and
Commerce, Subcommittee Telecommunications and the Internet, Hearing on “An Examination of Competition in
the Wireless Industry,” May 7, 2009, at 5, (estimating that three to five nationwide carriers will be able to provide
mobile services, including mobile broadband).
242 See Section III.D, Horizontal Concentration, supra.
243 See Dennis W. Carlton, Why Barriers to Entry are Barriers to Understanding, American Economic Review,
2004, 94: 2, at 468-469. See also R. Preston McAfee, et al., What Is a Barrier to Entry?, American Economic
Review, 2004, 94: 2, at 463 (What is a Barrier to Entry?).
244 See, e.g., Dennis W. Carlton, Why Barriers to Entry are Barriers to Understanding, American Economic Review,
2004, 94: 2, at 469; Malcolm B. Coate, Theory Meets Practice: Barriers to Entry in Merger Analysis, Review of
Law and Economics, vol. 4, Feb. 2008, at 190; What is a Barrier to Entry?, at 463-465. The difference between an
adjustment cost and a barrier to entry (i.e. a permanent asymmetry in firms’ costs) may, in practice, be a matter of
degree, depending on the length of the delay caused by the adjustment cost. See What is a Barrier to Entry? at 464
(arguing that economies of scale are not barriers to entry), and 465 (arguing that sunk costs cause firms to delay
entry because of their option value).
245 Spectrum Bridge, Inc. provides an online marketplace for spectrum exchange. Spectrum Bridge Inc.’s online
market exchange, SpecEx, can be accessed athttp://www.specex.com/Default.aspx"> http://www.specex.com/Default.aspx (visited Aug. 16, 2012). Its list
of available spectrum can be accessed athttp://spectrumbridge.com/ProductsServices/specex/VerticalCarriers.aspx"> http://spectrumbridge.com/ProductsServices/specex/VerticalCarriers.aspx
(visited Nov. 30, 2012).
246 This was calculated by dividing the total net auction revenue by spectrum bandwidth and population in the year
2000.

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81.
Network Coverage. To create a customer base, a new facilities-based entrant must
provide network coverage that is sufficient to attract new customers, including enticing customers to
switch from their existing service providers.247 Major network deployment costs include cell site
acquisition, preparation, engineering, and construction. Network cost studies analyze cost scenarios
under diverse sets of assumptions. One network cost study estimates that the total capital cost of
deploying a single cell site, on average, can be upwards of $200,000.248 Regional wireless providers
typically have hundreds or thousands of sites and national providers have tens of thousands of sites. A
new entrant would therefore need to invest tens or hundreds of millions of dollars in capital expense for a
regional network (depending on the size of the regions) and billions of dollars for a national network. We
note that roaming on competitors’ networks can offer entrants access to greater network coverage while
they are deploying their own networks. Service providers, including new entrants to a mobile wireless
market that typically deploy their planned networks gradually, may seek access to networks besides their
own in order to achieve a competitive level of coverage while their network is being built out. Roaming
can increase network coverage by allowing the entrant’s customers to have network coverage when they
travel outside of the range of the entrant’s own network.249
82.
Entrants often use backhaul provided by other firms, especially if construction of separate
backhaul facilities is not cost-justified given the size of the market. Backhaul can be a significant cost for
new entrants. Estimates of average monthly costs range from hundreds of dollars (for a T1 line) to
$6,000.250 The costs can vary widely by market and provider, and may affect the ability of entrants to
compete successfully. Overall cell site and backhaul costs also depend on the spectrum held by new
entrants.251 For instance, a new entrant with more spectrum bandwidth would be able to reduce its cell
site and backhaul costs by deploying fewer cell sites and potentially fewer backhaul transmission lines for
a given traffic volume. Additionally, a new entrant utilizing spectrum only in higher frequency bands
may need to deploy more infrastructure, including cell sites to cover the same land area and therefore
incur higher cell site costs, compared to providers using lower band spectrum. Additional discussions on
cell site deployment and backhaul facilities can be found in Section VII.A.
83.
Handsets and Devices. Mobile handsets and devices are the end points of mobile
wireless networks that connect consumers to the networks. They directly affect the quality of a
consumer’s mobile wireless experience and can factor into a consumer’s choice of a wireless provider.
Depending on the market strategy of the entrant, its portfolio of handsets and devices may be a significant
non-price factor affecting its ability to compete for customers. Although handset manufacturers sell many
handset models to any service provider with a compatible network, some handsets and devices may be
subject to exclusivity arrangements that restrict their distribution to a single service provider in the United
States or they may be designed to function only in spectrum bands held by particular providers.252
84.
Marketing and Distribution. The ability of a potential entrant to compete for customers
is also influenced by its expenditures on marketing and the development of its Internet and non-Internet
sales and distribution networks. Marketing expenditures help to distribute product information and

247 A scale effect can occur when positive network externalities increase with the size of the network, a relationship
known as “network effects.” See Competition Policy, at 82 (stating that greater network coverage, by increasing the
pool of network users, increases the quality of the service, and, hence, the benefits consumers derive from the good).
248 See Comments of Mobile Satellite Ventures Subsidiary LLC, WT Docket No. 06-150, Service Rules for the 698-
746, 747-762 and 777-792 MHz Bands (filed June 20, 2008), at 49 (MSV 700 MHz Comments).
249 See Section V.E.3, Intercarrier Roaming Rates and Revenue, infra, for an additional discussion of roaming.
250 See Fourteenth Report, 25 FCC Rcd at 11459 ¶ 64.
251 See Section VII.A.1, Infrastructure Facilities, infra.
252 See Sections IV.B.3, Differentiation in Mobile Wireless Handsets/Devices and Applications, infra; Section
VII.B.1, Mobile Wireless Handsets/Devices and Operating Systems, infra.

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promote brand recognition. Marketing expenditures are a significant factor of non-price competition in
the mobile wireless industry.253 The size of a provider’s sales and distribution networks is one measure of
the provider’s penetration of the market. An entrant that has an existing customer base for other
telecommunication services may expect to have lower expenditures on marketing, sales, and distribution
than an entrant that does not have a customer base in potentially complementary telecommunications
services that can be marketed in bundles. Marketing and advertising expenditures by mobile wireless
service providers are discussed below.254

F.

Spectrum for Mobile Wireless Services

85.
As discussed above, spectrum is a key input for the provision of mobile wireless services,
and spectrum policy affects if and when existing providers and potential entrants will be able to build out
networks or expand capacity. Because spectrum plays such a significant role in the mobile wireless
industry, and because the Commission has primary responsibility for overseeing spectrum availability,
allocation, and holdings, this section will highlight the role of spectrum as an entry condition. Other
inputs in the mobile wireless industry, including infrastructure and backhaul, are discussed in Section VII
below. First, we briefly describe the Commission’s allocation and licensing of commercial wireless
spectrum that is used for the provision of mobile voice and data services. We then provide an overview
of the overall spectrum holdings among different providers. We also discuss the relative advantages of
spectrum in different frequency bands for providing broadband service.
1.

Availability of Mobile Wireless Services Spectrum

86.
Ensuring that sufficient spectrum is available for incumbent licensees, as well as for
potential entrants, is critical to promoting competition, investment, and innovation. Incumbent licensees
may need additional spectrum to increase their coverage or capacity as they grow their subscriber bases
and meet increasing demand, while new entrants need access to spectrum to enter the market and compete
with established licensees. A number of commenters discuss their concerns with a lack of spectrum for
mobile use, and comment that competition and innovation in the mobile market requires spectrum.255
Through the years, the Commission has increased the amount of spectrum available for the provision of
mobile wireless services. This spectrum has been made available in different frequency bands, in
different bandwidths and licensing areas.
87.
As noted in the National Broadband Plan, making sufficient spectrum available to meet
growing spectrum needs is integral to enabling network expansion and technology upgrades by
providers.256 In the absence of sufficient spectrum, network providers must turn to costly alternatives,
such as cell splitting, often with diminishing returns.257 Accordingly, the National Broadband Plan
recommended that the Commission make 500 megahertz of spectrum newly available for broadband use
within ten years, of which 300 megahertz between 225 MHz and 3.7 GHz should be made newly

253 See Barriers to Understanding, at 467 (Advertising, like investments that raise product quality, is as common a
competitive behavior in high-technology industries as price competition is in industries that are characterized by less
product innovation). See also Modern Industrial Organization, at 80 (If an incumbent has never had any rivals [i.e.
it is a monopolist] then asymmetries in advertising costs between the incumbent and entrant can constitute a barrier
to entry, because the monopolist has never had to bear these costs). However, the wireless telephony/broadband
market is not a monopoly, and incumbent providers incur significant advertising costs as a component of their
rivalry.
254 See Section IV.B.4, Advertising Marketing, Sales Expenditures, and Retailing, infra.
255 See Counsel Tree Comments at 1; CTIA Comments at 66; TechAmerica Comments at 3; WCAI Reply at 4.
256 National Broadband Plan, at 77.
257 National Broadband Plan, at 77.

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available for mobile use within five years.258 Furthermore, on June 28, 2010, the President issued an
Executive Memorandum calling for 500 megahertz of new spectrum to be made available for wireless
broadband use in the next ten years.259 Moreover, the wireless industry is undergoing a transformation
from an industry providing predominantly voice services to one that is increasingly focused on providing
data services, particularly mobile broadband services. Rapid adoption of smartphones and tablet
computers, wide-spread use of mobile applications, and deployment of high-speed 3G and 4G
technologies are driving more intensive use of mobile networks. In 2012, a single smartphone could
generate as much traffic as 50 basic-feature phones, while a tablet could generate as much traffic as 120
basic-feature phones and a single laptop as much traffic as 368 basic-feature phones.260 The adoption of
smartphones alone increased at a 50 percent annual growth rate in 2011, from 27 percent of U.S. mobile
subscribers in December 2010 to nearly 42 percent in December 2011.261 In addition, global mobile data
traffic is anticipated to grow thirteen-fold between 2012 and 2017.262 A study by the Council of
Economic Advisors (CEA) found that “the spectrum currently allocated to wireless is not sufficient to
handle the projected growth in demand, even with technological improvements allowing for more
efficient use of existing spectrum and significant investment in new facilities.”263
88.
In 2010, the Department of Commerce’s National Telecommunications and Information
Administration (NTIA) released two complementary reports describing efforts to make additional
spectrum available for mobile and fixed broadband commercial use: a Ten-Year Plan and Timetable,264
as well as a Fast Track Evaluation report identifying 115 megahertz of spectrum to be made available

258 National Broadband Plan, at 75-76. The National Broadband Plan contemplates that the 300-megahertz
spectrum goal can be met by making the following spectrum available: 20 megahertz of WCS spectrum; 60
megahertz of AWS 2/3 spectrum; the 10 megahertz 700 MHz D Block; 90 megahertz of MSS spectrum; and 120
megahertz of spectrum to be reallocated from the broadcast television bands. See id. at 84, Exhibit 5-E.
259 Memorandum for the Heads of Executive Departments and Agencies, Unleashing the Wireless Broadband
Revolution,
(Presidential Memorandum), rel. June 28, 2010, 75 Fed. Reg. 38387, available at
http://www.whitehouse.gov/the-press-office/presidential-memorandum-unleashing-wireless-broadband-revolution">http://www.whitehouse.gov/the-press-office/presidential-memorandum-unleashing-wireless-broadband-revolution
(visited June 4, 2012). This was further expanded on in the next State of the Union address. See “President Obama
Details Plan to Win the Future through Expanded Wireless Access,” available athttp://www.whitehouse.gov/the-press-office/2011/02/10/president-obama-details-plan-win-future-through-expanded-wireless-access"> http://www.whitehouse.gov/the-
press-office/2011/02/10/president-obama-details-plan-win-future-through-expanded-wireless-access (visited June 4,
2012).
260 See Cisco White Paper, Cisco Visual Networking Index: Global Mobile Data Traffic Forecast Update, 2012-
2017, at 9, February 6, 2013, available at
http://www.cisco.com/en/US/solutions/collateral/ns341/ns525/ns537/ns705/ns827/white_paper_c11-520862.pdf">http://www.cisco.com/en/US/solutions/collateral/ns341/ns525/ns537/ns705/ns827/white_paper_c11-520862.pdf .
261 comScore 2012, Mobile Future in Focus (2012), available at
http://www.comscore.com/Press_Events/Presentations_Whitepapers/2012/2012_Mobile_Future_in_Focus">http://www.comscore.com/Press_Events/Presentations_Whitepapers/2012/2012_Mobile_Future_in_Focus (last
visited Oct. 23, 2012). For consumers ages 25-34, eight of ten recent new phone purchases were smartphones. See
Survey: New U.S. Smartphone Growth by Age and Income, NIELSENWIRE, Feb. 20, 2012, available at
http://blog.nielsen.com/nielsenwire/online_mobile/survey-new-u-s-smartphone-growth-by-age-and-income/">http://blog.nielsen.com/nielsenwire/online_mobile/survey-new-u-s-smartphone-growth-by-age-and-income/ (last
visited Oct. 23, 2012).
262See Cisco White Paper, Cisco Visual Networking Index: Global Mobile Data Traffic Forecast Update, 2012-
2017, Executive Summary, February 6, 2013, available at
http://www.cisco.com/en/US/solutions/collateral/ns341/ns525/ns537/ns705/ns827/white_paper_c11-520862.pdf">http://www.cisco.com/en/US/solutions/collateral/ns341/ns525/ns537/ns705/ns827/white_paper_c11-520862.pdf.
263 Council of Economic Advisors, The Economic Benefits of New Spectrum for Wireless Broadband at 1 (Feb.
2012), available athttp://www.whitehouse.gov/sites/default/files/cea_spectrum_report_2-21-2012.pdf"> http://www.whitehouse.gov/sites/default/files/cea_spectrum_report_2-21-2012.pdf (last visited
Oct. 23, 2012).
264 See U.S. Department of Commerce, Plan and Timetable to Make Available 500 Megahertz of Spectrum for
Wireless Broadband
, Oct. 2010, available ahttp://www.ntia.doc.gov/reports/2010/TenYearPlan_11152010.pdf">t http://www.ntia.doc.gov/reports/2010/TenYearPlan_11152010.pdf
(visited Nov. 30, 2012) (Plan and Timetable to Make Available 500 Megahertz of Spectrum for Wireless
Broadband
).

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within five years.265 The Ten-Year Plan and Timetable, developed in collaboration with the Commission
and other Federal agencies, identifies over 2,200 megahertz of Federal and non-Federal spectrum that will
be evaluated for potential opportunities for wireless broadband use.266 It also describes the process for
evaluating these candidate bands and the steps necessary to make the selected spectrum available for
wireless broadband services.267 In its Fast Track Evaluation report, NTIA examines four spectrum bands
for potential reallocation within five years – 1675-1710 MHz, 1755-1780 MHz, 3500-3650 MHz, and
4200-4220/4380-4400 MHz – and recommends that various portions of these bands totaling 115
megahertz be made available for wireless broadband use within five years, contingent upon the allocation
of resources for necessary reallocation activities.268 In a subsequent report released in March 2012, NTIA
finds that 95 megahertz of spectrum at 1755-1850 MHz can be repurposed for wireless broadband use,
and discusses the importance of spectrum sharing, and suggests that spectrum repurposing rely on a
combination of relocating federal users and sharing spectrum between federal agencies and commercial
users.269 The Commerce Spectrum Management Advisory Committee (CSMAC) advises the NTIA on
spectrum policy issues and includes spectrum policy experts from within and outside the Federal
government. In May 2012, CSMAC was directed to create five working groups to consider ways to
facilitate the implementation of commercial wireless broadband in the 1695-1710 MHz and 1755-1850
MHz band and to “enable the NTIA and the FCC to formulate the service rules for the band, including
terms of spectrum sharing and required protections.”270 Work in these CSMAC working groups is
currently on-going, and it is anticipated that the working groups provide reports to the CSMAC by early
2013.271
89.
Recent legislation has provisions that will make additional spectrum available for
commercial mobile broadband services. On February 22, 2012, President Obama signed the Middle Class
Tax Relief and Job Creation Act of 2012 (Spectrum Act) into law. The Spectrum Act addresses public

265 See U.S. Department of Commerce, An Assessment of the Near-Term Viability of Accommodating Wireless
Broadband Systems in the 1675-1710 MHz, 1755-1780 MHz, 3500-3650 MHz, and 4200-4220, 4380-4400 MHz
Bands
, Oct. 2010, availablehttp://www.ntia.doc.gov/reports/2010/FastTrackEvaluation_11152010.pdf"> at http://www.ntia.doc.gov/reports/2010/FastTrackEvaluation_11152010.pdf (visited
Nov. 30, 2012).
266 See Plan and Timetable to Make Available 500 Megahertz of Spectrum for Wireless Broadband. Of the 2,200
megahertz of candidate spectrum that the Ten-Year Plan and Timetable identify, 28 percent is allocated exclusively
for Federal use at present, 35 percent is allocated exclusively for commercial use, and 37 percent is shared by
Federal and commercial users. The 2,200 megahertz includes 280 megahertz of commercial spectrum that the
Commission recommended in the National Broadband Plan to be made available for mobile broadband use within
five years.
267 See Plan and Timetable to Make Available 500 Megahertz of Spectrum for Wireless Broadband.
268 See U.S. Department of Commerce, An Assessment of the Near-Term Viability of Accommodating Wireless
Broadband Systems in the 1675-1710 MHz, 1755-1780 MHz, 3500-3650 MHz, and 4200-4220, 4380-4400 MHz
Bands
, Oct. 2010, availablehttp://www.ntia.doc.gov/reports/2010/FastTrackEvaluation_11152010.pdf"> at http://www.ntia.doc.gov/reports/2010/FastTrackEvaluation_11152010.pdf (visited
Nov. 30, 2012).
269 U.S. Department of Commerce, An Assessment of the Viability of Accommodating Wireless Broadband in the
1755 – 1850 MHz Band,
March 2012, available athttp://www.ntia.doc.gov/report/2012/assessment-viability-accommodating-wireless-broadband-1755-1850-mhz-band"> http://www.ntia.doc.gov/report/2012/assessment-viability-
accommodating-wireless-broadband-1755-1850-mhz-band (visited Nov. 30, 2012) In its Report, NTIA also finds
that a number of issues will need to be resolved, including the allocation by NTIA and the Commission of
comparable spectrum to accommodate federal operations, consideration of incumbent operations in such comparable
spectrum, and the need for any repurposing to promote economic values without loss of critical federal capabilities.
270 See Framework for Work within CSMAC at 1,
http://www.ntia.doc.gov/files/ntia/meetings/framework_for_work_within_csmac_20120525.pdf">http://www.ntia.doc.gov/files/ntia/meetings/framework_for_work_within_csmac_20120525.pdf. (visited Dec 12,
2012).
271 See id.

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safety communications and electromagnetic spectrum auctions,272 and grants the Commission the
authority to conduct incentive auctions.273 Section 6403 of the Spectrum Act requires the Commission to
conduct a one-time incentive auction of broadcast television spectrum, and sets forth specific
requirements for the auction.274 Section 6403(a)(1) directs the Commission to conduct a “reverse
auction” to determine the amount of compensation that each broadcast television licensee would accept
for voluntarily relinquishing some or all of its spectrum usage rights for assignment through a system of
competitive bidding.275 The Spectrum Act also indicates that the Commission may “make such
reassignments of television channels as the Commission considers appropriate,” and “reallocate such
portions of such spectrum as the Commission determines are available for reallocation.”276 The
Commission has proposed to make the recovered spectrum available for flexible use in fixed and mobile
wireless communications services, including mobile broadband.277 The Commission has stated that
repurposing this spectrum will serve to further address this nation’s growing demand for wireless
broadband services, promote ongoing innovation and investment in mobile communications, and help to
ensure that the United States keeps pace with the global wireless revolution.278 In addition to the
provisions on incentive auctions and broadcast television spectrum, the Spectrum Act also requires the
Commission to allocate certain spectrum for commercial use and to assign new initial licenses for its use
subject to flexible use service rules within three years of enactment.279 The Spectrum Act takes other
steps, including requiring the reallocation of the Upper 700 MHz D block for use by public safety.280 The
Spectrum Act also requires the reallocation of the spectrum in the 470-512 MHz band that is currently
used by public safety and requires the Commission to begin a system of competitive bidding to grant new
initial licenses for the use of the spectrum.281
90.
On July 20, 2012, the President’s Council of Advisors on Science and Technology
(PCAST) released a report 282 recommending that the U.S. government share underutilized spectrum to
the maximum extent consistent with the Federal mission, and identify 1,000 MHz of Federal spectrum in
which to implement shared-use spectrum pilot projects.283 The PCAST report also recommended

272 See Middle Class Tax Relief and Job Creation Act of 2012, Pub. L. No. 112-96, §§ 6001-6703, 125 Stat. 156
(2012) (Spectrum Act).
273 47 U.S.C. § 309(j)(8)(G); Spectrum Act at § 6402.
274 See Spectrum Act at § 6403. Section 6402 of the Spectrum Act, codified at 47 U.S.C. 307(J)(8)(G)(i) authorizes
the Commission to conduct incentive auctions in which a licensee may voluntarily relinquish its spectrum usage
rights in order to permit the assignment by auction of new initial licenses subject to flexible-use service rules, in
exchange for a portion of the resulting auction proceeds.
275 See Spectrum Act at § 6403(a)(1).
276 See Spectrum Act at § 6403(b)(1).
277 See Expanding the Economic and Innovation Opportunities of Spectrum Through Incentive Auctions, GN Docket
No. 12-268, Notice of Proposed Rulemaking, FCC 12-118, (adopted Sept. 28, 2012) (Incentive Auctions NPRM).
278 Id.
279 See Spectrum Act at § 6401(b). These are the frequencies between 1915-1920 MHz, 1995-2000 MHz, and 2155-
2180 MHz. Also included in this requirement is 15 megahertz of spectrum identified by NTIA between 1675-1710
MHz, and 15 megahertz of contiguous spectrum to be identified by the Commission. Id.
280 See Spectrum Act at § 6101(a).
281 Id. at § 6103(a). The Commission must reallocate this spectrum within 9 years of enactment and relocate users
within 2 years after spectrum is competitively bid. Id. at § 6103(a), (c).
282 Executive Office of the President, Realizing the Full Potential of Government-Held Spectrum to Spur Economic
Growth
, (July 20, 2012) (PCAST Report), available at
http://www.whitehouse.gov/administration/eop/ostp/pcast/docsreports">http://www.whitehouse.gov/administration/eop/ostp/pcast/docsreports (visited Oct. 16, 2012).
283 See PCAST Report, at 1.

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modifying FCC rules to allow “general authorized access” devices to operate in the 3550-3650 MHz
(radar) band and another to be determined by NTIA and the FCC.284
91.
Wireless operators today primarily use licenses that fall in frequencies between 698 MHz
and 2.7 GHz for the provision of mobile voice and broadband services. Among the bands used, or with
the potential to be used, are Cellular (in the 850 MHz band), SMR (in the 800/900 MHz band), broadband
PCS (in the 1.9 GHz band), BRS and EBS in the 2.5 GHz band, AWS in the 1.7/2.1 GHz band (and
potentially other bands), the 700 MHz band, and WCS in the 2.3 GHz band. By examining the history of
the available frequency bands and associated service rules, it is possible to trace the growth of the mobile
wireless industry and the introduction of new competition in the mobile wireless marketplace.285
a.

Frequency Bands

92.
Cellular. The Commission began licensing Cellular spectrum in 1982, eventually
making a total of 50 megahertz available. The band was divided into two blocks, licensed by Cellular
Market Area (CMA). At the time of initial licensing, one of the two Cellular channel blocks in each
market was awarded to a local incumbent wireline carrier, while the other block was awarded to another
entity in order to promote competition.286 The Commission completed licensing the majority of Cellular
operators in 1991. Cellular licensees provided the first widely-used mobile services,287 and providers
have since been using Cellular spectrum to deploy mobile voice and broadband services using
technologies on the CDMA and GSM migration paths.
93.
SMR. The Commission established SMR in 1979 to provide for land mobile
communications on a commercial basis.288 While it initially licensed SMR spectrum in non-contiguous
bands, on a site-by-site basis, the Commission has since licensed additional SMR spectrum on an EA
basis through the auction process. 289 Although the primary use for SMR traditionally was dispatch
services,290 providers such as Nextel acquired significant amounts of SMR spectrum and were successful
in launching mobile voice services in the 800 and 900 MHz bands in the 1990s, competing with licensees
using Cellular spectrum in the provision of mobile voice services.291 As discussed in previous reports, for

284 See PCAST Report, at 82.
285 A more detailed description of spectrum available for mobile wireless service is provided in Appendix A. Also,
see Section III.B.3 Narrowband Data Providers, supra; Narrowband Personal Communications Service, FCC
Encyclopedia,http://www.fcc.gov/encyclopedia/narrowband-personal-communications-service-pcs"> http://www.fcc.gov/encyclopedia/narrowband-personal-communications-service-pcs (visited
September 19, 2012). There are other bands that can be used to provide CMRS, including 1670-1675 MHz and 901-
902 MHz (narrowband PCS). Appendix A also includes a discussion of the 3650-3700 MHz band, which can be
used to provide wireless broadband service (although not fully mobile service).
286 Inquiry Into the Use of the Bands 825-845 MHz and 870-890 MHz for Cellular Communications Systems; and
Amendment of Parts 2 and 22 of the Commission’s Rules Relative to Cellular Communications Systems, CC
Docket No. 79-318, Report and Order, 86 FCC 2d 469, 488-92 ¶¶ 38-43 (1981).
287 See Third Report, 13 FCC Rcd at 19749, 19779, pp. 3, 29.
288 See Federal Communications Commission Wireless Telecommunications Bureau Staff Paper, Private Land
Mobile Radio Services: Background
, December 18, 1996 at D-6, available at
http://wireless.fcc.gov/index.htm?job=reports.
289 The “900 MHz” SMR band refers to spectrum allocated in the 896-901 and 935-940 MHz bands; the “800 MHz”
band refers to spectrum allocated in the 806-824 and 851-869 MHz bands. See 47 C.F.R. § 90.603; 47 C.F.R. § 90.7
(defining “specialized mobile radio system”); see also Auctions 16, 34, 36 and 43 in FCC Auctions Home, Auctions,
http://wireless.fcc.gov/auctions/default.htm?job=auctions_home">http://wireless.fcc.gov/auctions/default.htm?job=auctions_home (visited Aug. 23, 2012).
290 Dispatch services allow two-way, real-time, voice communications between fixed units and mobile units (e.g.,
between a taxicab dispatch office and a taxi) or between two or more mobile units (e.g., between a car and a truck).
See Fifth Report, 15 FCC Rcd at 17727-28, for a detailed discussion.
291 Nextel and Sprint combined their spectrum holdings in a merger completed in 2005, becoming Sprint Nextel
Corporation. Shttp://www.sprint.com/companyinfo/history/">ee http://www.sprint.com/companyinfo/history/ (visited Oct. 27, 2010).

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many years, SMR providers offered mobile wireless services using iDEN-based technologies.292
However, Sprint, the largest SMR licensee, has announced that it is in the process of repurposing its 800
MHz SMR spectrum for CDMA-based technology and that it will shut down its iDEN network as early as
June 30, 2013.293 In May of 2012 the Commission adopted a Report and Order that amends its rules to
allow geographically-based SMR licensees to operate across contiguous channels without rigid channel
spacing requirement or bandwidth limitation.294 This change enables SMR licensees to fully and more
efficiently utilize their licensed spectrum and transition their networks from legacy 2G technologies to 3G
as well as other advanced technologies such as LTE.295
94.
Broadband PCS. Between 1995 and 1999, the Commission auctioned 120 megahertz of
Broadband PCS spectrum, using different bandwidths and licensing areas, in the 1850-1910 MHz and
1930-1990 MHz bands.296 Licensees of this newly-available spectrum deployed digital technologies that
were more efficient and offered improved service quality over the existing analog technologies deployed
in the Cellular bands at the time. These deployments by new entrants facilitated the growth and
development of a more competitive mobile wireless marketplace. By 1998, 87 percent of the U.S.
population (by Basic Trading Area) was covered by three or more mobile wireless providers, and 54
percent by five or more providers.297 During this time period, the Broadband PCS band was the primary
spectrum available to new entrants that could provide competition to the cellular incumbents. With that
increased competition came increased innovation: broadband PCS service providers offered new pricing
plans, introduced smaller handsets with increased functionality, and facilitated mass market acceptance of
mobile wireless service. Cumulative investment in the industry more than tripled from $19 billion to over
$70 billion from 1994 to 2000,298 and the number of cell sites more than quadrupled, from 18,000 to over
80,000.299 Subsequently, the Commission assigned an additional 10 megahertz at 1910-1915 MHz and
1990-1995 MHz to Sprint as part of the 800 MHz Band Reconfiguration agreement.300
95.
BRS and EBS. In 2004, the Commission adopted revisions to the rules and band plan
governing the BRS and EBS spectrum in the 2.5 GHz band that better facilitated the use of this spectrum
– 73.5 megahertz of BRS and 112.5 megahertz of EBS – for mobile and fixed broadband services.301

292 See Ninth Report, 19 FCC Rcd at 20597 ¶ 78.
293 See Section IV.B.1 Network Coverage and Technology Upgrades, infra; Sprint to Cease Service on its iDEN
Network as Early as June 30, 2013
, News Release, Sprint Newsroom, May 29, 2012, available at
http://newsroom.sprint.com/article_display.cfm?article_id=2296&ECID=vanity:nextelnetwork">http://newsroom.sprint.com/article_display.cfm?article_id=2296&ECID=vanity:nextelnetwork (visited Sep. 17,
2012).
294 See Improving Spectrum Efficiency Through Flexible Channel Spacing and Bandwidth Utilization for Economic
Area-based 800 MHz Specialized Mobile Radio Licensees, WT Docket No. 12-64 Report and Order, 12 FCC
Rcd.1225. FCC 12-55, Rel. May 24, 2012 (WTB).
295 Id. at ¶ 5.
296 See Auctions 4, 5, 10, 11, 22, 35, 58, 71 and 78 in FCC Auctions Home, Auctions,
http://wireless.fcc.gov/auctions/default.htm?job=auctions_home">http://wireless.fcc.gov/auctions/default.htm?job=auctions_home (visited Aug. 23, 2012).
297 See Third Report, 13 FCC Rcd at 19768, Table 3A.
298 CTIA Year-End 2008 Wireless Indices Report, at 126.
299 CTIA Year-End 2008 Wireless Indices Report, at 150.
300 See Improving Public Safety Communications in the 800 MHz Band, Report and Order, Fifth Report and Order,
Fourth Memorandum Opinion and Order
, 19 FCC Rcd 14969, 15083 (2004).
301 These totals for BRS and EBS spectrum do not include the 8 megahertz in the J and K guard bands. On October
30, 2009, the Commission completed Auction 86, which offered 78 BRS licenses: 75 licenses covering various
Basic Trading Areas (BTAs), including one partial BTA, and 3 licenses covering BRS service areas in the Gulf of
Mexico. The Commission completed the auction. See “Auction of Broadband Radio Service Licenses Closes;
Winning Bidders Announced for Auction 86,” Public Notice, 24 FCC Rcd 13572 (2009).

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Since then, BRS and EBS licensees have been transitioning to the revised band plan, a process that is
nearly complete. In 2008, Clearwire began deploying mobile broadband services using this spectrum in
various markets across the country.302 Clearwire currently operates a mobile WiMAX network and plans
to overlay certain of its WiMAX sites with TDD LTE technology by June 2013.303 Several smaller
providers, including Xanadoo and Digital Bridge, are, like Clearwire, deploying WiMAX in their 2.5
GHz spectrum holdings.304
96.
AWS-1. In 2006, the Commission auctioned a total of 90 megahertz of AWS-1 spectrum
in the 1.7 and 2.1 GHz bands.305 Since 2008, several licensees have deployed mobile wireless services
using AWS spectrum and 3G/4G technologies in markets across the country.306 T-Mobile has been using
its AWS spectrum to offer WCDMA/HSPA+ technologies since 2008 and, in 2012, announced plans to
launch an LTE network in 2013 using AWS licenses acquired from AT&T earlier this year.307 MetroPCS
and Leap have launched LTE networks using their AWS licenses in September 2010 and December 2011,
respectively.308 In addition, AT&T launched its LTE network in September 2011, and has stated that it is
using both AWS and 700 MHz spectrum for its LTE deployment.309 AT&T plans to deploy LTE to 80
percent of the U.S. population by the end of 2013.310 In 2012, Verizon Wireless completed the
acquisition of a significant amount of AWS spectrum from Leap, SpectrumCo, and Cox.311 Verizon
Wireless plans to use this spectrum to expand and enhance its existing LTE network, and committed to
covering at least 30 percent of the total population in the Economic Areas in which it is acquiring AWS
by August 2015 and at least 70 percent by August 2019.312 T-Mobile acquired significant amounts of
AWS spectrum during 2012 in two significant transactions: from AT&T as part of the implementation of
the break-up provisions of the AT&T/Deutsche Telekom deal and from Verizon Wireless.
97.
700 MHz. The auctions of 700 MHz spectrum between 2002 and 2008, combined with
the completion of the Digital Television transition in June 2009, made 70 megahertz of spectrum in the
700 MHz Band available for commercial mobile and fixed services, including 58 megahertz of paired
spectrum.313 Certain providers have begun rolling out LTE networks using 700 MHz Band spectrum.

302 See Section IV.B.1, Network Coverage and Technology Upgrades, infra.
303 See Section IV.B.1, Network Coverage and Technology Upgrades, infra.
304 Digital Bridge Communications, About DBC: Bringing Broadband to Underserved or Rural Communities
Nationwide
http://www.digitalbridgecommunications.com/AboutDBC/tabid/84/Default.aspx">, http://www.digitalbridgecommunications.com/AboutDBC/tabid/84/Default.aspx (visited Aug. 20,
2012); Xanadoo Company, About Xanadoohttp://www.xanadoo.com/about.html">, http://www.xanadoo.com/about.html (visited Aug. 20, 2012).
305 See Appendix A for a band plan diagram of the AWS bands. Only the AWS-1 spectrum has been auctioned and
licensed.
306 See Section IV.B.1, Network Coverage and Technology Upgrades, infra.
307 See Section IV.B.1, Network Coverage and Technology Upgrades, infra.
308 See Section IV.B.1, Network Coverage and Technology Upgrades, infra.
309 See Section IV.B.1, Network Coverage and Technology Upgrades, infra; Fifteenth Report, 26 FCC Rcd at 9737 ¶
110.
310 See Section IV.B.1, Network Coverage and Technology Upgrades, infra.
311 Applications of Cellco Partnership d/b/a Verizon Wireless and SpectrumCo LLC and Cox TMI, LLC For Consent
To Assign AWS-1 Licenses, WT Docket No. 12-4, Applications of Verizon Wireless and Leap for Consent To
Exchange Lower 700 MHz, AWS-1, and PCS Licenses, ULS File Nos. 0004942973, 0004942992, 0004952444,
0004949596, and 0004949598, Applications of T-Mobile License LLC and Cellco Partnership d/b/a Verizon Wireless
for Consent to Assign Licenses, WT Docket 12-175, FCC 12-95 (2012) (Verizon Wireless-SpectrumCo Order).
312 See Verizon Wireless-SpectrumCo Order, FCC 12-95, at ¶ 121.
313 Portions of the Lower 700 MHz band were auctioned in Auctions 44, 49, 60 and 73. See Auctions 44, 49, 60
and 73 in FCC Auctions Home, Auctionshttp://wireless.fcc.gov/auctions/default.htm?job=auctions_home">, http://wireless.fcc.gov/auctions/default.htm?job=auctions_home (visited
Aug. 23, 2012). Auction 92 in 2011offered licenses that were previously offered but remained unsold or were
(continued….)

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Verizon Wireless first launched LTE services using its 700 MHz Upper C Block licenses in December
2010 and is leasing portions of this spectrum to wireless service providers in rural areas where it does not
intend to build out.314 AT&T launched its LTE network in September 2011 and has stated that it is using
both 700 MHz and AWS spectrum for its LTE deployment.315 AT&T also has announced plans to use the
unpaired 700 MHz Lower D and E block licenses it acquired from Qualcomm in December 2011 as early
as 2014 as a supplemental downlink for mobile broadband services.316 In March 2012, US Cellular
launched LTE service using 700 MHz spectrum and plans to expand LTE service to cover approximately
25 million people by year end 2012 and approximately two-thirds of its footprint by 2014.317 On
September 7, 2012, the Public Safety and Homeland Security Bureau (PSHSB) implemented the
directives of the Spectrum Act by reallocating the Upper 700 MHz D Block for public safety services, and
adopting rules to license the D Block and the existing public safety broadband spectrum in the 700 MHz
Band to FirstNet, an independent authority within NTIA, in order to establish “a nationwide,
interoperable public safety broadband network.”318
98.
Wireless Communications Service (WCS). In May 2010, the Commission adopted final
rules for WCS that modified the technical parameters governing the operation of WCS mobile and
portable devices in 25 megahertz of spectrum in the 2.3 GHz band.319 The revised rules were intended to
enable WCS licensees to offer mobile broadband services, while limiting the potential for harmful
interference to incumbent Satellite Digital Audio Radio Service licensees operating in adjacent bands.320
In 2012 the Commission issued an Order on Reconsideration that adopted flexible technical and operating
rules to enable LTE mobile broadband deployment in 20 megahertz of long-dormant WCS spectrum. In
addition, it made an additional 10 megahertz of spectrum available for fixed broadband, with possible
future downlink use of the spectrum to serve mobile broadband devices (for a total of 30 megahertz
potentially available for mobile broadband). It also provides greater certainty to Sirius XM by requiring
WCS licensees to work cooperatively if WCS base or fixed stations cause harmful interference (i.e.,
(Continued from previous page)
licenses on which a winning bidder defaulted. See Auction of 700 MHz Band Licenses Scheduled for July 19, 2011,
Notice and Filing Requirements, Minimum Opening Bids, Upfront Payments, and Other Procedures for Auction 92,
Public Notice, 26 FCC Rcd 3342 (2011). The Digital Television transition ensured that the 700 MHz spectrum was
cleared of broadcast use, and thus made available for commercial mobile services, no later than June 12, 2009. In
addition to the 80 megahertz of spectrum included in Table 16, 4 megahertz of 700 MHz spectrum serve as Guard
Bands. The Spectrum Act requires the reallocation of the Upper 700 MHz D block (10 megahertz) for use by public
safety. See Spectrum Act at § 6101(a).
314 See Section IV.B.1, Network Coverage and Technology Upgrades, infra.
315 See Section IV.B.1, Network Coverage and Technology Upgrades, infra; Fifteenth Report, 26 FCC Rcd at 9824 ¶
274.
316 Application of AT&T Inc and Qualcomm Incorporated for Consent to Assign Licenses and Authorizations, WT
Docket No. 11-18, Order, 26 FCC Rcd 17589, 17625 ¶ 89 (2011) (AT&T-Qualcomm Order).
317 See Section IV.B.1, Network Coverage and Technology Upgrades, supra; Stephen Lawson, U.S. Cellular Throws
Its 4G LTE Hat in the Ring,
ComputerWorld, Mar. 22, 2012, at
http://www.computerworld.com/s/article/9225498/U.S._Cellular_throws_its_4G_LTE_hat_in_the_ring">http://www.computerworld.com/s/article/9225498/U.S._Cellular_throws_its_4G_LTE_hat_in_the_ring. (visited
Nov. 19, 2012).
318 Implementation of Section 6002(b) of the Omnibus Budget Reconciliation Act of 1993, PS Docket No. 12-94,
DA 12-1462, Report and Order (PSHSB, adopted September 7, 2012).
319 See Amendment of Part 27 of the Commission’s Rules to Govern the Operation of Wireless Communications
Services in the 2.3 GHz Band, WT Docket No. 07-293, Report and Order, 25 FCC Rcd 11710 (2010). The WCS band
has a total of 30 MHz spectrum at 2305-2320 MHz and 2345-2360 MHz. Id. However, WCS mobile and portable
devices are not permitted to operate in the 2.5-megahertz portions of the WCS C and D blocks closest to the SDARS
band (i.e., 2317.5-2320 and 2345-2347.5 MHz). Id.
320 See Amendment of Part 27 of the Commission’s Rules to Govern the Operation of Wireless Communications
Services in the 2.3 GHz Band, WT Docket No. 07-293, Report and Order, 25 FCC Rcd 11710 (2010).

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muting) to SDARS receivers on roadways, resolving longstanding interference concerns between the
WCS and SDARS.321
99.
AWS-4. In March 2012, the Commission proposed service and licensing rules for the
provision of terrestrial mobile broadband service in the 40 megahertz of spectrum in the 2000-2020 MHz
and 2180-2200 MHz bands, currently assigned to the Mobile Satellite Service and known as “AWS-4.”322
As described in more detail below, in December of 2012, the Commission adopted service and licensing
rules that generally follow the Commission’s Part 27 flexible use rules, modified as necessary to account
for issues unique to the AWS-4 band.323 This action carries out a recommendation in the National
Broadband Plan
that the Commission enable the provision of stand-alone terrestrial services in this
spectrum.324
100.
Other Spectrum Bands. Other spectrum bands that may later be used for the provision of
mobile voice or broadband services include spectrum in the 1.4 GHz band (1392-1395 MHz and 1432-
1435 MHz), and the 1670-1675 MHz band as well as certain MSS spectrum bands. As noted previously,
the Spectrum Act requires that the Administration, within three years, begin the process of withdrawing
or modifying the assignment to Federal stations of 15 megahertz between 1675 and 1710 MHz identified
for reallocation from Federal use to non-Federal use. In addition, the Spectrum Act requires the
Commission to allocate this spectrum for commercial use and assign new initial licenses within three
years of enactment (February 2015), along with 1915-1920 MHz, 1995-2000 MHz, 2155-2180 MHz, and
an additional 15 megahertz of continuous spectrum that it must identify. The Commission has taken
several steps to accelerate terrestrial broadband deployment in MSS bands For example, in April 2011,
the Commission adopted a Report and Order applying certain spectrum leasing policies to MSS/ATC
leasing arrangements and adding co-primary mobile and fixed allocations in the 2 GHz MSS band. As
discussed above, on March 21, 2012, the Commission proposed rules for AWS-4 to enable the provision
of terrestrial mobile broadband service in the 2 GHz band at 2000-2020 MHz and 2180-2200 MHz. The
AWS-4 NPRM also proposed eliminating the ATC rules for the 2 GHz band.325 In December of 2012, the
Commission eliminated the ATC rules for the 2 GHz band, granted terrestrial authority to the existing
MSS licensee, and established terrestrial service, technical, and licensing rules that generally follow the
Commission’s Part 27 flexible use rules, modified as necessary to account for issues unique to the AWS-4
band.326 Further, on December 12, 2012, the Commission adopted a Notice of Proposed Rulemaking

321 See Amendment of Part 27 of the Commission’s Rules to Govern the Operation of Wireless Communications
Services in the 2.3 GHz Band, WT Docket No. 07-293, Establishment of Rules and Policies for the Digital Audio
Radio Satellite Service in the 2310-2360 MHz Frequency Band, IB Docket No. 95-91Order on Reconsideration,
12FCC Rcd. 5754 (2012).
322 Service Rules for Advanced Wireless Services in the 2000-2020 MHz and 2180-2200 MHz Bands, WT Docket
No. 12-70, Fixed and Mobile Services in the Mobile Satellite Service Bands at 1525-1559 MHz and 1626.5-1660.5
MHz, 1610-1626.5 MHz and 2483.5-2500 MHz, and 2000-2020 MHz and 2180-2200 MHz, ET Docket No. 10-142,
Service Rules for Advanced Wireless Services in the 1915-1920 MHz, 1995-2000 MHz, 2020-2025 MHz and 2175-
2180 MHz Bands, WT Docket No. 04-356, Notice of Proposed Rulemaking and Notice of Inquiry, 27 FCC Rcd
3561 (2012) (AWS-4 NPRM).
323 See Service Rules for Advanced Wireless Services in the 2000-2020 MHz and 2180-2200 MHz Bands, WT
Docket No. 12-70, Fixed and Mobile Services in the Mobile Satellite Service Bands at 1525-1559 MHz and 1626.5-
1660.5 MHz, 1610-1626.5 MHz and 2483.5-2500 MHz, and 2000-2020 MHz and 2180-2200 MHz, ET Docket No.
10-142, Service Rules for Advanced Wireless Services in the 1915-1920 MHz, 1995-2000 MHz, 2020-2025 MHz
and 2175-2180 MHz Bands, WT Docket No. 04-356, Report and Order and Order of Proposed Modification, FCC
12-151 (rel. Dec. 17, 2012) (AWS-4 NPRM).
324 See National Broadband Plan, Recommendation 5.8.4 at 87-88.
325 AWS-4 NPRM at ¶ 136.
326 See Service Rules for Advanced Wireless Services in the 2000-2020 MHz and 2180-2200 MHz Bands, WT
Docket No. 12-70, Fixed and Mobile Services in the Mobile Satellite Service Bands at 1525-1559 MHz and 1626.5-
(continued….)

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that seeks comment on creating a new Citizens Broadband Service, which would make 100 megahertz of
spectrum available for mobile broadband service in the 3550-3650 MHz Band according to rules that
would leverage the benefits of small cell technologies to facilitate spectrum sharing with incumbent
federal and commercial users. And, as recommended in the PCAST Report, the Commission proposes to
use a spectrum access system to manage shared access to the band and protect incumbent users. In
addition, as discussed in the Fifteenth Report, LightSquared had planned to use MSS/ATC authority
associated with its L-band MSS licenses to offer terrestrial LTE service and satellite connectivity on a
wholesale basis to other wireless providers. However, on February 15, 2012, the Commission’s
International Bureau proposed to vacate the conditional waiver previously granted to LightSquared and
to modify LightSquared’s satellite license “to suspend indefinitely LightSquared’s underlying ATC
authorization” out of concerns that its network would interfere with GPS services. More recently,
LightSquared has requested that the Commission take additional actions that would allow LightSquared
to proceed with revised plans to provide terrestrially-based services using L-band spectrum.327
b.

Facilitating Access to Spectrum Among Multiple Providers

101.
In addition to increasing the availability of commercial mobile wireless spectrum, the
Commission has had different policies related to the service and technical rules, licensing and assignment,
and aggregation of spectrum, all of which have affected market entry. We discuss here several prominent
Commission policies that have affected spectrum holdings over the past two decades.
102.
Flexible Use Policies. Initially, the Commission’s rules restricted the use of Cellular
spectrum to analog service. More recently, the Commission has adopted a general policy of providing
licensees with significant flexibility to decide which services to offer and what technologies to deploy on
spectrum used for the provision of mobile wireless services. For example, licensees have the flexibility to
deploy next-generation wireless technologies that allow them to offer high-speed mobile data services
using their existing spectrum.328
103.
Mobile Spectrum Holdings. The Commission has adopted different policies through the
years with regard to policies regarding mobile spectrum holdings. As mentioned above, when first
licensing 50 megahertz of Cellular spectrum, the Commission required that two different Cellular
licensees serve each local market in order to promote competition between mobile telephony providers.
In 1994, as the Commission prepared to make an additional 120 megahertz of spectrum available through
broadband PCS auctions, it adopted a CMRS spectrum cap.329 Under these CMRS spectrum limits,
which were modified in 1999, no entity could control more than 45 megahertz out of 180 megahertz of
(Continued from previous page)
1660.5 MHz, 1610-1626.5 MHz and 2483.5-2500 MHz, and 2000-2020 MHz and 2180-2200 MHz, ET Docket No.
10-142, Service Rules for Advanced Wireless Services in the 1915-1920 MHz, 1995-2000 MHz, 2020-2025 MHz
and 2175-2180 MHz Bands, WT Docket No. 04-356, Report and Order and Order of Proposed Modification, FCC
12-151 (rel. Dec. 17, 2012)(AWS-4 NPRM).
327 See Modification Application of LightSquared Subsidiary LLC, IBFS File Nos. SAT-MOD-20120928-00160, -
00161, SES-MOD-20121001-00872 (filed Sept. 28, 2012 and Oct. 1, 2012 with identical narrative text).
328 For licensees of PCS, see 47 C.F.R § 24.3.
329 Implementation of Sections 3(n) and 332 of the Communications Act, Third Report and Order, 9 FCC Rcd 7988,
7999, 8100-8110 ¶¶ 16, 238-265 (1994) (CMRS Third Report and Order). In adopting spectrum aggregation limits,
the Commission was “recognizing the possibility that mobile service licensees might exert undue market power or
inhibit market entry by other service providers if permitted to aggregate large amounts of spectrum.” Id. at 8100 ¶
239. It stated that if firms were to aggregate sufficient amounts of spectrum, it is possible that they could
unilaterally or in combination exclude efficient competitors, reduce the quality of service available to the public, and
increase prices to the detriment of consumers. Id. at 8104 ¶ 248. See also Amendment of the Commission's Rules
Regarding Installment Payment Financing for Personal Communication Services (PCS) Licensees, WT Docket No.
97-82, Sixth Report and Order and Order on Reconsideration, 15 FCC Rcd. 16266, 16275 ¶ 15 (2000) (adopting
auction eligibility restrictions to set aside some PCS licenses for small businesses to ensure that these businesses are
provided with opportunities to enter the marketplace).

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Cellular, SMR, and broadband PCS spectrum in any given cellular market.330 In 2003, the Commission
moved from a spectrum cap to a case-by-case market review of proposed merger transactions to review
potential competitive effects on the marketplace, as well as the acquisition of business units.331 In 2012,
the Commission released a notice of proposed rulemaking to review its policies governing mobile
spectrum holdings.332 The Commission seeks comment on a number of options for evaluating the
competitive effects of spectrum holdings, including retaining the current case-by-case approach, adopting
bright-line limits, or adopting a hybrid approach that would combine some elements of a bright-line limit
with a case-by-case analysis.333
104.
Spectrum Screen. Beginning in 2004, the Commission has used a two-part screen to help
identify markets where the acquisition of spectrum provides particular reason for further competitive
analysis.334The first part of the screen considers changes in market concentration as a result of the
transaction and is based on the size of the post-transaction Herfindahl-Hirschman Index (HHI) and the
change in the HHI.335 The second part examines the amount of spectrum that is suitable and available on
a market-by-market basis for the provision of mobile telephony/broadband service.336 For those markets
highlighted by one or both steps in the analysis, the Commission routinely conducts detailed, market-by-
market reviews to determine whether the transaction would result in an increased likelihood or ability in
those markets for the combined entity to behave in an anticompetitive manner. The case-by-case analysis
considers variables that are important in predicting the incentives and ability of service providers to
successfully reduce competition on price or non-price terms, and transaction-specific public interest

330 CMRS Third Report and Order, 9 FCC Rcd at 8105-8110 ¶¶ 252-265. See also 1998 Biennial Regulatory
Review, Spectrum Aggregation Limits for Wireless Telecommunications Carriers, WT Docket No. 98-205, Report
and Order
, 15 FCC Rcd 9219, 9254-57 ¶¶ 80-84 (2000). The CMRS spectrum cap only covered services that had
spectrum of 5 megahertz or more (thus excluding narrowband CMRS) in order to ensure that providers using the
spectrum could compete with one another. CMRS Third Report and Order, 9 FCC Rcd at 8105 ¶ 252. The CMRS
Third Report and Order
calculated that PCS, Cellular, and SMR account for approximately 189 megahertz, which
included 120 megahertz of broadband PCS spectrum, 50 megahertz of Cellular spectrum, and 19 megahertz of SMR
spectrum. 9 FCC Rcd at 8108 ¶ 258. However, under the CMRS spectrum cap rules, no more than 10 megahertz of
SMR spectrum could be attributed to any one licensee, making 180 megahertz the total pool of spectrum for the
CMRS spectrum cap. See 47 C.F.R. § 20.6(b); 2000 Biennial Regulatory Review Spectrum Aggregation Limits for
Commercial Mobile Radio Services, Notice of Proposed Rulemaking, 16 FCC Rcd 2763, 2764 ¶ 2 (2001); CMRS
Third Report and Order
, 9 FCC Rcd at 8113-14 ¶ 275. In 1999, the Commission raised the CMRS spectrum cap to
55 megahertz in rural market areas (RSAs). Biennial Regulatory Review, Spectrum Aggregation Limits for
Wireless Telecommunications Carriers, Report and Order, 15 FCC Rcd 9219, 9256-57 (1999).
331 Verizon Wireless- SpectrumCo Order, FCC 12-95, at ¶ 48; AT&T-Qualcomm Order, 26 FCC Rcd at 17602 ¶ 31;
Applications of AT&T Inc. and Centennial Communications Corp. For Consent to Transfer Control of Licenses,
Authorizations, and Spectrum Leasing Arrangements, WT Docket No. 08-246, Memorandum Opinion and Order,
24 FCC Rcd 13915, 13938 ¶ 50 (2009)(AT&T-Centennial Order); see also 2000 Biennial Regulatory Review –
Spectrum Aggregation Limits for Commercial Mobile Radio Services, WT Docket No. 01-14, Report and Order, 16
FCC Rcd 22668, 22693-94 ¶ 50 (2001) (Second Biennial Review Order) (stating that case-by-case review gives the
Commission flexibility to reach the appropriate decision in each case on the basis of the particular circumstances of
that case.
332 Policies Regarding Mobile Spectrum Holdings, WT Docket No. 12-269, Notice of Proposed Rulemaking, FCC
12-119 ¶ 8 (rel. Sept. 28, 2012) (Mobile Spectrum Holdings NPRM).
333 See Mobile Spectrum Holdings NPRM, FCC 12-119, at ¶¶ 17-22 (rel. Sept. 28, 2012).
334 See, e.g., Verizon Wireless-SpectrumCo Order, FCC 12-95, at ¶ 48; AT&T-Qualcomm Order, 26 FCC Rcd at
17602 ¶ 31; Applications of AT&T Wireless Services, Inc. and Cingular Wireless Corporation For Consent to
Transfer Control of Licenses and Authorizations, WT Docket No. 04-70, Memorandum Opinion and Order, 19 FCC
Rcd 21522, 21552 ¶ 58 (2004) (Cingular-AT&T Wireless Order).
335 See Section III.D.2, Hefindahl-Hirschman Index, supra.
336 See, e.g., Verizon Wireless-SpectrumCo Order, FCC 12-95, at ¶ 59.

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benefits that may mitigate or outweigh any harms arising from the transaction.337
105.
In 2008, the Commission recognized the evolving nature of mobile services marketplace
and therefore expanded the product market to include mobile broadband services.338 The Commission
has determined suitability by whether the spectrum is capable of supporting mobile service given its
physical properties and the state of equipment technology, whether the spectrum is licensed with a mobile
allocation and corresponding service rules, and whether the spectrum is committed to another use that
effectively precludes its uses for the relevant mobile services.339 With respect to availability, the
Commission has considered particular spectrum to be a relevant input if it is fairly certain that it will meet
the criteria for suitable spectrum in the near term.340 The Commission has balanced a number of factors in
its market-by-market analysis, considering the totality of the circumstances in each market.341 The
Commission also has considered whether harms in numerous local markets may result in nationwide
harms.342 Since 2004, the Commission has periodically modified its spectrum screen to include additional
spectrum – including 700 MHz,343 AWS-1,344 BRS,345 and WCS346 spectrum– as those bands have been
made available for commercial use.347 The Commission has determined that cellular, PCS,348 SMR, and
700 MHz band spectrum, as well as AWS-1, WCS, and BRS spectrum, where available, meet the
definition.349 In the recent Mobile Spectrum Holdings NPRM, the Commission notes that in several recent
transactions, some parties have suggested modifying the spectrum screen to include additional spectrum
bands, such as the BRS spectrum not currently included in the screen, EBS, and MSS. In the NPRM, the

337 See Verizon Wireless-Alltel Order, 23 FCC Rcd at 17460 ¶ 26; Mobile Spectrum Holdings NPRM, FCC 12-119.
338 See Verizon Wireless-Alltel Order, 23 FCC Rcd at 17469-70 ¶¶ 45-47.
339 See AT&T-Qualcomm Order, 26 FCC Rcd at 17605-06 ¶ 38; See, e.g.http://web2.westlaw.com/find/default.wl?mt=26&db=4493&tc=-1&rp=%2ffind%2fdefault.wl&findtype=Y&ordoc=2026749679&serialnum=2022375303&vr=2.0&fn=_top&sv=Split&tf=-1&referencepositiontype=S&pbc=134CFA79&referenceposition=8723&rs=WLW12.07">, AT&T-Verizon Wireless Order, 25 FCC
Rcd at 8723-24 ¶ 39; AT&T-Cingular Order, 19 FCC Rcd at 21560-61 ¶ 81.
340 See AT&T-Qualcomm Order, 26 FCC Rcd at 17605-06 ¶ 38; AT&T-Verizon Wireless Order, 25 FCC Rcd at
8723-24 ¶ 39; AT&T-Centennial Order, 24 FCC Rcd at 13935 ¶ 43.
341 See, e.g., Verizon Wireless-Alltel Order, 23 FCC Rcd at 17487-88 ¶ 91.
342 See Verizon Wireless-SpectrumCo Order, FCC 12-95, at ¶ 76.
343See Applications of AT&T Inc. and Dobson Communications Corporation, WT Docket No. 07-153,Memorandum
Opinion and Order
, 22 FCC Rcd 20295, 20307-08 ¶ 17 (2007)(AT&T-Dobson Order).
344 See Sprint Nextel Corp. and Clearwire Corp. Applications for Consent to Transfer Control of Licenses, Leases,
and Authorizations, WT Docket No. 08-94, Memorandum Opinion and Order, 23 FCC Rcd 17570, 17599 ¶ 72
(2008) (Sprint Nextel-Clearwire Order).
345 Most BRS spectrum is considered available in those markets where the transition of BRS spectrum to the new
band plan has been completed. Sprint Nextel-Clearwire Order, 23 FCC Rcd at 17598-99 ¶ 70. EBS spectrum,
which is licensed to educational institutions and can be leased to commercial operators, is not included in the
Commission’s spectrum screen when evaluating proposed transactions.
346 See Applications of AT&T Mobility Spectrum LLC, New Cingular Wireless PCS, LLC, Comcast Corporation,
Horizon Wi-Com, LLC, NextWave Wireless, Inc., and San Diego Gas & Electric Company, WT Docket No. 12-
240, Memorandum Opinion and Order (rel. Dec. 18, 2012).
347 As discussed above, in reviewing proposed merger transactions that involve spectrum aggregation, the
Commission examines market participants’ holdings of suitable spectrum to ensure that there is sufficient spectrum
available to competitors.
348 The PCS spectrum includes the 10 megahertz of spectrum obtained by Sprint Nextel as part of the 800 megahertz
rebanding order. See Verizon Wireless- SpectrumCo Order, FCC 12-95, at ¶ 63 n.151.
349 See Verizon Wireless- SpectrumCo Order, FCC 12-95, at ¶ 59; Sprint Nextel-Clearwire Order, 23 FCC Rcd at
17591-92 ¶ 53.

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Commission seeks comment on whether to modify the screen to include additional bands.350
106.
The spectrum screen identifies markets for particular focus in its case-by-case analysis to
determine the likelihood that the transfer of spectrum may increase competitors’ costs to increase capacity
or foreclose competitors or potential entrants from expanding capacity, deploying next-generation
services, or entering the market.351 The Commission can condition approval of a transaction on the
divestiture of licenses in markets where necessary to find an application serves the public interest. 352 The
Commission is not, however, limited in its consideration of potential competitive harms in proposed
transactions solely to markets identified by the spectrum screen.353

Table 16

Spectrum Attributable in the Spectrum Screen

Spectrum Band

Megahertz

Cellular
50
SMR*
26.5
Broadband PCS**
130
700 MHz***
80
AWS-1****
90
BRS*****
55.5
WCS
20
* Including 19 megahertz of SMR spectrum and 7.5 megahertz of spectrum that is available for SMR as
well as other services.354
** Includes 10 megahertz of 1910-15/1990-95 MHz spectrum held by Sprint as a result of the 800 MHz
Band Reconfiguration.355
***Includes 10 megahertz of Upper 700 MHz D Block spectrum.356
**** AWS-1 is not attributable in markets where Federal Government users have not been relocated.
***** BRS is not attributable in markets where previous BRS licensees have not been transitioned. 357

107.
In both the 2011 AT&T-Qualcomm Order and in the 2012 Verizon Wireless- SpectrumCo

350 Mobile Spectrum Holdings NPRM, FCC 12-119, at ¶ 28.
351 See Verizon Wireless- SpectrumCo Order, FCC 12-95, at ¶ 72.
352 See, e.g., AT&T-Cingular Order, 19 FCC Rcd at 21577 ¶140, 21620-21 ¶ 255.
353 See Verizon Wireless- SpectrumCo Order, FCC 12-95, at ¶ 48; Mobile Spectrum Holdings NPRM, FCC 12-119, at
¶ 8.
354 See Appendix A, infra. The Commission has recently indicated that, as the provision of mobile broadband
services becomes increasingly central to wireless transactions it may be appropriate to reduce the amount of suitable
SMR spectrum from 26.5 megahertz to 14 megahertz to reflect the portion of SMR spectrum through which mobile
broadband service can be provided. See AT&T-Qualcomm Order, 26 FCC Rcd at 17607 ¶ 42. The Commission is
seeking comment on how much SMR spectrum is suitable and available in the near term for mobile broadband
services. Spectrum Holdings NPRM, FCC 12-119, at ¶ 29.
355 See Verizon Wireless-SpectrumCo Order, FCC 12-95, at ¶ 63 n. 151.
356 The Upper 700 MHz D Block is to be reallocated for public safety service rather than commercial service. The
Commission is seeking comment on whether this spectrum should remain relevant to its mobile spectrum holdings
analysis, Mobile Spectrum Holdings NPRM, FCC 12-119, at ¶ 29.
357 55.5 megahertz out of a total 74 megahertz of BRS is attributable where transitioned. See Sprint/Clearwire
Order
, 23 FCC Rcd at 17598-99 ¶ 70. To date, the Commission has declined to include in its analysis several other
spectrum bands—including EBS, MSS/ATC, AWS-2/3, WCS, 3650-3700 MHz, and 2155-2175 MHz. See AT&T-
Qualcomm Order
, 26 FCC Rcd at 17606 ¶ 39; see also Verizon Wireless- SpectrumCo Order, FCC 12-95, at ¶ 63.

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Order, the Commission declined to make any changes to the current spectrum screen.358 However, in the
Verizon Wireless-Spectrum Co Order, the Commission stated it would initiate a proceeding to review its
policies governing mobile wireless spectrum holdings to ensure that they fulfill statutory objectives, given
changes in technology, spectrum availability, and the marketplace.359 On September 28, 2012, the
Commission released the Mobile Spectrum Holdings NPRM to review its policies to ensure that its rules
“are clear and predictable and promote the competition needed to ensure a vibrant, world-leading,
increasingly mobile economy driven by innovation.”360 As noted above, one of the issues the
Commission addresses is whether and how to modify the current spectrum screen.361
108.
Secondary Market Transactions and Spectrum Leasing. The Commission also has
adopted secondary market policies to facilitate spectrum access. Subject to the Commission’s approval,
which includes review of spectrum aggregation for potential competitive harm, licensees may buy and
sell licenses, in whole or in part (through partitioning and/or disaggregation), on the secondary market.
As part of its secondary market policies, the Commission also permits mobile wireless licensees to lease
all or a portion of their spectrum usage rights for any length of time within the license term, and over any
geographic area encompassed by the license.362 The Commission’s secondary market policies allow
existing licensees to obtain additional spectrum capacity and expand their coverage areas to better meet
the needs of their customers, while also providing new entrants with additional opportunities to access the
spectrum so that they can compete. The National Broadband Plan recommended that the Commission
spur further development and deployment of opportunistic uses across more radio spectrum. Consistent
with that recommendation, in November 2010 the Commission released a Notice of Inquiry seeking
comment on the variety of ways in which dynamic spectrum access radios and techniques can promote
more intensive and efficient use of the radio spectrum, and the potential of these technological
innovations to enable more effective management of spectrum through use of secondary market
arrangements. Geo-location databases with policy information, and the use of small cell technologies
have the potential to enable efficient spectrum sharing in both the existing commercial bands, as well as
those bands designated for federal and non-federal use such as the 3.5 GHz and 1755 MHz bands.
109.
The Commission’s spectrum leasing policies provide for two types of spectrum leasing
agreements: spectrum manager leases363 and de facto transfer leases.364 Such leasing agreements can
provide parties with the opportunity to negotiate voluntary, market-driven leasing arrangements that
enable other providers or new entrants to provide facilities-based services to the public or other end-

358 AT&T-Qualcomm Order, 26 FCC Rcd at 17607 ¶ 42 (the Commission approved the assignment of 11 licenses in
the D and E Block of the Lower 700 MHz band from Qualcomm to AT&T); Verizon Wireless- SpectrumCo Order,
FCC 12-95, at ¶ 63 (the Commission approved the assignment and/or exchange of a significant portion of AWS-1
spectrum to Verizon Wireless from Cox, Leap, Comcast, Time Warner Cable, and Bright House Networks).
359 See Verizon Wireless- SpectrumCo Order, FCC 12-95, at ¶ 63.
360 Mobile Spectrum Holdings NPRM, FCC 12-119, at ¶ 1.
361 Mobile Spectrum Holdings NPRM, FCC 12-119, at ¶ 34.
362 Ninth Report, 19 FCC Rcd at 20631 ¶ 84.
363 Spectrum manager leases require the licensee to retain both de jure control and de facto control over the spectrum
that it leases, however, it does not require prior Commission approval. These leases may be implemented once the
parties submit notifications satisfying the applicable requirements. See Promoting Efficient Use of Spectrum
Through Elimination of Barriers to the Development of Secondary Markets, WT Docket No. 00-230, Report and
Order and Further Notice of Proposed Rulemaking
, 18 FCC Rcd 20604, 20657 ¶ 119 (2003) (“Secondary Markets
Report and Order
”).
364 Under de facto transfer leases, the licensee retains de jure control of the license while transferring de facto
control and associated rights of the leased spectrum to the spectrum lessee. The parties must file an application for a
de facto transfer lease and obtain prior Commission approval before commencing operations.

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users.365 Leasing provides lessees the flexibility to lease a small or large quantity of spectrum for short or
longer time periods depending on their business needs. 366 The Commission applies its general
competition policies to spectrum leasing arrangements, with spectrum being attributed, with limited
exceptions, to both lessee and lessor.
110.
Spectrum leasing has been used frequently in a number of the Commission’s spectrum
bands, such as paging or narrowband PCS, where there are licensees and third parties making businesses
out of leasing spectrum. Spectrum leasing arrangements in the spectrum bands that are the focus of this
Report, however, have been employed more sparingly. For instance, parties have at times entered into
short-term spectrum manager lease arrangements involving spectrum that is also the subject of an
application to assign the underlying spectrum licenses. Such arrangements enable the lessee to gain
interim access to the spectrum during the pendency, and subject to approval, of the underlying assignment
application.367 Spectrum manager leasing arrangements in these spectrum bands also have provided
licensees the flexibility to provide contractually for certain post-transaction obligations. For instance,
such arrangements have been used by sellers of spectrum to continue to provide roaming services on a
transitional basis post-transaction before buyers use the spectrum to launch new services.368 Spectrum
manager leasing arrangements also have been relied upon to facilitate transition of customers by means of
a temporary leaseback of spectrum once it has been transferred to a new entity to ensure that the original
licensee can move existing customers using that spectrum to replacement spectrum in a non-disruptive
fashion. This use can often occur where two existing licensees are swapping spectrum within the same
geographic market.369 Short-term de facto transfer leases also have been used for post-transaction
customer transition purposes, as, for example in the recent transaction between T-Mobile License LLC
and Cellco Partnership d/b/a Verizon Wireless involving AWS-1 licenses.370
2.

Current Spectrum Transactions

111.
Since the Fifteenth Report, there have been developments regarding several major
proposed transactions filed with the Commission that involved the transfer of spectrum licenses only,
rather than network assets or customers, from one mobile wireless licensee to another. Such transactions
primarily involved an assignment of spectrum either to or from AT&T or Verizon Wireless. The first of
the spectrum-only transactions involving AT&T involved the Commission’s approval in late 2011 of the
assignment of 11 licenses in the D and E Block of the Lower 700 MHz band from Qualcomm to AT&T,

365 See Secondary Markets Use Report and Order, 18 FCC Rcd at 20625-26 ¶ 44. Spectrum lessees leasing CMRS
spectrum must disclose to the Commission whether they hold direct or indirect interests (of 10 percent or more) in
any entity that already has access to 10 megahertz or more of CMRS spectrum (through a license or lease) in the
same geographic area. We also require leasing parties to indicate whether the lease arrangement reduces the number
of CMRS competitors in the market. Such disclosure requirements help to ensure market transparency, and also
help the Commission to distinguish those leases that may warrant further inquiry to assess whether there is a
competitive impact from the likely vast majority of leases that will have no competitive impact and require no
further inquiry. See Secondary Markets Report and Order, 18 FCC Rcd at 20659 ¶ 123.
366 See Secondary Markets Report and Order, 18 FCC Rcd at 20625-26 ¶ 44.
367 See, e.g., FCC Application or Notification for Spectrum Leasing Arrangement, FCC Form 608, Cellco
Partnership, Licensee, Cricket Communications, Inc., Lessee, ULS File No. 0005070267 (filed Feb. 10, 2012); FCC
Application or Notification for Spectrum Leasing Arrangement, FCC Form 608, Cricket License Company, LLC,
Licensee, Cellco Partnership, Lessee, ULS File No. 0005085825 (filed Feb. 21, 2012).
368 See, e.g., FCC Application or Notification for Spectrum Leasing Arrangement, FCC Form 608, Wireless Co,
L.P., Licensee, New Cingular Wireless PCS, LLC, Lessee, ULS File No. 0005182011 (filed Apr. 27, 2012); FCC
Application or Notification for Spectrum Leasing Arrangement, FCC Form 608, Wireless Co, L.P., Licensee, New
Cingular Wireless PCS, LLC, Lessee, ULS File No. 0005182023 (filed Apr. 27, 2012).
369 See FCC Encyclopedia,http://www.fcc.gov/encyclopedia/spectrum-leasing"> http://www.fcc.gov/encyclopedia/spectrum-leasing. (visited Nov. 30, 2012).
370 See ULS File No. 0004993617.

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subject to certain conditions.371 In addition, in April 2012, the Commission consented to the transfer of
13 AWS-1 licenses in 20 full and partitioned portions of 27 AWS-1 licenses from AT&T to T-Mobile.372
This transaction was the result of a break-up provision between AT&T and Deutsche Telekom for the
proposed, but ultimately withdrawn, application for the sale of T-Mobile to AT&T.373 T-Mobile
acquired 10-20 megahertz of spectrum in 128 CMAs covering 121 million people (or approximately 39
percent of the U.S. population).374 In August 2012, AT&T was a party to separate applications seeking
Commission consent to assign 51 WCS licenses and 12 AWS-1 licenses from Comcast, Horizon, and
Nextwave to AT&T. On August 31, 2012, the Commission consolidated the review of these AT&T
applications.375 On September 14, 2012, an additional application was filed to assign two WCS licenses
from San Diego Gas & Electric to AT&T, which was also consolidated. The Commission approved the
acquisition of all these respective licenses on December 18, 2012.376
112.
The spectrum-only transactions involving Verizon Wireless included a series of
interrelated assignments and exchanges with Leap Wireless, SpectrumCo, Cox, and T-Mobile. In
November 2011, Verizon Wireless and Leap filed applications seeking Commission consent to assign
certain 700 MHz, AWS, and PCS licenses between the two applicants. Specifically, the parties sought to
assign, from Verizon Wireless to Leap, the 700 MHz Lower Band A Block license for the Chicago BEA,
and to assign, from Leap to Verizon Wireless, 23 PCS and 13 AWS-1 licenses in full; disaggregated
portions of one PCS license and one AWS-1 license; and partitioned portions of five AWS-1 licenses.377
Shortly thereafter, in early 2012, Verizon Wireless, SpectrumCo, and Cox Wireless filed two separate
applications seeking Commission consent to assign 122 AWS-1 licenses to Verizon Wireless from
SpectrumCo, and 30 AWS-1 licenses to Verizon Wireless from Cox.378 In June 2012, Verizon Wireless
and T-Mobile filed applications for the assignment and exchange of a number of full and partial AWS-1

371 See AT&T-Qualcomm Order, 26 FCC Rcd at 17591 ¶ 5.
372 Applications of T-Mobile License LLC, AT&T Mobility Spectrum LLC and New Cingular Wireless PCS, LLC
for Consent To Assign AWS-1 Licenses, WT Docket No. 12-21, Order, 27 FCC Rcd 4124 (WTB 2012) (T-Mobile-
AT&T Order
).
373 See T-Mobile-AT&T Order, 27 FCC Rcd at 4125 ¶ 3; Applications of AT&T Inc. and Deutsche Telekom AG For
Consent To Assign or Transfer Control of Licenses and Authorizations, WT Docket No. 11-65, Order, 26 FCC Rcd
16184 (WTB 2011); AT&T Ends Bid to Add Network Capacity through T-Mobile USA Purchase, Press Release,
AT&T, Dec. 19, 2011, available ahttp://www.att.com/gen/press-room?pid=22146&cdvn=news&newsarticleid=33560">t http://www.att.com/gen/press-
room?pid=22146&cdvn=news&newsarticleid=33560. (visited Nov. 19, 2012).
374 ULS File Nos. 0005005682, 0005005685, 0005005687 and 0005016840.
375 AT&T Seeks FCC Consent to the Assignment and Transfer of Control of WCS and AWS-1 Licenses, WT
Docket No. 12-240, Public Notice, DA 12-1341 (WTB 2012). As part of its application, AT&T and Nextwave also
have applied for the transfer of control of certain NextWave subsidiaries to AT&T. AT&T has also proposed to
acquire WCS spectrum from San Diego Gas & Electric Company in CMA 18 (San Diego, California), review of
which has been consolidated with the other pending WCS applications. Public Notice Consolidating Review of
Additional Application, WT Docket No. 12-240, Public Notice, DA 12-1513 (WTB 2012).
376 See Applications of AT&T Mobility Spectrum LLC, New Cingular Wireless PCS, LLC, Comcast Corporation,
Horizon Wi-Com, LLC, NextWave Wireless, Inc., and San Diego Gas & Electric Company, WT Docket No. 12-
240, Memorandum Opinion and Order (rel. Dec. 18, 2012).
377 Verizon Wireless and Leap Wireless Seek FCC Consent to the Exchange of Lower 700 MHz Band A Block,
AWS-1, and Personal Communications Service Licenses,” ULS File Nos. 0004942973, 0004942992, 0004952444,
0004949596, 0004949598, Revised Pleading Cycle Established, Public Notice, 27 FCC Rcd 367 (WTB 2012).
Verizon Wireless acquired two of the partitioned AWS-1 licenses from Savary Island and the remaining licenses
from Cricket License Company.
378 CellCo Partnership d/b/a Verizon Wireless, SpectrumCo, LLC, and Cox TMI Wireless, LLC Seek FCC Consent
to the Assignment of AWS-1 Licenses, ULS File Nos. 0004993617 and 0004996680, Pleading Cycle Established,
Public Notice, 27 FCC Rcd 360 (WTB 2012).

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licenses, including 47 licenses that Verizon Wireless had proposed to acquire from SpectrumCo, Cox, and
Leap Wireless.379 On August 3, 2012, the Commission consolidated the review of these Verizon Wireless
applications380 and on August 24, 2012 the Commission consented to the various assignments of spectrum
subject to certain conditions.381
113.
In addition to larger spectrum-only transactions, there have been several smaller
transactions in which larger providers have acquired spectrum licenses in a small number of CMAs from
small or regional licensees. Many of these transactions also included assignments of spectrum to AT&T
and Verizon Wireless. From the end of 2010 through December 2012, the Commission consented to
close to 60 applications filed by AT&T in which it sought to acquire PCS, AWS, Cellular, and 700 MHz
licenses. Between November 2010 and mid-June 2011, AT&T filed applications associated with nine
separate transactions through which it acquired 700 MHz licenses from small or regional licensees.382 For
example, in May 2011, AT&T filed an application to acquire a 700 MHz B Block license from Maxima in
two counties and one CMA in Louisiana.383 Also, in June 2011, AT&T filed an application to acquire 12
megahertz of 700 MHz spectrum from Kennebec in two counties and one CMA in Iowa and Nebraska.384
In 2012, AT&T filed numerous additional applications to acquire 700 MHz spectrum, among these, an
application for consent to the assignment of eight Lower 700 MHz B Block licenses from Cox.385
114.
During 2011 and 2012, the Commission consented to approximately 30 applications filed
by Verizon Wireless seeking to acquire PCS, AWS and Cellular spectrum from small or regional
licensees. For example, in February 2011, Verizon Wireless filed an application to acquire a 10
megahertz PCS F Block license from 3 Rivers Telephone Cooperative, Inc. covering 5 counties and 3
CMAs in Montana.386 The following February, Verizon Wireless filed an application to acquire a 20
megahertz AWS B Block license from 3 Rivers in 14 counties in 6 Montana CMAs.387 In addition,
nationwide service providers filed applications to transfer spectrum licenses among those providers: for

379 CellCo Partnership d/b/a Verizon Wireless, and T-Mobile License LLC Seek FCC Consent to the Assignment of
Advanced Wireless Service Licenses, WT Docket No. 12-175, Public Notice, 27 FCC Rcd 7169 (WTB 2012).
380 Wireless Telecommunications Bureau Consolidates Review of Verizon Wireless–SpectrumCo–Cox, Verizon
Wireless–Leap Wireless, and T-Mobile–Verizon Wireless Transactions, WT Docket Nos. 12-4 and 12-175, ULS
File Nos. 0004942973, etc., Public Notice, DA 12-1266 (rel. Aug. 3, 2012).
381 See Verizon Wireless-SpectrumCo Order, FCC 12-95, at ¶ 6.
382 See ULS File Nos. 0004681773 and 0004681771, consummated Feb. 22, 2012; ULS File Nos. 0004544863 and
0004544869; ULS File No. 0004621016, consummated Mar. 7, 2012; ULS File No. 0004643747, consummated
Mar. 9, 2012; ULS File No. 0004635440, consummated Mar. 13, 2012; ULS File No. 0004777216, consummated
Mar. 29, 2012; ULS File No. 0004448347, consummated Mar. 30, 2012.
383 See ULS File No. 0004699707, consummated Mar. 21, 2012. See also, “AT&T Mobility Spectrum LLC and
Maxima International, LLC Seek FCC Consent to the Assignment of One Lower 700 MHZ Band B Block License,”
Public Notice, 26 FCC Rcd 7847 (WTB 2011).
384 See ULS File No. 0004774053, consummated Feb. 8, 2012. See also, “Wireless Telecommunications Bureau,
Assignment of License Authorization Applications, Transfer of Control of Licensee Applications, and De Facto
Transfer Lease Applications, and Designated Entity Reportable Eligibility Event Applications Accepted for Filing,”
Public Notice (WTB Accepted for Filing PN), rel. Aug. 10, 2011.
385 AT&T Mobility Spectrum LLC and Cox TMI Wireless, LLC Seek FCC Consent to the Assignment of Eight
Lower 700 MHz Band B Block Licenses, ULS File No. 0005155794, Pleading Cycle Established, Public Notice, 27
FCC Rcd 5213 (WTB 2012). See also for additional 700 MHz applications filed by AT&T, ULS File No.
0005150801, consummated July, 24, 2012; ULS File No. 0005231760; ULS File No. 0005262760; ULS File No.
0005286787; ULS File No. 0005295055; ULS File No. 0005296026; ULS File No. 0005304258; ULS File No.
0005293645; ULS File No. 0005323094.
386 See ULS File No. 0004608390, consummated June 20, 2011. WTB Accepted for Filing PN, rel. Mar. 16, 2011.
387 See ULS File No. 0005046789, consummated July 11, 2011. WTB Accepted for Filing PN, rel. Mar. 7, 2012.

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instance, AT&T and Verizon Wireless transferred Cellular spectrum licenses between the two companies,
Verizon Wireless and Sprint transferred PCS spectrum licenses.388
115.
In addition to the two largest service providers, T-Mobile as well as certain small or
regional providers also filed applications with other parties to assign or transfer spectrum. T-Mobile filed
a number of applications to acquire or exchange AWS or PCS spectrum. For instance, in June 2012, T-
Mobile acquired 20 megahertz of AWS spectrum from Cleveland Unlimited in 10 counties and 3 CMAs
in Ohio.389 The regional carrier US Cellular participated in a large number of transactions during 2011
and 2012 compared to most other regional providers, mainly to acquire 700 MHz licenses. These
included an April 2012 application for 12 megahertz of lower 700 MHz A Block spectrum from Cox in
30 CMAs throughout five Midwestern states.390
3.
Analysis of Spectrum Holdings Overall
116.
Because access to spectrum is necessary for the provision of mobile wireless service, the
different spectrum holdings of providers potentially affect their ability to compete effectively. These
spectrum holdings include licenses obtained when the spectrum was first licensed for mobile services,
such as through the original Cellular assignments or through the auction process (e.g., PCS, AWS, or 700
MHz spectrum), as well as spectrum obtained through various secondary market transactions. The
following Tables and Charts update the information included in past Reports.391
117.
Verizon Wireless and AT&T each hold significant amounts of 700 MHz, Cellular,
broadband PCS, and AWS spectrum. Sprint has substantial holdings of PCS licenses, as well as the SMR
spectrum acquired through its merger with Nextel in 2005. T-Mobile’s spectrum holdings are in both the
PCS and AWS bands. 392 Uniquely, the spectrum holdings of Clearwire, which is affiliated with
Sprint,393 fall in the 2.5 GHz band – where it holds the predominant share of BRS spectrum, and has
access to much of the EBS spectrum through spectrum leasing arrangements. 394 Regional provider US

388 See WTB Accepted for Filing PN, rel. Oct. 26, 2011 (AT&T/Verizon Wireless Swap Applications); WTB
Accepted for Filing PN
, rel. Nov. 23, 2011(Verizon Wireless/Sprint).
389 See ULS File No. 000 5271445. WTB Accepted for Filing PN, rel. Mar. Jul. 18, 2012.
390 See United States Cellular Corporation and Cox TMI Wireless, LLC seek FCC consent to the Assignment of
Four Lower 700 MHz Band A Block Licenses, ULS File No 000 5167598, Pleading Cycle Established, Public
Notice, 27 FCC Rcd 526 (WTB 2012).
391 See infra Tables 17-18 and Charts 4-5 The data in these tables and charts generally reflect major transactions
consummated through August 2012. As in past Reports, the data in these tables include EBS leases, and do not
include MSS or WCS spectrum holdings. See, e.g., Fifteenth Report, 26 FCC Rcd at 9822 ¶ 269 – 9825 ¶ 276 &
Table 26. As discussed above, the Commission is considering which spectrum bands should be considered in its
mobile spectrum holdings policy. See Mobile Spectrum Holdings NPRM, FCC 12-119, at ¶ 26.
392 However, SunCom Wireless License Company, LLC, a wholly owned subsidiary of T-Mobile, holds one Cellular
license for CMA 629-South Carolina 5-Georgetown (call sign KNKN557).
393 See Section III.B.1, Facilities-Based Providers, supra. Sprint holds a 48.6 percent interest in Clearwire. See
Clearwire Corporation SEC Form 10-K Filed February 16, 2012 at 4. On Nov. 15, 2012, Sprint sought approval to
increase its stake in Clearwire from approximately 48% to over 50% through its acquisition of Eagle River’s stake in
Clearwire. This pro forma application was consented to on Dec. 6 and Dec. 7, 2012. In addition, on Nov. 11th,
2012, SoftBank filed a series of applications seeking Commission approval to its proposed acquisition of Sprint
Nextel. Further, on Dec. 17, 2012, Sprint and Clearwire announced that Sprint would acquire the remaining stock of
Clearwire that it did not already own, and on Dec. 20, 2012, SoftBank and Sprint filed an amendment to supplement
their previously filed applications.

394 As noted above, while EBS licensees may lease excess capacity to commercial operators, various elements of the
EBS licensing regime complicate the use of EBS spectrum for commercial purposes. See, III.F. 3 Analysis of
Spectrum Holdings Overall, ¶ 112, supra.

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Cellular holds Cellular, 700 MHz, PCS, and AWS licenses, while MetroPCS and Leap chiefly hold PCS
and AWS spectrum. Finally, as the charts below reveal, smaller providers also hold Cellular, 700 MHz,
SMR, PCS, AWS, and BRS licenses, primarily in the less populated parts of the United States.
118.
Five providers together – Verizon Wireless, AT&T, T-Mobile, as well as Sprint and
Clearwire – hold close to 80 percent of all spectrum, measured on a MHz-POPs basis, that is potentially
usable for the provision of mobile wireless services.395 Table 18 shows megahertz holdings for each
provider, weighted by population. Finally, Chart 4 is a graph of providers’ spectrum holdings by
frequency band, measured on a MHz-POPs basis.

Table 17

Percentage Spectrum Holdings, Measured on a MHz-POPs Basis

by Provider, by Frequency Band396

EBS

Cellular

SMR

AWS

700

PCS (1.9

BRS (2.5

Leases

Licensee

(850
(800/900
(1.7/2.1

MHz

GHz)

GHz)

(2.5

MHz)

MHz)

GHz)

GHz)

Verizon Wireless
42.0%
48.1%
0.0%
15.7%
35.5%
0.0%
0.0%
AT&T
35.9%
43.6%
0.0%
26.4%
6.2%
0.0%
0.0%
Sprint Nextel
0.0%
0.0%
97.2%
27.1%
0.0%
0.0%
0.0%
Clearwire
0.0%
0.0%
0.0%
0.0%
0.0%
85.4%
61.1%
T-Mobile
0.0%
0.1%
0.0%
19.6%
34.6%
0.0%
0.0%
MetroPCS
0.5%
0.0%
0.0%
2.6%
6.1%
0.0%
0.0%
US Cellular
2.9%
4.2%
0.0%
2.1%
2.0%
0.0%
0.0%
Leap
0.6%
0.0%
0.0%
2.3%
6.6%
0.0%
0.0%
Other397
18.1%
4.1%
2.8%
4.2%
9.0%
14.6%
38.9%
* Estimates in Table 17 include all transactions consummated as of August 15, 2012, as well as the transactions
approved in the Verizon Wireless-SpectrumCo Order. Estimates do not include WCS spectrum that was added in the
spectrum screen in December 2012.









395 See Table 17, supra; Table 18, infra.
396 Spectrum tables include 18 megahertz of BRS and 112.5 megahertz of EBS not currently attributable in the
spectrum screen. As noted above, while EBS licensees may lease excess capacity to commercial operators, various
elements of the EBS licensing regime complicate the use of EBS spectrum for commercial purposes. SunCom
Wireless License Company, LLC, a wholly owned subsidiary of T-Mobile, holds one Cellular license.
397 Total EBS spectrum includes 112.5 megahertz of spectrum, and “Other” EBS spectrum represents spectrum held
by all other providers (including educational institutions and providers such as Digital Bridge) and EBS white space.
Total BRS spectrum includes 73.5 megahertz of spectrum and “Other” BRS spectrum represents spectrum held by
all other providers (such as Digital Bridge) and BRS white space. In the context of transactions, with respect to
both BRS and EBS spectrum, the Commission counts only 55 megahertz of BRS spectrum as suitable and available
for mobile telephony/broadband services. See Sprint Nextel Corporation and Clearwire Corporation, WT Docket
No. 08-94, Memorandum Opinion and Order, 23 FCC Rcd 17570 (2008).

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Table 18

Population-Weighted Average Megahertz Holdings

by Provider, by Frequency Band398

EBS

Cellular

SMR

PCS

AWS

BRS

700

Leases

Licensee

(850
(800/900
(1.9
(1.7/2.1
(2.5

MHz

(2.5

MHz)

MHz)

GHz)

GHz)

GHz)

GHz)

Verizon Wireless
29.4
25.2
0.0
20.6
32.1
0.0
0.0
AT&T
25.2
22.9
0.0
34.6
5.6
0.0
0.0
Sprint Nextel
0.0
0.0
17.5
35.5
0.0
0.0
0.0
Clearwire
0.0
0.0
0.0
0.0
0.0
62.8
68.7
T-Mobile
0.0
0.0
0.0
25.7
31.3
0.0
0.0
MetroPCS
0.3
0.0
0.0
3.4
5.5
0.0
0.0
US Cellular
2.1
2.2
0.0
2.7
1.8
0.0
0.0
Leap
0.4
0.0
0.0
3.0
6.0
0.0
0.0
Other
12.7
2.1
0.5
5.4
8.2
10.7
43.8
* Estimates in Table 18 do not include the WCS spectrum that was added to the spectrum screen in December 2012,
5.4 billion MHz-Pops of which is held by AT&T.

Chart 4

Mobile Wireless Provider Spectrum Holdings by Band, Weighted by Population399




398 Weighted average megahertz is the sum of the provider’s MHz-POPs, divided by the U.S. population (2010
Census).
399 Estimates do not include the WCS spectrum that was added to the spectrum screen in December 2012, 5.4 billion
MHz-Pops of which is held by AT&T.

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4.

Analysis of Spectrum Characteristics

119.
In addition to considering the quantity of spectrum to which providers have access, we
also consider the characteristics of particular spectrum that is available for licensing and assignment. As
discussed below, spectrum bands vary in their propagation characteristics, and service providers may
make use of different bands depending on the nature of the service, geography, density, or other factors in
their network build-out. Spectrum below 1 GHz is considered most suitable for establishing base network
coverage, especially for rural area and in-building coverage, whereas higher frequencies, which are
typically available in wider bandwidths, often can best enable providers to increase capacity where
needed, especially to provide higher data rates. In particular, providers that obtain coverage by deploying
services in below-1-GHz spectrum often use spectrum from 1 GHz through 2.7 GHz for additional
capacity, whereas operators who only have access to high frequency spectrum use it for both coverage
and capacity. Thus, as a general matter, a provider is best positioned if it holds complementary spectrum
bands, i.e., both higher and lower frequency bands. In this sense, to a certain degree, higher-frequency
spectrum may be made more valuable by being combined with lower-frequency spectrum, and vice versa.
We discuss below the technical differences between spectrum at lower and higher frequencies as well as
the spectrum holdings of mobile wireless providers in both lower and higher frequency bands.
120.
In the United States, there are frequency bands suitable for mobile broadband services at
very different frequencies: the 700 MHz, SMR, and Cellular bands fall below 1 GHz,400 while the AWS,
PCS, BRS, and EBS bands – which run from 1.7 to 2.5 GHz – are above 1 GHz. The different
characteristics of these respective bands affect how providers use them to deliver mobile services to
consumers. Two licensees may hold equal quantities of bandwidth but nevertheless hold very different
spectrum assets. Some commenters note that access to spectrum is important to competition.401 In
addition, several parties have commented on the importance of access to spectrum below 1 GHz.402
121.
As noted above, it is well established that lower frequency bands possess certain more
favorable spectrum propagation characteristics than spectrum in higher bands that make them particularly
suitable for establishing baseline, or foundational, network coverage.403 In particular, “low-band”
spectrum can provide superior coverage both over larger geographic areas, through adverse climates and
terrain, and inside buildings and vehicles.404

400 In addition to the spectrum bands below 1 GHz authorized for licensed use, the Commission has recently taken
steps to free up vacant spectrum between TV channels – called “white spaces” – for unlicensed use. See Unlicensed
Operation in the TV Broadcast Bands, ET Docket No. 04-186, Additional Spectrum for Unlicensed Devices Below
900 MHz and in the 3 GHz Band, ET Docket No. 02-380, Second Memorandum Opinion and Order, 25 FCC Rcd
18661 (2010) (TVWS Second MO&O).
401 See MetroPCS Comments at 35; Leap Reply Comments at 2; Council Tree Comments at 1.
402 See Letter from Steven K. Berry, President & CEO, Rural Carriers Association—The Competitive Carriers
Association, to Marlene H. Dortch, Secretary, FCC, WT Docket No. 11-186 (filed May 24, 2012) (T-Mobile May
24, 2012 Ex Parte Letter
) at 9 (citing AT&T-Qualcomm Order at ¶ 49; T-Mobile Comments at 5 (citing to
November 11 Public Notice in WT Docket No. 11-186, AT&T-Qualcomm Order at ¶ 49, and Fifteenth Report 26
FCC Rcd at 9833-34 ¶ 292). Other commenters question the differentiation of spectrum above and below 1 GHz.
See Verizon Comments at 125-26; Telecommunications Industry Association Comments at 24; AT&T Reply
Comments at 17-18.
403 See, e.g., 700 MHz Band Second R&O, 22 FCC Rcd at 15349 ¶ 158, 15354-55 ¶ 176, 15400-01 ¶ 304
(recognizing the excellent propagation characteristics of 700 MHz band spectrum); White Spaces Report and Order,
23 FCC Rcd at 16807, 16820-21 ¶ 32 (stating that propagation characteristics of the TV bands enable service at
greater ranges than in the 2.4 GHz band).
404 See Fifteenth Report, 26 FCC Rcd at 9833-34 ¶ 292. In addition, in the ATT-Qualcomm Order, the Commission
in recognizing the different frequency band characteristics, stated that “[t]he more favorable propagation
characteristics of lower frequency spectrum (i.e., spectrum below 1 GHz) allow for better coverage across larger
(continued….)

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122.
With respect to wide area coverage, the Commission has noted, in particular with respect
to 700 MHz band spectrum, that lower frequency spectrum has “excellent propagation” characteristics
that, in contrast to higher frequency bands such as PCS and AWS spectrum, “make it ideal for delivering
advanced wireless services to rural areas.”405 In addition, certain providers have noted the advantages of
lower frequency spectrum for coverage in rural areas.406 Low-band spectrum can provide the same
geographic coverage, at a lower cost, than higher-frequency bands, such as the 1.9 GHz PCS band, the
1.7/2.1 GHz AWS band, and the 2.5 GHz band.407 In order to provide equivalent service coverage, a
licensee that exclusively or primarily holds spectrum in a higher frequency range generally must construct
more cell sites (at additional cost) than a licensee with primary holdings at a lower frequency. For
example, T-Mobile has estimated that build out of 700 MHz spectrum would require approximately 25 to
30 percent of the sites needed to build out a comparable geographic area using AWS-1 spectrum.408 The
National Institute of Standards and Technology (NIST) developed a propagation model comparing the
700 MHz, 1.9 GHz, and 2.4 GHz spectrum bands.409 Similarly, an analysis using the Okumura-Hata
model shows that rural, suburban, and urban cell sizes at 700 MHz are more than three times larger than
cells in the PCS band.410
123.
With respect to critical in-building coverage issues, wireless providers such as Verizon
Wireless and AT&T have recognized the relative advantages of deploying lower frequency spectrum in
urban areas due to its superior in-building coverage characteristics.411 For instance, to improve its
(Continued from previous page)
geographic areas and inside buildings,” when compared with spectrum above 1 GHz. AT&T-Qualcomm Order, 26
FCC Rcd at 17610 ¶ 49.
405 700 MHz Second R&O, 22 FCC Rcd at 15349 ¶ 158. See also, AT&T-Qualcomm Order, 26 FCC Rcd at 17610-
11 ¶ 49 (discussing proceedings in which the Commission noted the value of lower frequency spectrum making it
ideal for services to rural areas); TVWS Second MO&O, 25 FCC Rcd at 18662 ¶ 1 (the Commission noted that this
particular spectrum has excellent propagation characteristics that allow signals to reach farther and penetrate walls
and other structures).
406 See AT&T-Qualcomm Order, 26 FCC Rcd at 17610-11 ¶ 49 (discussing AT&T’s statement in its bid to acquire
T-Mobile that T-Mobile customer access to spectrum below 1 GHz would enable extended rural coverage);
Fifteenth Report, 26 FCC Rcd at 9833 n.843.
407 See Section III.E, Entry and Exit Conditions, supra (a new entrant utilizing spectrum only in higher frequency
bands may need to deploy more infrastructure, including cell sites, to cover the same land area and therefore incur
higher cell site costs, compared to providers using lower band spectrum.
One network cost study estimates that the
total capital cost of deploying a single cell site, on average, can be upwards of $200,000; See Peter Cramton, 700
MHz Device Flexibility Promotes Competition
, Aug. 9, 2010, at 2, available at
http://www.cramton.umd.edu/papers2010-2014/cramton-700-mhz-device-flexibility-promotes-competition.pdf">http://www.cramton.umd.edu/papers2010-2014/cramton-700-mhz-device-flexibility-promotes-competition.pdf
(visited Nov. 30, 2012), (“The 700 MHz and Cellular bands allow a region to be covered with many fewer cell sites
and thus at much lower cost.”) (visited Aug. 30, 2012); GSM World, Impact of Spectrum Allocation,
http://www.gsmworld.com/our-work/public-policy/spectrum/digital-dividend/impact_of_spectrum_allocation.htm">http://www.gsmworld.com/our-work/public-policy/spectrum/digital-dividend/impact_of_spectrum_allocation.htm
(visited Feb. 23, 2011) (“Operators need fewer cells at lower frequencies; 3G at 700 MHz needs about 30 percent of
cells to offer the same coverage as 3G at 2100 MHz”); Morgan Stanley Mobile Internet Report, at 313-314 (lower
spectrum allocations, such as 700 MHz spectrum, help lower capital expenditures by broadening reach).
408 T-Mobile Comments, GN Docket No. 09-51 et al., NBP PN #26, at 11 (filed Dec. 22, 2009).
409 See NIST, 700 MHz Band Channel Propagation Modelhttp://www.nist.gov/itl/antd/emntg/700mhz.cfm">, http://www.nist.gov/itl/antd/emntg/700mhz.cfm (visited
Aug. 29, 2012) (NIST model concludes that because of the favorable propagation characteristics of the 700 MHz
spectrum, providers need less infrastructure at the lower frequency compared to the higher frequencies to cover the
same geographic area). See also Fifteenth Report, 26 FCC Rcd at 9834-35 ¶ 293.
410 Okumura-Hata is a widely used RF propagation. See John S. Seybold, Introduction to RF Propagation, Wiley-
Interscience, 2005.
411 See, e.g., Dan Mead, President and Chief Executive Officer, Verizon Wireless, News Conference at 2011
Consumer Electronics Show (Jan. 6, 2011), available ahttp://client.uvault.com/2491/010611/news/vod/start.php">t http://client.uvault.com/2491/010611/news/vod/start.php#
(stating that 700 MHz spectrum is “the best spectrum for in-building coverage”); John Stankey, President and CEO,
(continued….)

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network performance in large cities due to subscribers’ increasing usage of smartphones, AT&T put 3G
traffic on its 850 MHz Cellular spectrum, which provided comparatively better in-building coverage.412
Verizon Wireless has estimated that spectrum in the 700 MHz and Cellular bands can provide in-building
penetration approximately two to three times farther than that of spectrum in the PCS, AWS, and BRS
bands.413
124.
In its consideration of mobile wireless mergers and transactions, both the Commission
and the DOJ have both noted the differences between the use of lower and higher frequency bands.414 In
2011, in its review of the competitive effects of the AT&T-Qualcomm transaction, the Commission found
that the proposed transaction raised some competitive concerns because post-transaction, AT&T would
hold a significant proportion of the available spectrum suitable for the provision of mobile voice or
broadband services, particularly below-1 GHz spectrum with “technical attributes important for other
competitors to meaningfully expand their provision of mobile broadband services or for new entrants to
have a potentially significant impact on competition.”415 Furthermore, some regulators in other countries
have recognized the distinctive characteristics between lower and higher frequency bands. As lower
frequency spectrum has become available for mobile services, countries such as Germany and the United
Kingdom have adopted policies intended to promote wireless competition, innovation, and investments,
as well as broadband deployment in rural areas.416
(Continued from previous page)
AT&T Operations, Inc., Jan. 28, 2010 (Q4 2010 Earnings Call) (noting that 850 MHz Cellular spectrum is “very
high quality with terrific propagation characteristics. …As customers make the shift to more data-intensive devices,
we think this is important for the perceived quality of their overall experience”).
412 AT&T, What the 850 MHz Spectrum Can Do for You, available athttp://www.att.com/gen/press-room?pid=6209&cat=66&u=982"> http://www.att.com/gen/press-
room?pid=6209&cat=66&u=982 (AT&T videoblog discussing AT&T’s use of an 850 MHz overlay in New York
City to provide enhanced in-building coverage over 1900 MHz frequencies).
413 See Barclays Capital, Lowell McAdam, President and CEO of Verizon Wireless, May 26, 2010, at slide 8,
available athttp://www22.verizon.com/idc/groups/public/documents/adacct/event_965_precol.pdf"> http://www22.verizon.com/idc/groups/public/documents/adacct/event_965_precol.pdf (visited Nov. 30,
2012). (showing the relative distances of building penetration for 700 MHz LTE, 800 MHz Cellular, 1900 MHz
PCS, 2100 MHz AWS, and 2500 MHz BRS, when broadcast power is the same across the frequencies, and
advocating the benefits of below-1-GHz spectrum as “foundational spectrum” for a network). According to Verizon
Wireless, “[e]ach frequency has a different rate of energy decay, with higher frequencies decaying faster.” Id. Full
transcript and presentation audio available at
http://www22.verizon.com/investor/barclays_capital_global_wireless_and_wireline_conf.htm">http://www22.verizon.com/investor/barclays_capital_global_wireless_and_wireline_conf.htm (visited Nov. 30,
2012).
414 See Fifteenth Report, 26 FCC Rcd at 9834 n.845.
415 AT&T-Qualcomm Order, 26 FCC Rcd at 17611 ¶ 51. The Commission concluded that potential harm arising out
of the transaction could be mitigated with certain technical conditions, including a requirement for AT&T to use the
spectrum acquired from Qualcomm only for downlink transmissions, to operate under the reduced power and
antenna height limits applicable to Lower 700 MHz A and B Block licensees, and to take certain steps to mitigate
possible interference the uplink operations of licensees operating in the Lower 700 MHz A, B, and C Blocks. Id. at
17616-17 ¶¶ 62-67.
416 See Fifteenth Report, 26 FCC Rcd at 9834 n.846. See Mobile Spectrum Holdings NPRM, FCC 12-119, at ¶ 36 n.
106 (stating some countries conducting or planning auctions of spectrum reclaimed as part of the transition from
analog to digital television have adopted various measures that recognize the differences between lower-frequency
and higher-frequency spectrum in the context of spectrum aggregation limits. See, e.g., Federal Network Agency,
Decisions of the President’s Chamber of the Federal Network Agency for Electricity, Gas, Telecommunications,
Post and Railway of 12 October 2009 on Combining the Award of Spectrum in the Bands 790 to 862 MHz, 1710 to
1725 MHz and 1805 to 1820 MHz with Proceedings to Award Spectrum in the Bands 1.8 GHz, 2 GHz and 2.6 GHz
for Wireless Access for the Provision of Telecommunications Services, at 6 (2009), available at
http://www.bundesnetzagentur.de/cae/servlet/contentblob/138364/publicationFile/3682/DecisionPresidentChamberTenor_ID17495pdf.pdf">http://www.bundesnetzagentur.de/cae/servlet/contentblob/138364/publicationFile/3682/DecisionPresidentChamberT
enor_ID17495pdf.pdf (visited Nov. 30, 2012) (adopting limits on sub-1GHz spectrum in Germany’s 4G auction)
(last visited Aug. 7, 2012); Office of Communications (Ofcom), Statement on Assessment of Future Mobile
Competition and Award of 800 MHz and 2.6 GHz,
at Executive Summary, page 3, (2012), available at
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125.
A comparison of spectrum prices in the AWS and 700 MHz spectrum auctions (Auctions
66 and 73, respectively) suggests that providers may have placed a higher value on 700 MHz spectrum, at
least in part, because of its relative advantages for coverage and in-building penetration. Although a
number of factors in addition to frequency can affect the prices in a particular auction, including factors
unrelated to technical characteristics of the spectrum, both auctions involved large quantities of paired
spectrum with similar service rules in a relatively close timeframe, eliminating at least some of the other
factors that could reduce the significance of the comparison. In the 2008 auction of 700 MHz spectrum,
the average price for the 700 MHz spectrum was $1.28 per MHz-pop, which was more than twice the
average price of $0.54 per MHz-pop for AWS spectrum auctioned in 2006.417
126.
Although higher-frequency spectrum does not provide the same level of coverage or in-
building penetration as lower-frequency spectrum, in some instances, higher-frequency spectrum may be
just as effective, or more effective, for providing significant capacity, or increasing capacity, within
smaller geographic areas.418 For instance, AT&T has noted that it cannot be assumed that lower
frequency bands will require fewer cells or be more economical to deploy because other factors also
affect propagation – including the presence of large buildings in urban areas or other physical
impediments.419 In addition, capacity enhancement technologies such as multiple-input and multiple-
output (MIMO) may perform better at higher frequencies.420 We also note that while spectral efficiency
is the same for all spectrum bands when using a given technology (and bandwidth),421 there currently is
significantly more spectrum above 1 GHz that is potentially available for use (as shown by Table 16
above), and, in many parts of these higher bands, spectrum is licensed in larger contiguous blocks. Larger
blocks can enable operators to deploy wider channels and simplify device design. Thus, higher-frequency
spectrum can be ideally suited for providing high capacity where it is needed, such as in high-traffic urban
areas.422
127.
In general, as noted above, because the properties of lower and higher frequency
spectrum are complementary, both types of spectrum may be helpful for the development of an effective
nationwide competitor that can address both coverage and capacity needs.423 As some observers have
noted, a combination of sub-1 GHz and higher frequency spectrum may be optimal.424 For example, low
frequency spectrum can be deployed ubiquitously with relatively few cell sites, providing a base layer of
(Continued from previous page)
http://stakeholders.ofcom.org.uk/binaries/consultations/award-800mhz/statement/Statement-summary.pdf">http://stakeholders.ofcom.org.uk/binaries/consultations/award-800mhz/statement/Statement-summary.pdf (visited
Nov. 30, 2012) (adopting limits on sub-1 GHz spectrum in United Kingdom’s upcoming 4G auction) (visited Aug.
7, 2012).
417 See generally FCC, Auction 66 – Advanced Wireless Services,
http://wireless.fcc.gov/auctions/default.htm?job=auction_summary&id=66">http://wireless.fcc.gov/auctions/default.htm?job=auction_summary&id=66 (visited Nov. 30, 2012); FCC Auction 73
– 700 MHz Band
http://wireless.fcc.gov/auctions/default.htm?job=auction_summary&id=73">, http://wireless.fcc.gov/auctions/default.htm?job=auction_summary&id=73 (visited Nov. 30,
2012).
418 See Fifteenth Report, 26 FCC Rcd at 9836-37 ¶ 296.
419 AT&T Comments, Docket No. 09-66, at 81-83, stating that “in areas that are capacity limited, there is likely to be
no difference in the number of cells required at 700 MHz vs. 2.5 GHz.”
420 See Fifteenth Report, 26 FCC Rcd at 9836-37 ¶ 296.
421 See Fifteenth Report, 26 FCC Rcd at 9836-37 ¶ 296.
422 See Fifteenth Report, 26 FCC Rcd at 9836-37 ¶ 296.
423 See AT&T-Qualcomm Order, 26 FCC Rcd at 17609-11 ¶ 49, n.140.
424 See Fifteenth Report, 26 FCC Rcd at 9837 ¶ 297. See also T-Mobile Dec. 2, 2010 Ex Parte Letter at 1-3,
Attachment at 10-11 (stating that a mixture of low (below 1 GHz) and upper band spectrum is “important to building
competitive high speed mobile broadband networks”); Alan Hadden, Mobile Broadband — Where The Next
Generation Leads Us
, Global Mobile Suppliers Association, Dec. 2009, available at
http://www.gsacom.com/downloads/pdf/GSA_IEEE_articles1209.php4">http://www.gsacom.com/downloads/pdf/GSA_IEEE_articles1209.php4. (visited Nov. 26, 2012)

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coverage that extends to wide areas and complemented with a capacity layer using high frequency
spectrum.425 Given these different spectrum characteristics, a licensee’s particular mix of spectrum
holdings may affect its ability to provide efficient mobile wireless services.
a.

Analysis of Spectrum Holdings Below 1 GHz

128.
Three nationwide providers – Verizon Wireless, AT&T, and Sprint – hold licenses for
spectrum below 1 GHz, as do regional providers, such as US Cellular and C Spire, and several smaller
companies, many of which have holdings in more rural areas of the country. T-Mobile, the fourth
nationwide provider, holds one Cellular license in South Carolina.426
129.
Of the sub-1 GHz spectrum, Verizon Wireless and AT&T each hold a significant amount
of the available Cellular and 700 MHz spectrum. Specifically, when measured on a licensed MHz-POP
basis, Verizon Wireless holds 48.1 percent of the Cellular spectrum and 42 percent of the 700 MHz
spectrum, while AT&T holds 43.6 percent of the Cellular spectrum and 35.9 percent of the 700 MHz
band spectrum. Adding these two bands together, Verizon Wireless holds approximately 45 percent of
the licensed MHz-POPs of the combined Cellular and 700 MHz band spectrum, while AT&T holds
approximately 39 percent. US Cellular holds approximately 3 percent of these bands. Several other,
smaller providers’ combined holdings total approximately four percent of the Cellular and 18 percent of
the 700 MHz spectrum. Sprint Nextel holds approximately 97 percent of the SMR spectrum.
b.

Analysis of Spectrum Holdings Above 1 GHz

130.
All four nationwide providers hold spectrum above 1 GHz. Verizon Wireless, AT&T,
and T-Mobile each hold a substantial number of PCS and AWS licenses, while Sprint holds significant
amounts of PCS spectrum. In the PCS and AWS spectrum bands, no licensee holds more than 26 percent
of the combined MHz-POPs for those two bands, with T-Mobile holding the most. Of the PCS and AWS
spectrum held by nationwide providers, again based on MHz-POPs: Verizon Wireless holds
approximately 15.7 percent of the PCS and 35.5 percent of the AWS spectrum; AT&T holds around 26.4
percent of the PCS and 6.2 percent of the AWS spectrum; Sprint holds approximately 27.1 percent of the
PCS and none of the AWS; and T-Mobile holds approximately 19.5 percent of the PCS and
approximately 34.6 percent of the AWS. US Cellular, MetroPCS, and Leap each hold some PCS and
AWS spectrum, with MetroPCS and Leap holding a somewhat higher percentage, relative to their PCS
holdings, of the AWS spectrum. Other, smaller providers hold 4.2 percent of the PCS spectrum and 9
percent of the AWS spectrum. Finally, as noted above, Clearwire, in which Sprint holds a significant
ownership interest, holds a predominant amount of 2.5 GHz spectrum, comprised of the BRS and EBS
bands, which is the highest frequency band potentially usable for the provision of mobile broadband
service.427

425 See Fifteenth Report, 26 FCC Rcd at 9837 ¶ 297. See also Alan Hadden, Mobile Broadband — Where The Next
Generation Leads Us
, Global Mobile Suppliers Association, Dec. 2009, available at
http://www.gsacom.com/downloads/pdf/GSA_IEEE_articles1209.php4">http://www.gsacom.com/downloads/pdf/GSA_IEEE_articles1209.php4 (visited Nov. 26, 2012) (“A combination of
higher spectrum (e.g., 1.8 GHz, 2.1 GHz, 2.6 GHz) for the capacity layer, and sub-1 GHz spectrum for improved
coverage in rural areas and for urban in-building, is considered optimal.”).
426 SunCom Wireless License Company, LLC, a wholly owned subsidiary of T-Mobile, holds a Cellular license for
CMA629-South Carolina 5-Georgetown (call sign KNKN557).
427 On October 18, 2012, Sprint Nextel announced that it would increase its stake in Clearwire from approximately
48% to over 50% through its acquisition of Eagle River’s stake in Clearwire
http://www.sec.gov/Archives/edgar/data/101830/000119312512426578/d424777dex9929.htm">http://www.sec.gov/Archives/edgar/data/101830/000119312512426578/d424777dex9929.htm (visited Nov. 30,
2012);http://www.sec.gov/Archives/edgar/data/101830/000119312512426578/d424777dsc13da.htm"> http://www.sec.gov/Archives/edgar/data/101830/000119312512426578/d424777dsc13da.htm
(visited Oct. 25, 2012). We note that since the Sprint Nextel-Clearwire Order, the Commission has attributed
Clearwire to Sprint Nextel because Sprint Nextel owns more than a 10 percent equity interest in Clearwire. See e.g.
Sprint Nextel Corporation and Clearwire Corporation, Applications for Consent to Transfer Control of Licenses,
Leases, and Authorizations, WT Docket No. 08-94, Memorandum Opinion and Order, 23 FCC Rcd 17570 (2008)
(continued….)

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c.

Distribution of Holdings Below and Above 1 GHz

131.
The following chart shows the spectrum holdings of nationwide wireless providers by
frequency. It provides a side-by-side comparison of each licensee’s holdings – in terms of total
population-weighted average megahertz – under 1 GHz, between 1 and 2 GHz, and above 2.5 GHz.428

Chart 5

Population-Weighted Average Megahertz Under/Over 1 GHz*


d.

Distribution of Holdings by Population Density

132.
The following Chart shows how spectrum is nationally distributed by population density.
Generally, as the population density decreases, the under-1 GHz spectrum holdings of the large providers
decrease, and those of regional and smaller companies increase.







(Continued from previous page)
(Sprint Nextel-Clearwire Order).
428 Estimates do not include the WCS spectrum that was added to the spectrum screen in December 2012, 5.4 billion
MHz-Pops of which is held by AT&T.


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Chart 6

Average Under-1 GHz Spectrum by Population Density Deciles


5.

Competitive Effects of Spectrum Holdings

133.
The Commission’s competition policies with respect to spectrum holdings have been
developed with the goal of preserving competitive opportunities in the mobile wireless marketplace while
retaining incentives for efficiency and innovation. Its policies have evolved over the years as more and
more spectrum has been made available for mobile services. These policies have also changed as the
marketplace changes and technology evolves.
134.
The CMRS marketplace in 1995, when the First Report was issued, was very different
from today’s mobile wireless marketplace. Until 2007, the Commission’s competition policies
concerning the spectrum input market for mobile services focused on spectrum associated with three
frequency bands – Cellular, SMR, and broadband PCS. These were the specific frequency bands that,
until that time, the Commission had determined to be spectrum “suitable” for the provision of mobile
services in the relevant product market, which the Commission had defined as the product market for
“mobile telephony” services.429 For purposes of its competitive analysis, the Commission has evaluated
whether particular spectrum bands are “suitable” for mobile wireless services by determining whether the
spectrum is capable of supporting mobile services given its physical properties and the state of the
equipment technology, whether the spectrum is licensed with a mobile allocation and corresponding
service rules, and whether the spectrum is committed to another use that effectively precludes its uses for
mobile telephony.430 Since the Commission first began applying a “spectrum screen” as part of its
competitive analysis, it has determined that additional spectrum should be part of its spectrum input
analysis – including 700 MHz,431 AWS, and BRS spectrum432 – and periodically has modified the

429 See AT&T-Dobson Order, 22 FCC Rcd at 20311-12 ¶¶ 26-27.
430 See AT&T-Dobson Order, 22 FCC Rcd at 20311 ¶ 26.
431 AT&T-Dobson Order, 22 FCC Rcd at 20313-14 ¶ 31.

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spectrum screen as more spectrum has become available.433 The Commission also has recognized that the
mobile services marketplace – including the product market – has evolved. In 2008, the Commission
revised its competition policies, no longer limiting its competitive analysis to examination of the mobile
telephony product market. Given the increasing prevalence of mobile broadband services, the
Commission began examining a combined product market for both mobile telephony services and mobile
broadband services.434 Finally, we note that the Commission recently initiated a Mobile Spectrum
Holdings
rulemaking proceeding, in which it has sought comment on the factors it should use to
determine whether particular spectrum bands are suitable and available for purposes of evaluating
spectrum concentration, as well as which specific spectrum bands should be included in the analysis.435
135.
As discussed above, spectrum resources in different frequency bands have distinguishing
features that can make some frequency bands more valuable or better suited for particular purposes.
From a competitive perspective, given these complementary characteristics, a provider is best positioned
if it holds both low and higher frequency spectrum. Holding a mix of frequency ranges may be optimal
from the perspective of providing the greatest service quality at low cost. For instance, given the superior
propagation characteristics of spectrum under 1 GHz, particularly for providing coverage in rural areas
and inside buildings, providers whose spectrum assets include spectrum below 1 GHz may possess certain
competitive advantages for providing robust coverage when compared to licensees whose portfolio is
exclusively comprised of higher frequency spectrum. On the other hand, providers with higher
frequency spectrum may possess advantages in addressing capacity needs. For example, Verizon
Wireless has stated that for a number of reasons, its Lower 700 MHz Band licenses are not as suitable to
complement its 700 MHz Upper C Band for its own LTE capacity requirements as AWS.436 Recognizing
that different frequency bands can have distinct technical characteristics that affect how the bands are
used to deliver mobile services, the Commission has sought comment in the Mobile Spectrum Holdings
NPRM
on whether its policies regarding mobile spectrum holdings should include separate consideration
of spectrum in different frequency bands, such as spectrum below or above 1 GHz.437

IV.

MOBILE WIRELESS SERVICES: PROVIDER CONDUCT

136.
A key element of our analysis of competition in mobile wireless services is an
examination of the conduct of mobile wireless services providers—in particular, whether there is
evidence that service providers engage in price and non-price rivalry to attract customers from their
competitors. Price rivalry includes a comparison of providers’ service plans and their services, features,
and prices. Non-price rivalry includes providers’ network coverage, quality, and investment; providers’
portfolios of innovative devices and services, and providers’ advertising campaigns and expenditures to
create retail distribution networks, distribute product information, and establish brand recognition. For
both price and non-price rivalry providers take actions and make expenditures to differentiate themselves
from competitors, as well as to imitate initiatives of their competitors that have been successful in
attracting customers. For both price and non-price rivalry we report evidence of significant actions,
(Continued from previous page)
432 Sprint Nextel-Clearwire Order, 23 FCC Rcd at 17596-600 ¶¶ 61-73. As discussed above, in reviewing proposed
merger transactions that involve spectrum aggregation, the Commission examines market participants’ holdings of
suitable spectrum to ensure that there is sufficient spectrum available to competitors.
433 See Sprint Nextel-Clearwire Order, 23 FCC Rcd at 17596-600 ¶¶ 61-73.
434 See Sprint Nextel-Clearwire Order, 23 FCC Rcd at 17596 ¶ 61; Verizon Wireless-Alltel Order, 23 FCC Rcd at
17469-70 ¶¶ 45-47.
435 See Mobile Spectrum Holdings NPRM, FCC 12-119, at ¶¶ 26-29 (rel. Sept. 28, 2012).
436 Application of Cellco Partnership d/b/a Verizon Wireless and SpectrumCo, LLC For Consent to Assign Licenses,
Application of Cellco Partnership d/b/a Verizon Wireless and Cox TMI Wireless, LLC For Consent to Assign
Licenses, WT Docket No. 12-4, Joint Opposition to Petitions to Deny and Comments, William Stone Supp. Decl. at
at ¶ 25 (Mar. 2, 2012).
437 Mobile Spectrum Holdings NPRM, FCC 12-119, at ¶¶ 35-36.

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changes, and expenditures undertaken by providers during 2011and the first part of 2012 and their
responses to each other.

A.

Price Rivalry: Developments in Mobile Service Pricing Plans

137.
In the United States, most mobile wireless subscribers pay for their mobile wireless
service after they have received services (“postpaid” service).438 Other customers pay for their service
prior to making calls (“prepaid” service). The following discussion of developments in mobile service
pricing plans is divided into two sections. The first section covers developments in postpaid plans. The
second section covers developments in prepaid plans, including traditional prepaid service plans and
higher-end prepaid service plans that include data. The discussion focuses on recent changes made by
providers during the period covered by the Report and accordingly has varied significantly from previous
Reports as providers have changed their service plans and pricing practices. It does not present a
comprehensive comparison of pricing plans and pricing data.439
1.

Postpaid Service

138.
This section of the Sixteenth Report traces the evolution of smartphone data pricing since
the Fifteenth Report, which had focused on the industry’s shift from unlimited data pricing to tiered,
usage-based data pricing for smartphones. As discussed in the Fifteenth Report, this shift was a response
to the effects of increased bandwidth consumption by smartphone users on network utilization and
capacity constraints.440 The Fifteenth Report discussed the introduction of tiered smartphone data pricing
by AT&T in June 2010 and initial competitive responses by other providers to AT&T’s pricing
changes.441 As documented below, three distinct models for smartphone data pricing emerged in 2011:
(1) tiered, usage-based data pricing with overage charges (Verizon and AT&T); (2) tiered, usage-based
data pricing with speed reductions instead of overage charges (T-Mobile); and (3) unlimited data pricing
(Sprint). These pricing models remained relatively unchanged until the second half of 2012 when AT&T
and Verizon launched shared data plans for smartphones and other mobile data devices, and T-Mobile
reintroduced an unlimited smartphone data pricing option.
139.
AT&T and Verizon Wireless Smartphone Data Plans. Through the first half of 2012, the
smartphone data pricing plans offered by AT&T and Verizon Wireless, summarized in Table 19 below,

438 However, following changes in the market, the terms post-paid and pre-paid have evolved to be nearly
synonymous with multi-month contract and no contract, respectively. The post-paid and pre-paid categories are
industry conventions, and not always indicative of when customers pay their charges relative to the timing of the
services used. In practice, with some post-paid plans, some charges are billed in advance of the service and others
are billed after the customer has used the service. For example, the terms and conditions of Sprint state “Your bill
provides you notice of your charges. It reflects monthly recurring charges (usually billed one bill cycle in advance),
fees, taxes, Surcharges, product and equipment charges, subscription charges and usage/transaction specific charges
(usually billed in the bill cycle in which they’re incurred). Some usage charges, such as those that depend on usage
information from a third party, may be billed in subsequent bill cycles and result in higher than expected charges for
that month.” See Sprint Nextel,https://shop2.sprint.com/en/legal/os_general_terms_conditions_popup.shtml"> https://shop2.sprint.com/en/legal/os_general_terms_conditions_popup.shtml
(visited Nov. 11, 2011).
439 The geographic coverage of any particular pricing plan or offer may vary across regional markets for a number of
reasons. In some cases, service providers may not offer certain broadband data plans in geographic markets where
they have not yet upgraded their networks. In other cases, service providers conduct pilot tests of new pricing plans
(or changes in existing pricing plans) in selected regional markets before offering them across the rest of their
network footprint. We do not attempt to make a systematic determination of the geographic availability of the
pricing plans and rates covered in this section of the Report on a market-by-market basis. Therefore, we make no
claims about whether the pricing plans and rates covered by the Report are representative of the plans and rates
available in any given geographic market.
440 Fifteenth Report, 26 FCC Rcd at 9725-27 ¶¶ 85-87.
441 Fifteenth Report, 26 FCC Rcd at9726-27 ¶¶ 87-88.

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shared three basic features: (1) both discontinued a $30 per month unlimited data plan for new
smartphone customers;442 (2) both offered multiple usage-based tiers with overage charges levied on
customers when their monthly data usage allowances are exceeded;443 and (3) both grandfathered their
$30 per month unlimited data plan for existing smartphone users but subsequently started reducing the
data throughput speeds for the heaviest data users of the grandfathered “unlimited” plans under certain
circumstances.444 As with the original unlimited data plans, customers who purchased one of the tiered
data plans were also required to purchase a voice plan for an additional monthly charge.445


















442 Fifteenth Report, 26 FCC Rcd at 9726-27 ¶¶ 87-88; Philip Goldstein, Verizon Confirms It Will Ditch Unlimited
Smartphone Data Plans Starting July 7
, FIERCEWIRELESS, Jul. 5, 2011.
443 Fifteenth Report, 26 FCC Rcd at 9726-27 ¶¶ 87-88; Philip Goldstein, Verizon Confirms It Will Ditch Unlimited
Smartphone Data Plans Starting July 7
, FIERCEWIRELESS, Jul. 5, 2011.
444 Verizon, Network Optimization, http://support.verizonwireless.com/information/data_disclosure.html (visited
Oct. 4, 2011) stating “To optimize our network, we manage data connection speeds for a small subset of customers –
the top 5% of data users with 3G devices on unlimited data plans – and only in places and at times of 3G network
congestion.”; Philip Goldstein, Verizon’s Network Optimization Policy is About Pricing as Much as the Network,
FIERCEWIRELESS, Sept. 21, 2011; AT&T, An Update for Our Smartphone Customers With Unlimited Data Plans,
http://www.att.com/gen/press-room?pid=20535&cdvn=news&newsarticleid=32318&mapcode=corporate (visited
Oct. 4, 2011); Philip Goldstein, AT&T Will Throttle Heaviest Unlimited Smartphone Data Users Starting Oct. 1,
FIERCEWIRELESS, Jul. 29, 2011. See New York Times, Revising the Limits for the Unlimited, March 1, 2012. See
PCWorld, AT&T Wireless Bandwidth Throttling: The Backlash Has Begun, Feb. 14, 2012, available at
http://www.pcworld.com/article/249952/atandt_wireless_bandwidth_throttling_the_backlash_has_begun.html">http://www.pcworld.com/article/249952/atandt_wireless_bandwidth_throttling_the_backlash_has_begun.html
(visited Nov. 30, 2012).
445 AT&T, Individual Planshttp://www.att.com/shop/wireless/packages/nokia-lumia-900-package-sku5910224.html#fbid=fk9VjETnPJF">, http://www.att.com/shop/wireless/packages/nokia-lumia-900-package-
sku5910224.html#fbid=fk9VjETnPJF (visited Nov. 26, 2012). As explained below, Verizon discontinued offering
its tiered smartphone data plans when it introduced shared data plans.

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Table 19

AT&T and Verizon Wireless Data Plans: Unlimited with Reduced Speeds, Tiered with Overage

Charges, June 2010- June 2012

446

Unlimited Data Plans

Tiered Data Plans



New

Existing Customers

Date Monthly Monthly

Overage

Customers


(grandfathered with reduced

Data

Charge

Charge

speeds for heaviest data users)

AT&T

Discontinued
As of 10/2011, AT&T has

200 MB
$15
$15 per
6/07/2010
reserved the right to reduce data
200 MB
June
speeds for the top 5 percent of
2 GB
$25
$10 per
data users in a given billing
2010
GB
period.

300 MB
$20
$20 per
As of 3/2012, AT&T will only
300 MB
slow data speeds when users
Jan.
reach 3 GB of usage in a billing
3 GB
$30
$10 per
2012
cycle, or 5 GB for LTE
GB
customers.
5 GB
$50
$10 per
GB

Verizon

Discontinued
As of 9/2011, Verizon Wireless

2 GB
$30
$10 per
7/07/2011
may reduce data speeds for the
GB

Wireless

July
top 5% of 3G device users when
5 GB
$50
$10 per
connected to a congested 3G cell
2011
GB
site after reaching certain data-
usage levels in a billing cycle (2
10 GB
$80
$10 per
GB of data or more as of 8/2011),
GB
with an option to switch to usage-
based plans or an LTE device

140.
Verizon Wireless discontinued unlimited data plans for new smartphone customers more
than a year after AT&T did so. Verizon Wireless retained its unlimited smartphone data plans when it
first launched the CDMA iPhone in February 2011, and switched to usage-based smartphone data pricing
the following July.447 With AT&T being the only provider to offer the iPhone at that time, Verizon
Wireless acknowledged that its decision to delay the switch to usage-based data pricing was an attempt to
use its unlimited data plan to attract iPhone subscribers to Verizon Wireless from both AT&T’s existing

446 See AT&T, Support, Info for Smartphone Customers with Unlimited Data Plans, available at
http://www.att.com/esupport/datausage.jsp?source=IZDUel1160000000U">http://www.att.com/esupport/datausage.jsp?source=IZDUel1160000000U (visited August 7, 2012); See Verizon
Wireless, Data Plans and Features – Terms and Conditions,
http://support.verizonwireless.com/terms/products/vz_email.html">http://support.verizonwireless.com/terms/products/vz_email.html (visited August 7, 2012). Customers who
purchase one of unlimited data plans or the tiered data plans are also required to purchase a voice plan for an
additional monthly charge.
447 Mike Dano, Verizon Nets 65,000 LTE Subs, Details iPhone Data Pricing, FIERCEWIRELESS, Jan. 25, 2011
http://www.fiercewireless.com/story/verizon-nets-65000-lte-subs-details-iphone-data-pricing/2011-01-25">http://www.fiercewireless.com/story/verizon-nets-65000-lte-subs-details-iphone-data-pricing/2011-01-25 (visited
Oct. 16, 2012);Philip Goldstein, Sprint to Launch iPhone 4S Oct. 14, Along With AT&T, Verizon, FIERCEWIRELESS,
Oct. 4, 2011http://www.fiercewireless.com/story/sprint-launch-iphone-4s-oct-12-along-att-verizon/2011-10-04">, http://www.fiercewireless.com/story/sprint-launch-iphone-4s-oct-12-along-att-verizon/2011-10-04
(visited Oct. 16, 2012).

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iPhone customer base and the pool of potential new iPhone subscribers.448
141.
Verizon Wireless structured its data tiers differently that AT&T, as shown in Table 19.
Verizon Wireless offered a higher data tier than AT&T, and its tiers did not include an entry-level 200
MB plan like the one offered by AT&T. Whereas AT&T structured its usage-based tiers to attract new
smartphone customers and encourage existing customers to upgrade to smartphones by lowering the
entry-level cost of using smartphones, Verizon Wireless marketed its smartphone data offerings as a
premium product by targeting high-end users with higher average monthly revenues per user.449
Although Verizon Wireless included a 300 MB plan for a $20 monthly charge in a limited-time holiday
promotion launched in November 2011, the promotion was applicable only to LTE smartphones.450
142.
In January 2012, AT&T announced the first major changes to its smartphone data plans
since switching to tiered data pricing in June 2010.451 The company increased both the monthly prices
and the usage tier levels for new smartphone customers, as shown in Table 19. At the new higher tier
levels, the unit prices (average revenue per megabyte) are lower than those of the original tiers because
the flat monthly fee is spread over a larger quantity of data. Of course, the actual price per MB paid by
the subscriber depends on actual data usage, with subscribers who do not use up their monthly data
allowance paying higher prices per MB than those who do. While these pricing changes brought some of
AT&T’s smartphone data pricing tiers closer to those of Verizon Wireless, AT&T continued to offer an
entry-level plan with a monthly usage allowance well below Verizon Wireless’s lowest 2 GB tier, and
AT&T’s highest data usage tier was only half the size of Verizon Wireless’s highest 10 GB tier.
143.
In March 2012, AT&T changed its network management policy for customers with

448 Mike Dano, Verizon Nets 65,000 LTE Subs, Details iPhone Data Pricing, FIERCEWIRELESS, Jan. 25, 2011.
http://www.fiercewireless.com/story/verizon-nets-65000-lte-subs-details-iphone-data-pricing/2011-01-25">http://www.fiercewireless.com/story/verizon-nets-65000-lte-subs-details-iphone-data-pricing/2011-01-25 (visited
Oct. 16, 2012).
449 Philip Goldstein, How Will Consumers Respond to Verizon’s New Usage-Based Data Plans?, FIERCEWIRELESS,
Jul. 5, 2011http://www.fiercewireless.com/story/how-will-switching-usage-based-pricing-affect-verizon/2011-07-05"> http://www.fiercewireless.com/story/how-will-switching-usage-based-pricing-affect-verizon/2011-07-
05 (visited Oct. 16, 2012). However, Verizon does offer a 75 MB monthly plan for feature phones for $10 per
month. Philip Goldstein, Verizon Confirms It Will Ditch Unlimited Smartphone Data Plans Starting July 7,
FIERCEWIRELESS, Jul. 5, 20http://www.fiercewireless.com/story/verizon-confirms-it-will-ditch-unlimited-smartphone-data-plans-starting-jul/2011-07-05">11 http://www.fiercewireless.com/story/verizon-confirms-it-will-ditch-unlimited-
smartphone-data-plans-starting-jul/2011-07-05 (visited Oct. 16, 2012) ; Philip Goldstein, How Will Consumers
Respond to
Verizon’s New Usage-Based Data Plans?, FIERCEWIRELESS, Jul. 5, 2011
http://www.fiercewireless.com/story/how-will-switching-usage-based-pricing-affect-verizon/2011-07-05">http://www.fiercewireless.com/story/how-will-switching-usage-based-pricing-affect-verizon/2011-07-05 (visited
Oct. 16, 2012).
450 Philip Goldstein, Verizon to Double LTE Smartphone Data Allotments, FIERCEWIRELESS, Nov. 7, 2011.
http://www.fiercewireless.com/story/verizon-double-lte-smartphone-data-allotments/2011-11-07">http://www.fiercewireless.com/story/verizon-double-lte-smartphone-data-allotments/2011-11-07 (visited Oct. 16,
2012) As part of the same holiday promotion, Verizon also doubled the data plan allowances for LTE smartphone
customers for the same price as its existing tiered smartphone data offerings. Philip Goldstein, Verizon to Double
LTE Smartphone Data Allotments
, FIERCEWIRELESS, Nov. 7, 20http://www.fiercewireless.com/story/verizon-double-lte-smartphone-data-allotments/2011-11-07">11 http://www.fiercewireless.com/story/verizon-
double-lte-smartphone-data-allotments/2011-11-07 (visited Oct. 16, 2012). In particular, customers who sign up for
a 2 GB plan for $30 per month will get 4 GB per month, those who sign up for a 5 GB plan for $50 per month will
get 10 GB and those who sign up for a 10 GB plan for $80 per month will get 20 GB. Id. Philip Goldstein, Verizon
Revives Double LTE Smartphone Data Promotion
, FIERCEWIRELESS, Feb. 7, 2012.
http://www.fiercewireless.com/story/verizon-revives-double-lte-smartphone-data-promotion/2012-02-07">http://www.fiercewireless.com/story/verizon-revives-double-lte-smartphone-data-promotion/2012-02-07 (visited
Oct. 16, 2012) The holiday promotion ran from November 2011 through mid-January 2012, but in February 2012
Verizon revived the promotion that doubles the monthly data allowances of customers who purchase LTE
smartphones.
451 Philip Goldstein, AT&T Increases Pricing, Usage Thresholds on Smartphone Data Plans, FIERCEWIRELESS, Jan.
18, 2012.http://www.fiercewireless.com/story/att-increases-pricing-usage-thresholds-smartphone-data-plans/2012-01-18"> http://www.fiercewireless.com/story/att-increases-pricing-usage-thresholds-smartphone-data-plans/2012-
01-18 (visited Oct. 16, 2012).

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grandfathered unlimited smartphone data plans.452 Under the previous policy instituted in October 2011,
AT&T stated that it may reduce the data speeds of unlimited data subscribers when they are in the top
five percent of data users in the month and area. Subsequently, many customers complained that this
policy placed unreasonable limits on data usage because subscribers had no way of finding out what the
limits would be ahead of time, and some subscribers ended up having their data throughput speeds
reduced at just over 2 gigabytes of data use, lower than the data amount included under AT&T’s current
$30 per month limited smartphone data plan.453 In response, AT&T altered its network management
policy so that it will only slow down service for customers with unlimited data plans when they reach 3
gigabytes of usage in a billing cycle, or 5 gigabytes of usage for customers using the new LTE data
network and smartphones.454
144.
Under all of the above tiered data plans, individual customers or families with multiple
devices were required to purchase a separate data plan for each device. At the end of June 2012, Verizon
launched new tiered data pricing plans, called “Share Everything,” that allow customers to pool their data
usage package across multiple smartphones, tablets and other devices,455 and in August 2012 AT&T
followed suit by launching its own version of shared data plans, called “Mobile Share.”456 As set out
below in Table 20, each tier of both Verizon’s “Share Everything” plans for smartphones and AT&T’s
“Mobile Share” plans includes a single monthly data allowance that can be shared by up to ten different
devices, plus unlimited voice minutes, unlimited text, video and picture messaging, and a “mobile
hotspot” service. In addition, the pricing structure for each tier of both providers’ shared data plans
includes both a monthly charge for the monthly data allowance plus a monthly line access charge for each
device added to the account, as well as an overage charge for data usage that exceeds each tier’s monthly
data allowance. An important difference between the two shared data offerings is that Verizon
discontinued offering its existing tiered smartphone data plans to new customers and requires all new
customers who purchase subsidized smartphones to sign up for its new “Share Everything” data plans,
whereas AT&T introduced its new “Mobile Share” plans alongside its existing tiered smartphone data
plans and does not require new customers or customers who upgrade to a subsidized smartphone to sign
up for the new plans.457 However, to continue attracting new customers with limited data needs, Verizon

452 Brian Chen, AT&T Sets New Rules on ‘Unlimited Data’ Plans, THE NEW YORK TIMES, Mar. 1, 2012
http://bits.blogs.nytimes.com/2012/03/01/limited-unlimited-data/">http://bits.blogs.nytimes.com/2012/03/01/limited-unlimited-data/ (visited Oct. 18. 2012).
453 Brian Chen, AT&T Sets New Rules on ‘Unlimited Data’ Plans, THE NEW YORK TIMES, Mar. 1, 2012.
http://bits.blogs.nytimes.com/2012/03/01/limited-unlimited-data/">http://bits.blogs.nytimes.com/2012/03/01/limited-unlimited-data/ (visited Oct. 18, 2012).
454Brian Chen,, AT&T Sets New Rules on ‘Unlimited Data’ Plans, THE NEW YORK TIMES, Mar. 1, 2012.
http://bits.blogs.nytimes.com/2012/03/01/limited-unlimited/">http://bits.blogs.nytimes.com/2012/03/01/limited-unlimited/ (visited Oct. 18, 2012). While Verizon Wireless’s
speed reduction policy for customers with grandfathered unlimited data plans is based on a similar “top five percent”
rule, the company does not reduce the data speeds of customers in the top five percent of data users unless they are
connected to a cell tower that is congested at that particular moment. The Associated Press, AT&T Sets New Rules
on ‘Unlimited Data’ Plans
, THE NEW YORK TIMES, Mar. 1, 2012; Verizon, Network Optimization,
http://support.verizonwireless.com/information/data_disclosure.html (visited Oct. 4, 2011).
455 Philip Goldstein, Verizon Launches ‘Share Everything’ Family Data Plans, FIERCEWIRELESS, June 12, 2012;
Verizon Wireless, Share Everything Plans, http://www.verizonwireless.com/b2c/plan-information/?page=share-
everything (visited Sept. 6, 2012).
456 Philip Goldstein, AT&T Follows Verizon With ‘Mobile Share’ Shared Data Plans, FIERCEWIRELESS, July 18,
2012; AT&T, Mobile Share, http://www.att.com/shop/wireless/data-plans.html#fbid=pgSVH67Gp_M?tab2 (visited
Sept. 6, 2012); Anton Troianovski and Thomas Gryta, New Front Opens in Wireless Battle, WALL STREET JOURNAL,
June 12, 2012.http://online.wsj.com/article/SB10001424052702303901504577462241394886300.html"> http://online.wsj.com/article/SB10001424052702303901504577462241394886300.html (visited Oct.
16, 2012).
457 Philip Goldstein, AT&T Follows Verizon With ‘Mobile Share’ Shared Data Plans, FIERCEWIRELESS, July 18,
http://www.fiercewireless.com/story/att-follows-verizon-mobile-share-shared-data-plans/2012-07-18">2012 http://www.fiercewireless.com/story/att-follows-verizon-mobile-share-shared-data-plans/2012-07-18 (visited
Oct. 16, 2012); Anton Troianovski and Thomas Gryta, New Front Opens in Wireless Battle, WALL STREET
(continued….)

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kept two entry-level plans for new customers with basic phones.458
145.
The effects of the new shared data plans on the monthly price per megabyte of data paid
by a subscriber depends on both the number of devices and the amount of data a family or individual
customer uses. While light data users with a small number of devices will typically pay more per
megabyte of data, there is a cross-over point beyond which heavy data users with many devices will be
able to realize savings as a result of declines in the price per unit of data.459
146.
The introduction of shared data offerings also represents a potentially fundamental
departure from the historical model of pricing mobile voice and texting services on a per unit basis by
service (cents per minute of voice service or per text message).460 This historical model creates an
incentive for what one analyst terms “bandwidth arbitrage” – substitution of low-priced, high-bandwidth
data services for high-priced, low-bandwidth voice and text services by means of applications such as
Skype, Facebook and Apple’s iMessage.461 The new shared data plans reduce this type of substitution by
including unlimited voice and text messaging in each tier and by pricing that is based exclusively on data
usage.462









(Continued from previous page)
JOURNAL, June 12, 2012.http://online.wsj.com/article/SB10001424052702303901504577462241394886300.html"> http://online.wsj.com/article/SB10001424052702303901504577462241394886300.html
(visited Oct. 16, 2012).
458 The lowest plan includes 700 voice minutes and pay-as-you-go messaging and data for a monthly account access
charge of $10 per month, and the second plan includes 300 MB of shared data plus unlimited voice minutes and text
messaging for $40 per month. Both plans include an additional monthly line access charge of $30 per device.
Verizon Wireless, Share Everything Plans, http://www.verizonwireless.com/b2c/plan-information/?page=share-
everything (visited Sept. 6, 2012); Roger Entner, Entner: Shared Data Pricing has Arrived, FIERCEWIRELESS, June
12, 2012.http://www.fiercewireless.com/story/entner-shared-data-pricing-has-arrived/2012-06-12"> http://www.fiercewireless.com/story/entner-shared-data-pricing-has-arrived/2012-06-12 (visited Oct. 16,
2012).
459 Craig Moffett et al, Quick Take – Verizon: Market Share(ing)… The Beginning of the Endgame?, Bernstein
Research, June 12, 2012, at 2-3; Roger Entner, Entner: Shared Data Pricing has Arrived, FIERCEWIRELESS, June
12, 2012.http://www.fiercewireless.com/story/entner-shared-data-pricing-has-arrived/2012-06-12"> http://www.fiercewireless.com/story/entner-shared-data-pricing-has-arrived/2012-06-12 (visited Oct. 16,
2012).
460 David W. Barden et al., Verizon Shares New Pricing, Pre-Pay Welcomes iPhone, Bank of America Merrill
Lynch, Equity Research, July 10, 2012, at 1; Craig Moffett et al, Quick Take – Verizon: Market Share(ing)… The
Beginning of the Endgame?
, Bernstein Research, June 12, 2012, at 1-2.
461 Craig Moffett et al, Quick Take – Verizon: Market Share(ing)… The Beginning of the Endgame?, Bernstein
Research, June 12, 2012, at 1-2.
462 David W. Barden et al., Verizon Shares New Pricing, Pre-Pay Welcomes iPhone, Bank of America Merrill
Lynch, Equity Research, July 10, 2012, at 1; Craig Moffett et al, Quick Take – Verizon: Market Share(ing)… The
Beginning of the Endgame?
, Bernstein Research, June 12, 2012, at 1-2.

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Table 20

Verizon Wireless’s and AT&T’s Shared Data Plans


Monthly Line Access (per

Shared Data Monthly

Overage

Unlimited

device)

Allowance

Account Access

Charge

Voice and

(shared with up

Text

to 10 devices)

Verizon

Smartphones $40
1 GB
$50
$15 per

GB
Basic phones $30
2 GB
$60
Yes
Jetpacks/USBs/Notebooks/
4 GB
$70
Netbooks $20
6 GB
$80
Tablets $10
8 GB
$90
10 GB
$100

AT&T

Smartphones
$45
1 GB
$40
$15 per

GB

$40
4 GB
$70
Yes

$35
6 GB
$90
$30
10 GB
$120
15 GB
$160
20 GB
$200
Basic phones $30


Laptops/netbooks $20
Tablets $10
Gaming devices $10

147.
T-Mobile Smartphone Data Plans. The tiered, usage-based smartphone data plans
introduced by T-Mobile in 2011 differed in two key respects from the tiered plans of AT&T and Verizon
Wireless.463 T-Mobile set lower prices for comparable tiered plans, and its tiered plans depended
primarily on reducing the data speeds of customers once they exceed their monthly data allowances,
rather than on levying overage charges.464 The initial version of its tiered data plans for smartphones

463 Sue Marek, T-Mobile Unveils New Tiered Data Plans for Smartphones, Details Throttling Speeds,
FIERCEWIRELESS, May 23, 2011. http://www.fiercewireless.com/story/t-mobile-quietly-launches-tiered-data-plans-
smartphones/2011-05-23 (Visited Nov. 30, 2012).
464 Sue Marek, T-Mobile Unveils New Tiered Data Plans for Smartphones, Details Throttling Speeds,
FIERCEWIRELESS, May 23, 20http://www.fiercewireless.com/story/t-mobile-quietly-launches-tiered-data-plans-smartphones/2011-05-23">11. http://www.fiercewireless.com/story/t-mobile-quietly-launches-tiered-data-plans-
smartphones/2011-05-23 (visited Oct. 16, 2012). See T-Mobile, Terms and Conditions, available at
http://www.tmobile.com/">www.tmobile.com, (visited Aug. 14, 2012) (stating “To provide a good experience for the majority of our customers
and minimize capacity issues and degradation in network performance, we may take measures including temporarily
reducing data throughput for a subset of customers who use a disproportionate amount of bandwidth. In addition, if
your total usage exceeds 5GB (amount is subject to change without notice; please check T-Mobile's T&Cs on
http://www.t-mobile.com');">www.T-Mobile.com for updates) during a billing cycle, we may reduce your data speed for the remainder of that
billing cycle. If you use your Data Plan in a manner that could interfere with other customers' service, affect our
ability to allocate network capacity among customers, or degrade service quality for other customers, we may
suspend, terminate, or restrict your data session, or switch you to a more appropriate Data Plan. We also manage our
(continued….)

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introduced in May 2011 relied exclusively on reducing data speeds once a user exceeded her data usage
allowance.465 However, T-Mobile replaced speed reductions with overage fees on its entry-level 200 MB
smartphone data plan beginning on August 14, 2011 for new customers who sign up for this plan.466 T-
Mobile made the partial switch from speed reductions to overage charges for its entry-level 200 MB plan
because the rate of adoption exceeded expectations.467 As with the tiered smartphone data plans offered
by Verizon and AT&T, customers who purchased one of T-Mobile’s tiered smartphone data plans were
also required to purchase a voice plan for an additional monthly charge.

Table 21

T-Mobile: Tiered Smartphone Data Plans with Reduced Speeds or Overage Charges, Aug. 2011-

Aug. 2012

Monthly

Monthly

Speed Reduction

Overage Charge


Data

Charge

200 MB
$10
Reduced speeds replaced with overage fees for
$0.10 per MB, up to a
new customers as of 8/14/2011. Existing
maximum monthly charge
customers on the 200 MB plan are still subject to
of $40, including the cost
reduced speeds rather than overage charges.
of the 200 MB plan
2 GB
$20
Customers who exceed the cap will have their
No charge
data speeds reduced to an EDGE/2G experience
5 GB
$30
of around 100 Kbps or less for the rest of month,
10 GB
$60
with the option of switching to a higher data tier
instead

148.
Prior to the introduction of its new tiered data plans in May 2011, T-Mobile had already
begun to qualify its original $30 per month “unlimited” smartphone data plan by reducing the data speeds
of customers when they reached 5 GB of data usage.468 As a consequence, although T-Mobile continued
(Continued from previous page)
network to facilitate the proper functioning of services that require consistent high speeds, such as video calling,
which may, particularly at times and in areas of network congestion, result in reduced speeds for other services.
Additionally, we may implement other network management practices, such as caching less data, using less
capacity, and sizing video more appropriately for a Device to transmit data files more efficiently. These practices
are agnostic to the content itself and to the websites that provide it. While we avoid changing text, image, and video
files in the compression process when practical, the process may impact the appearance of files as displayed on your
Device.”).
465 Sue Marek, T-Mobile Unveils New Tiered Data Plans for Smartphones, Details Throttling Speeds,
FIERCEWIRELESS, May 23, 20http://www.fiercewireless.com/story/t-mobile-quietly-launches-tiered-data-plans-smartphones/2011-05-23">11. http://www.fiercewireless.com/story/t-mobile-quietly-launches-tiered-data-plans-
smartphones/2011-05-23 (visited Oct. 16, 2012).
466 Philip Goldstein, Confirmed: T-Mobile to Replace Throttling With Overage Fees on 200 MB Plan,
FIERCEWIRELESS, Aug. 11, 2011.http://www.fiercewireless.com/story/rumor-mill-t-mobile-replace-throttling-overage-fees-200-mb-plan/2011-08-11"> http://www.fiercewireless.com/story/rumor-mill-t-mobile-replace-throttling-
overage-fees-200-mb-plan/2011-08-11(visited Oct. 16, 2012). T-Mobile will send customers a free text message
advising them they are approaching their monthly data cap at 90 percent, or 180 MB, of data in a given billing cycle,
and will send them a similar message when they reach the 200 MB limit. Existing customers already on the 200 MB
plan prior to August 14, 2011 do not incur overage charges, but rather remain subject to speed reductions if they
exceed the 200 MB cap. Id.
467 Philip Goldstein, Confirmed: T-Mobile to Replace Throttling With Overage Fees on 200 MB Plan,
FIERCEWIRELESS, Aug. 11, 2011.http://www.fiercewireless.com/story/rumor-mill-t-mobile-replace-throttling-overage-fees-200-mb-plan/2011-08-11"> http://www.fiercewireless.com/story/rumor-mill-t-mobile-replace-throttling-
overage-fees-200-mb-plan/2011-08-11 (visited Oct. 16, 2012).
468 Sue Marek, T-Mobile Unveils New Tiered Data Plans for Smartphones, Details Throttling Speeds,
FIERCEWIRELESS, May. 23, 2011;http://www.fiercewireless.com/story/t-mobile-quietly-launches-tiered-data-plans-smartphones/2011-05-23"> http://www.fiercewireless.com/story/t-mobile-quietly-launches-tiered-data-plans-
smartphones/2011-05-23 (visited Oct. 16, 2012); Fifteenth Report, 26 FCC Rcd at9729 ¶ 92.

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to offer a $30 per month data plan to new smartphone customers alongside the new tiered data plans, what
had been T-Mobile’s original unlimited data plan became, in effect, one tier of its usage-based data plans.
Therefore, like AT&T and Verizon Wireless, T-Mobile stopped offering an unlimited data plan without
qualifications to new smartphone customers, and it used speed reductions to control the data usage of
subscribers of its original “unlimited” data plan.
149.
In July 2011, T-Mobile began “Value Plans” that offer less expensive monthly rates on
its three higher tiered data plans for customers who either bring a compatible device to T-Mobile or
purchase a new device in monthly installments.469 Customers who signed up for the less expensive plans
were still subject to speed reductions if they went over their monthly data allowances.470 T-Mobile
estimates that, as of December 2012, Value Plans accounted for approximately 80 percent of its postpaid
activations in its stores.471 In April 2012, T-Mobile raised the monthly charge for its two highest data
tiers – from $30 to $35 for its 5 GB tier, and from $60 to $65 for its 10 GB tier.472
150.
In September 2012, T-Mobile modified its approach to smartphone data pricing by
introducing an unlimited smartphone data pricing option without tethering alongside its existing tiered,
usage-based smartphone data pricing plans.473 Like T-Mobile’s original $30 per month unlimited
smartphone data plan discussed above, the provider’s new Unlimited Nationwide 4G Data plan is priced
at $30 per month for postpaid subscribers with subsidized smartphones, with $20 per month option
available to subscribers who choose to forgo a smartphone subsidy. Although T-Mobile’s 5 GB and 10
GB data tiers have higher monthly prices than the new unlimited without tethering plan, they include T-
Mobile’s “mobile hotspot” smartphone tethering service. T-Mobile differentiates its new unlimited data
plan from Sprint’s unlimited smartphone data offering based on the broader geographic coverage of its
HSPA+ network as compared to Sprint’s 4G data service, which runs over Clearwire’s mobile WiMAX
network and Sprint’s nascent LTE network, and the higher speeds offered by its HSPA+ network as
compared to Sprint’s slower nationwide 3G CDMA EV-DO network.474
151.
As a result of the revival of its unlimited smartphone data plan and the earlier change in
its entry-level tiered plan, T-Mobile’s pricing of smartphone data plans can be characterized as a

469 Philip Goldstein, Confirmed: T-Mobile Targets Sprint With Cheaper Unlimited Smartphone Plans,
FIERCEWIRELESS, Jul. 20, 2011http://www.fiercewireless.com/story/t-mobile-targets-sprint-cheaper-unlimited-smartphone-plans/2011-07-20">. http://www.fiercewireless.com/story/t-mobile-targets-sprint-cheaper-unlimited-
smartphone-plans/2011-07-20 (visited Oct. 16, 2012). In the Value plans and Classic plans, the data allotment was
bundled with unlimited voice and texting. The 2 GB Value plan was $20 less expensive than the comparable
Classic plan, and the 5 GB and 10 GB Value plans were each $15 less expensive than the comparable Classic plans.
Id.
470 Philip Goldstein, Confirmed: T-Mobile Targets Sprint With Cheaper Unlimited Smartphone Plans,
FIERCEWIRELESS, Jul. 20, 2011http://www.fiercewireless.com/story/t-mobile-targets-sprint-cheaper-unlimited-smartphone-plans/2011-07-20">. http://www.fiercewireless.com/story/t-mobile-targets-sprint-cheaper-unlimited-
smartphone-plans/2011-07-20 (visited Oct. 16, 2012).
471 T-Mobile USA, Presentation at Deutschetelekom Capital Markets Day 2012, Dec. 6, 2012, at 22, available at
http://www.telekom.com/static/-/162600/7/presentation-jl-si">http://www.telekom.com/static/-/162600/7/presentation-jl-si. (visited Oct. 16, 2012).
472 David W. Barden et al., Verizon Shares New Pricing, Pre-Pay Welcomes iPhone, Bank of America Merrill
Lynch, Equity Research, July 10, 2012, at 5-6.
473 T-Mobile Celebrates 10 Years of Innovation With Launch of Unlimited Nationwide 4G Data Plans, Press
Release, T-Mobile, Sept. 5, 20http://newsroom.t-mobile.com/articles/t-mobile-celebrates-10-years-and-launches-unlimited-nationwide-4g-data-plans">12 http://newsroom.t-mobile.com/articles/t-mobile-celebrates-10-years-and-launches-
unlimited-nationwide-4g-data-plans (visited Oct. 16, 2012 ; T-Mobile, Individual Plans, http://www.t-
mobile.com/shop/plans/individual-plans.aspx (visited Sept. 6, 2012); Mike Dano, T-Mobile Revives $30 Unlimited
Data for Postpaid Smartphones
, FIERCEWIRELESS, Aug. 22, 2012.http://www.fiercewireless.com/story/t-mobile-revives-30-unlimited-data-postpaid-smartphones/2012-08-22"> http://www.fiercewireless.com/story/t-mobile-
revives-30-unlimited-data-postpaid-smartphones/2012-08-22 (visited Oct. 16, 2012).
474 Mike Dano, T-Mobile Revives $30 Unlimited Data for Postpaid Smartphones, FIERCEWIRELESS, Aug. 22, 2012.
http://www.fiercewireless.com/story/t-mobile-revives-30-unlimited-data-postpaid-smartphones/2012-08-22">http://www.fiercewireless.com/story/t-mobile-revives-30-unlimited-data-postpaid-smartphones/2012-08-22 (visited
Oct. 16, 2012).

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composite of the three original models of smartphone data pricing. In addition to its original tiered data
plans with speed reductions, T-Mobile’s array of smartphone data plans includes a low-end tier with
overage charges adopted from the first model and an unlimited data pricing option from the third model.
Customers who purchase one of these smartphone data plans are also required to purchase a voice plan,
plus unlimited text messaging, for an additional monthly charge.475
152.
In December 2012, T-Mobile USA CEO John Legere announced that in 2013 the
company will eliminate the Classic rate plans shown in Tables 21 and 22 and instead offer only Value
plans to customers, thus eliminating device subsidies.476 As explained above, T-Mobile’s Value plans
allow customers to bring a compatible device to T-Mobile or pay for a new device upfront or in monthly
installments in exchange for lower monthly service plan fees.

Table 22

T-Mobile: Tiered Smartphone Data Plans with Reduced Speeds or Overage Charges, Sept. 2012

Monthly

Monthly

Speed

Overage

Mobile Hotspot

Data

Charge

Reduction

477

Charge

Tethering

200 MB
$10
No
$0.10 per MB
No
2 GB
$20
Yes
No
No
Unlimited
$30
No
No
No
5 GB
$35
Yes
No
Yes
10 GB
$65
Yes
No
Yes

153.
Sprint Smartphone Data Plans. Sprint remains the only nationwide service provider that
has continuously retained its unlimited data offering despite the trend toward tiered data, and that has not
yet introduced tiered smartphone data plans, discontinued offering new unlimited smartphone data plans,
or reduced the data speeds on its unlimited smartphone data plans.478 This was the standard industry
smartphone data pricing plan before the shift to tiered data plan pricing – a single unlimited data plan for
smartphones with no speed reductions or overage fees. Sprint has been using its unlimited smartphone
data offerings and the absence of either speed reductions or overage charges for heavy data use to
differentiate itself from its rivals and to seek a competitive advantage in attracting and retaining
customers.479 Sprint retained unlimited data pricing when it became the third U.S. service provider to

475 T-Mobile, Individual Plans, http://www.t-mobile.com/shop/plans/individual-plans.aspx (visited Nov. 26, 2012).
476 Phil Goldstein, T-Mobile Kills Device Subsidies, FIERCEWIRELESS, Dec. 6, 2012; T-Mobile USA, Presentation at
Deutschetelekom Capital Markets Day 2012, Dec. 6, 2012, at 23, available at http://www.telekom.com/static/-
/162600/7/presentation-jl-si.
477 See Table 21 for a more detailed description of the speed reduction policy for each tier.
478 Philip Goldstein, Sprint not Changing Data Pricing After AT&T’s Move, FIERCEWIRELESS, June 4, 2010
http://www.fiercewireless.com/story/sprint-not-changing-data-pricing-after-ts-move/2010-06-04">http://www.fiercewireless.com/story/sprint-not-changing-data-pricing-after-ts-move/2010-06-04 (visited Oct. 16,
2012); Philip Goldstein, Sprint: We Won’t Throttle Wireless Data Speeds on our Network, FIERCEWIRELESS, June
14, 2http://www.fiercewireless.com/story/sprint-we-wont-throttle-wireless-speeds-our-network/2010-06-14">010 http://www.fiercewireless.com/story/sprint-we-wont-throttle-wireless-speeds-our-network/2010-06-14
(visited Oct. 16, 2012); Philip Goldstein, Sprint Increases Unlimited Smartphone Data by $10 Per Month,
FIERCEWIRELESS, Jan. 18, 2011http://www.fiercewireless.com/story/sprint-increases-unlimited-smartphone-data-10-month/2011-01-18">. http://www.fiercewireless.com/story/sprint-increases-unlimited-smartphone-data-
10-month/2011-01-18 (visited Oct. 16, 2012).
479 Mike Dano, New Sprint Ad Campaign Hinges on Unlimited Data, FIERCEWIRELESS, Apr. 11, 2011
http://www.fiercewireless.com/story/new-sprint-ad-campaign-hinges-unlimited-data/2011-04-11">http://www.fiercewireless.com/story/new-sprint-ad-campaign-hinges-unlimited-data/2011-04-11 (visited Oct. 16,
2012); Mike Dano, Sprint Scolds Verizon’s Tiered Data Plans With New Unlimited Ads, FIERCEWIRELESS, Jul. 12,
(continued….)

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launch the iPhone in October 2011, and used its unlimited data plans to differentiate itself as the “value
proposition” provider in competing for iPhone users against rivals AT&T and Verizon Wireless.480
154.
Sprint prices its unlimited smartphone data plan with unlimited text messaging and
varying amounts of voice minutes included in the price (Table 23). As indicated in Table 23, it costs $30
per month to add Sprint’s unlimited smartphone data plan to a package that includes a limited bucket of
voice minutes and unlimited text messaging services.481

Table 23

Sprint Postpaid Unlimited Smartphone Data Plans

Monthly

Voice

Text

Monthly

Any Mobile

Push to

Data

Minutes

Messaging

Charge

Minutes

Talk

Unlimited
Unlimited
Unlimited
$109.99
Yes
Yes
Unlimited
900
Unlimited
$99.99
Yes
No
0
900
Unlimited
$69.99
No
No
Unlimited
450
Unlimited
$79.99
Yes
No
0
450
Unlimited
$49.99
No
No

155.
Although Sprint has yet to shift from unlimited data pricing to tiered data pricing, the
company made some pricing plan changes since its nationwide rivals shifted to tiered data pricing. (Table
24). In January 2011, Sprint raised the monthly charge on its unlimited smartphone data service by ten
dollars per month for new customers and also existing customers who get a new smartphone.482 This
price increase applied to both Sprint’s “Simply Everything” plan, which includes unlimited voice and
texting, and its “Everything Data” plans, which include a limited bucket of voice minutes and unlimited
texting. Prior to this increase, Sprint had charged an extra ten dollars per month only for its WiMAX-
capable smartphones.483 In addition, Sprint has begun to move away from unlimited data pricing in other
(Continued from previous page)
http://www.fiercewireless.com/story/sprint-scolds-verizons-tiered-data-plans-new-unlimited-ads/2011-07-12">2011 http://www.fiercewireless.com/story/sprint-scolds-verizons-tiered-data-plans-new-unlimited-ads/2011-07-12
(visited Oct. 16, 2012).
480 Philip Goldstein, Sprint Confirms Unlimited Data Plans for Iphone 4S and iPhone 4, FIERCEWIRELESS, Oct. 6,
http://www.fiercewireless.com/story/sprint-confirms-unlimited-data-plans-iphone-4s-and-iphone-4/2011-10-06">2011 http://www.fiercewireless.com/story/sprint-confirms-unlimited-data-plans-iphone-4s-and-iphone-4/2011-10-06
(visited Oct. 16, 2012); Philip Goldstein, Apple’s iPhone 4S May Not Be That Different, But the Wireless Industry
Now Is
, FIERCEWIRELESS, Oct. 5, 2http://www.fiercewireless.com/story/apples-iphone-4s-may-not-be-different-wireless-industry-now/2011-10-05">011 http://www.fiercewireless.com/story/apples-iphone-4s-may-not-be-different-
wireless-industry-now/2011-10-05 (visited Oct. 16, 2012).
481 Since the unlimited smartphone data bundles include unlimited mobile-to-mobile calling (Sprint’s “Any Mobile,
Anytime” feature) while the voice-and-text-only bundles do not, the effective size of the voice buckets is larger in
the unlimited smartphone data bundles, and therefore this estimate overstates the monthly charge for the unlimited
smartphone data plan. Sprint does not offer a separate unlimited calling plan, but rather only offers unlimited
calling (and texting) bundled with its unlimited smartphone data plan.
482 Philip Goldstein, Sprint Increases Unlimited Smartphone Data by $10 Per Month, FIERCEWIRELESS, Jan. 18,
2011.http://www.fiercewireless.com/story/sprint-increases-unlimited-smartphone-data-10-month/2011-01-18"> http://www.fiercewireless.com/story/sprint-increases-unlimited-smartphone-data-10-month/2011-01-18
(visited Oct. 16, 2012) Existing smartphone customers are not affected by the price increase unless they upgrade or
activate a new smartphone. The price increase applies to Sprint’s Everything Data Plan, which includes 450 voice
minutes and unlimited data, and its Simply Everything Plan, which includes unlimited voice, texting and data. Id.
483 Philip Goldstein, Sprint Increases Unlimited Smartphone Data by $10 Per Month, FIERCEWIRELESS, Jan. 18,
2011.http://www.fiercewireless.com/story/sprint-increases-unlimited-smartphone-data-10-month/2011-01-18"> http://www.fiercewireless.com/story/sprint-increases-unlimited-smartphone-data-10-month/2011-01-18
(visited Oct. 16, 2012).

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business segments, including its prepaid brands and non-smartphone devices.484

Table 24

Sprint Unlimited Smartphone Data Plan Changes, Jan. 2011-Mar. 2012

485

Unlimited

Pricing Changes

Speed Reduction

Plan

Postpaid Everything
Extra $10 per month for new customers and

Data
existing customers who got a new smartphone as of

1/20/2011
Simply
Everything
Prepaid
Beyond Talk
In July 2011, the price of the $25 plan increased to
As of March 2012, for
(Virgin
$35, the price of the $40 plan increased to $45, the
customers who use
Mobile)
price of the $60 plan decreased to $55, and a $10
more than 2.5 GB per
add-on fee for RIM Blackberry devices was
month
dropped
Boost Mobile
Extra $5 per month for new Android smartphone

customers as of 10/06/2011

156.
Smartphone Data Plans of Other Providers. Apart from the nationwide service
providers, C Spire Wireless (formerly Cellular South), in November 2011, became the fourth U.S. service
provider and the first regional provider to offer the iPhone 4S.486 The smartphone data pricing model
adopted by C Spire is similar to Sprint’s model in that all four bundled voice and data plans offered by C
Spire include unlimited data usage.487 The two least expensive plans curb bandwidth consumption by
excluding streaming video.488
157.
Tablet Data Plans. Unlike the case of smartphones, cellular network connections and
data plans are optional for tablets, and surveys indicate that tablet users prefer Wi-Fi over cellular
networks for connectivity.489 One of the factors inhibiting cellular connectivity for tablets has been the

484 In November 2011, Sprint stopped offering non-smartphone mobile broadband plans with unlimited data on
Clearwire’s mobile WiMAX network. Philip Goldstein, Sprint Drops Unlimited WiMAX Data for Mobile
Broadband Plans
, FIERCEWIRELESS, Oct. 21,http://www.fiercewireless.com/story/sprint-drops-unlimited-wimax-data-mobile-broadband-plans/2011-10-21"> 2011. http://www.fiercewireless.com/story/sprint-drops-unlimited-
wimax-data-mobile-broadband-plans/2011-10-21 (visited Oct. 16, 2012). Under the new plans, the monthly
recurring charge is unchanged, but WiMAX data now falls under the same data cap as EV-DO, with an overage
charge of $0.05 per MB. This change in Sprint’s mobile broadband plans does not affect smartphone users, but
instead applies to other data-oriented devices, including tablets, netbooks, notebooks and USB cards. Id.
485 Sprint, Virgin Mobile, and Boost Mobile are retail brands under the Sprint corporate brand. See, SEC, Form 10-
K, Sprint Nextel Corporation, filed Feb. 27, 2012, at 1.
486 “C Spire Wireless to Offer iPhone 4S on November 11,” Press Release, C Spire Wireless, Nov. 1, 2011.
http://www.cspire.com/company_info/about/news_detail.jsp?entryId=10700006">http://www.cspire.com/company_info/about/news_detail.jsp?entryId=10700006 (visited Oct. 16, 2012).
487 Id.
488 Id. In addition to streaming video, the four plans differ with respect to voice usage. The most expensive plan
and the second most expensive plan include unlimited calling, while the least expensive plan and the third most
expensive plan include 500 and 1000 minutes of voice service, respectively. All four plans include unlimited
texting.
489 Philip Goldstein, NPD: Tablet Users Increasingly Favor Wi-Fi Over Cellular Connections,
FIERCEWIRELESS, Dec. 12, 2011.http://www.fiercewireless.com/story/npd-tablet-users-increasingly-favor-wi-fi-over-cellular-connections/2011-12-12"> http://www.fiercewireless.com/story/npd-tablet-users-increasingly-favor-wi-fi-
over-cellular-connections/2011-12-12 (visited Oct. 16, 2012). According to the NPD report, 65 percent of U.S.
(continued….)

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need to purchase an additional data plan.490 The introduction of new family data plans for multiple
devices may make cellular network connectivity more attractive for tablet users.491
158.
Prior to the launch of the new shared data plans, data plans for tablets were not a major
focal point of price rivalry in comparison with data plans for smartphones.492 While service providers
heavily subsidize the purchase of smartphones to promote their adoption and attract and retain data users,
they do not subsidize the purchase of tablets as extensively as they do smartphone purchases. Neither
Verizon Wireless nor AT&T offer subsidies for the purchase of Apple iPads, although both offer
subsidies on other brands provided customers sign up for a two-year contract. While T-Mobile and Sprint
do not offer the iPad, T-Mobile offers subsidies on the tablets it supports and Sprint offers subsidies on
some but not all tablets.493 Data pricing for tablets is less differentiated than smartphone data pricing. In
particular, all four nationwide providers offer exclusively tiered, usage-based data plans for tablets, rather
than unlimited data plans.494 In common with Verizon Wireless and AT&T, Sprint levies overage
charges for usage in excess of monthly allowances, while T-Mobile reduces the data speeds of tablet users
after they reach their monthly data allowances.495 Data plan pricing for tablets by AT&T and Verizon
(Continued from previous page)
tablet buyers only connect via Wi-Fi, up from 60 percent in April 2011; Philip Goldstein, Localytics: Only 6% of
iPad Data Sessions are on Cellular Networks
, FIERCEWIRELESS, Mar. 23, 2012.
http://www.fiercewireless.com/story/localytics-only-6-ipad-data-sessions-are-cellular-networks/2012-03-23">http://www.fiercewireless.com/story/localytics-only-6-ipad-data-sessions-are-cellular-networks/2012-03-23 (visited
Oct. 16, 2012) (citing a finding of Localytics that just 6 percent of iPad data sessions are transmitted over a cellular
network, and a Chetan Sharma Consulting report finding that 90 percent of tablet users are only using Wi –Fi, even
if the tablets have cellular data capabilities). Localytics also found that about 89.7 percent of all iPads sold can only
connect to Wi-Fi networks, 8.8 percent can connect to 3G networks and 1.5 percent can connect to LTE networks;
among iPads with 3G connectivity, 55 percent of usage is over Wi-Fi and 45 percent is over 3G networks; among
LTE-enabled iPads, 64 percent of usage is over Wi-Fi and 36 percent is via LTE. Id.
490 Philip Goldstein, NPD: Tablet Users Increasingly Favor Wi-Fi Over Cellular Connections, FIERCEWIRELESS,
Dec. 12, 2011.http://www.fiercewireless.com/story/npd-tablet-users-increasingly-favor-wi-fi-over-cellular-connections/2011-12-12"> http://www.fiercewireless.com/story/npd-tablet-users-increasingly-favor-wi-fi-over-cellular-
connections/2011-12-12 (visited Oct. 16, 2012).
491 Philip Goldstein, NPD: Tablet Users Increasingly Favor Wi-Fi Over Cellular Connections, FIERCEWIRELESS,
Dec. 12, 2011.http://www.fiercewireless.com/story/npd-tablet-users-increasingly-favor-wi-fi-over-cellular-connections/2011-12-12"> http://www.fiercewireless.com/story/npd-tablet-users-increasingly-favor-wi-fi-over-cellular-
connections/2011-12-12 (visited Oct. 16, 2012).
492 Table data plans are generally available on a postpaid basis with a two-year contractual commitment for
subsidized tablets, and on a no-contract or prepaid basis otherwise.
493 Verizon, Select Device, https://preorder.verizonwireless.com/ iconic/iconic/screens/IconicDeviceSelection.do
(visited Mar. 28, 2012); AT&T, Cell Phones and Mobile Devices,
http://www.att.com/shop/wireless.html#fbid=I4cgltbUFdp (visited Mar. 28, 2012); T-Mobile, Internet Devices,
http://www.t-mobile.com/shop/phones/?shape=lcards (visited Mar. 28, 2012); Sprint, Laptops, Tablets and More,
http://shop.sprint.com/mysprint/shop/phone_wall.jsp?flow=&tabId=dvcTab1820005&filterString=tablet&isDeeplinked=true&INTNAV=ATG:HE:Tablets">http://shop.sprint.com/mysprint/shop/phone_wall.jsp?flow=&tabId=dvcTab1820005&filterString=tablet&isDeeplin
ked=true&INTNAV=ATG:HE:Tablets (visited Mar. 28, 2012).
494 Sprint, Plans,
http://shop.sprint.com/mysprint/shop/plan/plan_wall.jsp?tabId=plnTab1820002&flow=AAL&planFamilyType=null
(visited Mar. 28, 2012); T-Mobile, T-Mobile Has Tablets for Everyone, http://mobile-broadband.t-
mobile.com/tablets (visited Mar. 28, 2012); AT&T, AT&T Data Plans. http://www.wireless.att.com/cell-phone-
service/cell-phone-plans/data-connect-plans.jsp?_requestid=142028 (visited Mar. 28, 2012); Verizon, Mobile
Broadband Plans Details
, http://www.verizonwireless.com/b2c/plans/?page=mobileBroadband (visited Mar. 28,
2012).
495 Sprint, Plans,
http://shop.sprint.com/mysprint/shop/plan/plan_wall.jsp?tabId=plnTab1820002&flow=AAL&planFamilyType=null
(visited Mar. 28, 2012); T-Mobile, T-Mobile Has Tablets for Everyone, http://mobile-broadband.t-
mobile.com/tablets (visited Mar. 28, 2012); AT&T, AT&T Data Plans. http://www.wireless.att.com/cell-phone-
service/cell-phone-plans/data-connect-plans.jsp?_requestid=142028 (visited Mar. 28, 2012); Verizon, Mobile
(continued….)

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Wireless is shown above in Table 20 on their shared data plans. The pricing of comparable data plans for
tablets by Sprint and T-Mobile is shown in Table 25 below. Unlike with smartphone data plans, data
plans for tablets are not bundled with voice plans, and customers who purchase a data plan for tablets
from Sprint or T-Mobile are not required to purchase a voice plan.

Table 25

Sprint and T-Mobile Data Plans for Tablets


Data Allowance Monthly Price Overage Charge Speed

Reductions

Sprint

3 GB
$34.99
$0.05 per MB
Not applicable
6 BG
$49.99
12 GB
$79.99

T-Mobile

496 2 GB
$39.99
Not applicable
Speeds slowed
after monthly
5 GB
$49.99
limit reached
10 GB
$79.99

2.

Prepaid Service

159.
Prepaid plans typically yield lower average monthly revenue per user (ARPU) and higher
churn rates for service providers in comparison to postpaid service.497 For these reasons, initially the
industry did not heavily promote prepaid offerings.498 Subsequently, however, the pool of unsubscribed
customers that met the credit requirements for postpaid plans declined to the point where prepaid
offerings, which do not require credit checks, became more attractive to more service providers.499 In
recent years there has been growth in unlimited prepaid service offerings,500 and prepaid service providers
took actions to compete aggressively for customers of smartphones and other data devices. 501 Leading
this trend, MetroPCS and Leap added new smartphones to their handset line-ups and introduced higher-
tier pricing plans for smartphones.502 Prepaid smartphone penetration reached 25 and 27 percent in the
second quarter of 2011 for MetroPCS and Leap, respectively.503
160.
Accompanying the growth of unlimited and tiered prepaid offerings, there is a trend
towards lower per-minute rates and increased usage and ARPU in prepaid services. As a result, analysts
(Continued from previous page)
Broadband Plans Details, http://www.verizonwireless.com/b2c/plans/?page=mobileBroadband (visited Mar. 28,
2012).
496 T-Mobile offers a discount of $10.00 per month to new and existing voice customers.
497 Twelfth Report, 23 FCC Rcd at 2293-94 ¶ 116.
498 Id.
499 Id.
500 Fourteenth Report, 25 FCC Rcd at 11473-74 ¶ 98; Phil Cusick et al., Slumdog Millionaires, Macquarie Capital,
Equity Research, May 1, 2009, at 3 (Slumdog Millionaires).
501 Fifteenth Report, 26 FCC Rcd at 9732 ¶ 102.
502 Fifteenth Report, 26 FCC Rcd at 0732-33 ¶ 102.
503 Simon Flannery et al., AlphaWise Survey Points to Ongoing Postpaid Cannibalization by Prepaid, Morgan
Stanley, Sept. 23, 2011, at 11.

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believe that the market for prepaid service is divided into a low-end segment and a high-end segment.504
The low-end prepaid segment comprises traditional pay-as-you-go prepaid service, while the high-end
prepaid segment encompasses unlimited and tiered service plans, especially those that include data. The
following discussion of developments in prepaid pricing plans discusses first the high-end and then the
low-end prepaid segments.
161.
High-End Segment Prepaid Plans. The following discussion of the high-end prepaid
segment focuses on two trends, both of which were highlighted in the Fifteenth Report.505 The first is the
continued entry of the nationwide service providers into the unlimited and tiered prepaid segment, and the
second is the continued movement by prepaid service providers into data services for smartphone users.
As explained below, the high-end prepaid segment is evolving to tiered plans due to the movement of
prepaid service providers into smartphone data services and the strain that heavy bandwidth consumption
by smartphone data users puts on network management. Faced with network capacity constraints, some
prepaid service providers are beginning to respond with plan changes designed to limit bandwidth use,
including reductions in data connection speeds when usage exceeds a monthly allowance.
162.
Multi-metro providers Leap and MetroPCS were the earliest retailers of unlimited
prepaid talk, text, and data offerings.506 In recent years, the nationwide service providers have entered
this segment directly via their own prepaid brands and indirectly through wholesale arrangements with
resellers. Unlimited offerings from Sprint Nextel’s Virgin Mobile and Boost Mobile prepaid brands were
among the first examples of this trend. They were followed by TracFone’s “Straight Talk” service, which
was launched on Verizon Wireless’s network in 2009.507
163.
Today, TracFone’s Straight Talk service runs on the networks of all four nationwide
service providers.508 Following its 2009 launch on Verizon Wireless’s CDMA network, in 2010
TracFone expanded Straight Talk to include feature phones that operate on AT&T’s and T-Mobile’s
respective GSM networks.509 In the second half of 2011, Sprint began to support TracFone’s Straight
Talk service when it signed an agreement to provide the underlying network for Straight Talk’s first
Android smartphone and future Straight Talk Android devices.510 In January 2012, TracFone expanded
its Straight Talk service for Android smartphones by launching a high-end Android smartphone (the LG

504 Craig Moffett et al., U.S. Wireless Industry Scorecard: The Haves and the Have-Nots Diverge, Bernstein
Research, Nov. 6, 2009, at 1, 9 (The Haves and the Have-Nots Diverge); Slumdog Millionaires, at 4.
505 Fifteenth Report, 26 FCC Rcd at 9731-33 ¶ 99-102.
506 Thirteenth Report, 24 FCC Rcd at 6295 ¶ 231.
507 Fourteenth Report, 25 FCC Rcd at 11475 ¶ 101; Roger Cheng, Wal-Mart Wireless Expands, Wall Street Journal,
Oct. 15, 2009 (Wal-Mart Wireless Expands).
508 Philip Goldstein, TracFone’s Straight Talk Android Phones Will Use Sprint’s Network, FIERCEWIRELESS, Sept.
9, 2011.http://www.fiercewireless.com/story/tracfones-straight-talk-android-phones-will-use-sprints-network/2011-09-09"> http://www.fiercewireless.com/story/tracfones-straight-talk-android-phones-will-use-sprints-network/2011-
09-09 (visited Oct. 16, 2012).
509 Philip Goldstein, T-Mobile Jumps on Straight Talk Bandwagon, FIERCEWIRELESS, Aug. 4, 2010.
http://www.fiercewireless.com/story/report-t-mobile-jumps-straight-talk-bandwagon/2010-08-04">http://www.fiercewireless.com/story/report-t-mobile-jumps-straight-talk-bandwagon/2010-08-04 (visited Oct. 16,
2012); Philip Goldstein, TracFone’s Straight Talk Android Phones Will Use Sprint’s Network, FIERCEWIRELESS,
Sept. 9, 2011.http://www.fiercewireless.com/story/tracfones-straight-talk-android-phones-will-use-sprints-network/2011-09-09"> http://www.fiercewireless.com/story/tracfones-straight-talk-android-phones-will-use-sprints-
network/2011-09-09 (visited Oct. 16, 2012).
510 Philip Goldstein, TracFone’s Straight Talk Android Phones Will Use Sprint’s Network, FIERCEWIRELESS, Sept.
9, 2011.http://www.fiercewireless.com/story/tracfones-straight-talk-android-phones-will-use-sprints-network/2011-09-09"> http://www.fiercewireless.com/story/tracfones-straight-talk-android-phones-will-use-sprints-network/2011-
09-09 (visited Oct. 16, 2012).

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Optimus 2X) on T-Mobile’s HSPA+ network.511 The price of the Straight Talk plan with unlimited
voice, text, and mobile web access is $45 per month.512 Straight Talk also offers three months, six
months, and one year unlimited data plans that offer discounts to consumers who purchase the plan for
longer periods.513
164.
The Fifteenth Report noted that Verizon Wireless’s earlier decision to support Straight
Talk had represented a shift in its business strategy inasmuch as the company had largely avoided the
prepaid market prior to the launch of Straight Talk in 2009.514 Subsequently, Verizon Wireless has
increased its presence in the unlimited prepaid segment by launching its own unlimited prepaid brand
called “Unleashed.” As detailed in Table 26, while Verizon Wireless’s initial experimentation with
unlimited prepaid offerings was confined to regional markets in parts of the Southeast, Florida and
Southern California, these were followed by the launch of the Unleashed $50 per month unlimited prepaid
plan on a nationwide basis in September 2011.515 According to analysts, Verizon Wireless launched its
own brand of unlimited prepaid plans in response to the success of traditional unlimited prepaid providers
(such as MetroPCS) in certain regional markets, and its entry into the unlimited prepaid segment is likely
to compete for customers with existing unlimited prepaid providers that offer comparable plans at the
same or somewhat lower monthly prices, including MetroPCS ($40 per month), Leap ($45), Sprint
Nextel’s Boost Mobile brand ($50) and TracFone’s Straight Talk service ($45).516






511 Philip Goldstein, Analyst: TracFone’s Straight Talk to Launch Smartphone Via T-Mobile’s HSPA+ Network,
FIERCEWIRELESS, Jan. 19, 2012http://www.fiercewireless.com/story/analyst-tracfones-straight-talk-launch-smartphone-t-mobiles-hspa-network/2012-01-19">. http://www.fiercewireless.com/story/analyst-tracfones-straight-talk-launch-
smartphone-t-mobiles-hspa-network/2012-01-19 (visited Oct. 16, 2012).
512 Straight Talk, Service Plans, ahttps://www.straighttalk.com/secure/ServicePlans">t https://www.straighttalk.com/secure/ServicePlans (visited Sep. 14, 2012).
513 Straight Talk, Service Plans, ahttps://www.straighttalk.com/secure/ServicePlans">t https://www.straighttalk.com/secure/ServicePlans (visited Sep. 14, 2012).
514 Fifteenth Report, 26 FCC Rcd at 9731 ¶ 99; Niraj Sheth and Roger Cheng, Phone Rivals Dial Up Prepaid
Services
, WALL STREET JOURNAL, May 14, 2010.
http://online.wsj.com/article/SB10001424052748704635204575242232945917368.html">http://online.wsj.com/article/SB10001424052748704635204575242232945917368.html (visited Oct. 16, 2012).
515 Philip Goldstein, Verizon to Launch Unleashed $50 Unlimited Prepaid Plan Nationwide Thursday,
FIERCEWIRELESS, Sept. 13, 2011.http://www.fiercewireless.com/story/verizon-launch-unleashed-50-unlimited-prepaid-plan-nationwide-thursday/2011-09-13"> http://www.fiercewireless.com/story/verizon-launch-unleashed-50-unlimited-
prepaid-plan-nationwide-thursday/2011-09-13 (visited Oct. 16, 2012); Mike Dano, Verizon Wireless Details
Unleashed $50 Prepaid Unlimited Plan
, FIERCEWIRELESS, Apr. 26, 2011.
http://www.fiercewireless.com/story/verizon-wireless-details-unleashed-50-prepaid-unlimited-plan/2011-04-26">http://www.fiercewireless.com/story/verizon-wireless-details-unleashed-50-prepaid-unlimited-plan/2011-04-26
(visited Oct. 16. 2012); Philip Goldstein, Verizon Trials $50 Prepaid Unlimited Plan, FIERCEWIRELESS, July 22,
2010.http://www.fiercewireless.com/story/report-verizon-testing-50-prepaid-unlimited-plan/2010-07-22"> http://www.fiercewireless.com/story/report-verizon-testing-50-prepaid-unlimited-plan/2010-07-22 (visited
Oct. 16, 2012).
516 Philip Goldstein, Verizon Trials $50 Prepaid Unlimited Plan, FIERCEWIRELESS, July 22, 2010.
http://www.fiercewireless.com/story/report-verizon-testing-50-prepaid-unlimited-plan/2010-07-22">http://www.fiercewireless.com/story/report-verizon-testing-50-prepaid-unlimited-plan/2010-07-22 (visited Oct. 16,
2012); Philip Goldstein, Verizon to Launch Unleashed $50 Unlimited Prepaid Plan Nationwide Thursday,
FIERCEWIRELESS, Sept. 13, 201http://www.fiercewireless.com/story/verizon-launch-unleashed-50-unlimited-prepaid-plan-nationwide-thursday/2011-09-13">. http://www.fiercewireless.com/story/verizon-launch-unleashed-50-unlimited-
prepaid-plan-nationwide-thursday/2011-09-13 (visited Oct. 16, 2012); Mike Dano, Verizon Wireless Details
Unleashed $50 Prepaid Unlimited Plan
, FIERCEWIRELESS, Apr. 26, 2011.
http://www.fiercewireless.com/story/verizon-wireless-details-unleashed-50-prepaid-unlimited-plan/2011-04-26">http://www.fiercewireless.com/story/verizon-wireless-details-unleashed-50-prepaid-unlimited-plan/2011-04-26
(visited Oct. 16. 2012).

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Table 26

Verizon Wireless: Development of Unlimited Prepaid Offerings, Jul. 2010-2011

517

Launch

Plan

Geographic

Monthly

Services

Additional Conditions

Date


Coverage

Charge



7/2010
Southeast
Southeastern
$50
Unlimited
Limited-time offer, only
Save Program
voice and
open to subscribers targeted

States
texting, but no
with text message & email
data option
campaigns
4/2011
Unleashed518
Southern
$50
Unlimited
Mobile web does not provide
California &
voice, texting
full web browsing
and web access
defined
regions of
Florida
9/2011
Unleashed
Nationwide
$50
Unlimited
Mobile web does not provide
voice, texting
full web browsing.
& web access
Available at Verizon
Wireless stores & through
Best Buy, Target & Walmart
stores

165.
T-Mobile increased its presence in the high-end prepaid segment in 2011 by launching its
no annual contract Monthly 4G plans.519 As detailed in Table 27, T-Mobile’s Monthly 4G lineup is a
tiered offering, with most of the tiers featuring unlimited calling, texting and web use. 520 The exception

517 Verizon, Prepaid Plans, http://www.verizonwireless.com/b2c/splash/prepay.jsp (visited Nov. 1, 2011); Philip
Goldstein, Verizon to Launch Unleashed $50 Unlimited Prepaid Plan Nationwide Thursday, FIERCEWIRELESS, Sept.
13, 2http://www.fiercewireless.com/story/verizon-launch-unleashed-50-unlimited-prepaid-plan-nationwide-thursday/2011-09-13">011 http://www.fiercewireless.com/story/verizon-launch-unleashed-50-unlimited-prepaid-plan-nationwide-
thursday/2011-09-13 (visited Oct. 16, 2012); Mike Dano, Verizon Wireless Details Unleashed $50 Prepaid
Unlimited Plan
, FIERCEWIRELESS, Apr. 26, 2011http://www.fiercewireless.com/story/verizon-wireless-details-unleashed-50-prepaid-unlimited-plan/2011-04-26">. http://www.fiercewireless.com/story/verizon-wireless-details-
unleashed-50-prepaid-unlimited-plan/2011-04-26 (visited Oct. 16, 2012); Philip Goldstein, Verizon Trials $50
Prepaid Unlimited Plan
, FIERCEWIRELESS, July 22, 2010.http://www.fiercewireless.com/story/report-verizon-testing-50-prepaid-unlimited-plan/2010-07-22"> http://www.fiercewireless.com/story/report-verizon-
testing-50-prepaid-unlimited-plan/2010-07-22 (visited Oct. 16, 2012).
518 Verizon also offered Unleashed with per-day and per-minute pricing: $1.99 per day for unlimited calling to any
number, together with $0.02 per text and $0.99 per day for daily mobile Web browsing; or $0.99 per day for
unlimited calling to Verizon customers, with $0.10 per minute for calls to other numbers, $0.10 per text message
and $0.99 per day for mobile Web browsing. Mike Dano, Verizon Wireless Details Unleashed $50 Prepaid
Unlimited Plan
, FIERCEWIRELESS, Apr. 26, 2011http://www.fiercewireless.com/story/verizon-wireless-details-unleashed-50-prepaid-unlimited-plan/2011-04-26">. http://www.fiercewireless.com/story/verizon-wireless-details-
unleashed-50-prepaid-unlimited-plan/2011-04-26 (visited Oct. 16, 2012).
519 T-Mobile Offers Monthly 4G Plans Featuring Unlimited Talk, Text and Web With No Annual Contract, Press
Release, T-Mobile, May 23, 2011.http://newsroom.t-mobile.com/articles/t-mobile-offers-monthly4g-plans"> http://newsroom.t-mobile.com/articles/t-mobile-offers-monthly4g-plans (visited
Oct. 16, 2012); Philip Goldstein, T-Mobile Launches New Monthly and Pay-by-the-Day Plans, FIERCEWIRELESS,
Oct. 18, 2http://www.fiercewireless.com/story/t-mobile-launches-new-monthly-and-pay-day-plans/2011-10-18">011. http://www.fiercewireless.com/story/t-mobile-launches-new-monthly-and-pay-day-plans/2011-10-18
(visited Oct. 16, 2012) ; Philip Goldstein, T-Mobile Pushes Hard for Prepaid Subscribers Amid Uncertainty,
FIERCEWIRELESS, Oct. 24, 2011.http://www.fiercewireless.com/story/t-mobile-pushes-hard-prepaid-subscribers-amid-uncertainty/2011-10-24"> http://www.fiercewireless.com/story/t-mobile-pushes-hard-prepaid-subscribers-
amid-uncertainty/2011-10-24 (visited Oct. 16, 2012).
520 T-Mobile Offers Monthly 4G Plans Featuring Unlimited Talk, Text and Web With No Annual Contract, Press
Release, T-Mobile, May 23, 2011http://newsroom.t-mobile.com/articles/t-mobile-offers-monthly4g-plans">. http://newsroom.t-mobile.com/articles/t-mobile-offers-monthly4g-plans (visited
(continued….)

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is the data-centric Monthly 4G plan launched in an exclusive partnership with Walmart in October 2011,
which includes unlimited texting and web use but not unlimited voice.521 T-Mobile sets a different
monthly allowance for high-speed data use for each tier and reduces the data throughput speeds of
customers after they use up their monthly high-speed data allotment on its HSPA+ network by slowing
their speeds for the remainder of the month.522

Table 27

T-Mobile: Monthly Prepaid 4G Service Plans, 2011-Sept. 2012

523

Launch

Monthly

Calling

Texting

4G

Other Features

Date

Charge

Data
Cap

5/2011
$70
Unlimited
Unlimited 5 GB
NA
5/2011
$50
Unlimited
Unlimited 100 MB
NA
10/2011
$60
Unlimited
Unlimited 2 GB
NA
10/2011
$30
100 minutes, $0.10 per
Unlimited 5 GB
Sold exclusively at
minute after first 100
Walmart stores &
minutes
online

166.
MetroPCS responded to the unlimited offerings of nationwide providers in October 2011
by launching a holiday promotional offer of unlimited calling, texting and data usage in a package of four
feature phones for $100 per month, or $25 per line.524 The promotion represented a significant discount
from the price of $40 per month for each line for the company’s standard package of unlimited calling,
texting and web use.525 However, the promotion lasted only through December 31, 2011, only new
customers were eligible for the offer, and the company’s LTE and Android devices were excluded from
(Continued from previous page)
Oct. 16, 2012); T-Mobile Adds New Plans to Monthly Lineup, Press Release, T-Mobile, Oct. 17, 2011.
http://newsroom.t-mobile.com/articles/t-mobile-adds-new-monthly4g-plans">http://newsroom.t-mobile.com/articles/t-mobile-adds-new-monthly4g-plans (visited Oct. 16, 2012).
521 Walmart and T-Mobile Introduce Exclusive No-Annual Contract 4G Offering, Press Release, T-Mobile, Oct. 3,
2011.http://newsroom.t-mobile.com/articles/walmart-and-t-mobile-introduce-exclusive-no-annual-contract-4g-offering"> http://newsroom.t-mobile.com/articles/walmart-and-t-mobile-introduce-exclusive-no-annual-contract-4g-
offering (visited Oct.16, 2012); Philip Goldstein, T-Mobile, Walmart Partner o $30 No-Contract Data and Texting
Plan
, FIERCEWIRELESS, Oct. 3, 2011http://www.fiercewireless.com/story/t-mobile-walmart-partner-30-no-contract-data-and-texting-plan/2011-10-03">. http://www.fiercewireless.com/story/t-mobile-walmart-partner-30-no-
contract-data-and-texting-plan/2011-10-03 (visited Oct. 16, 2012).
522 T-Mobile Offers Monthly4G Plans Featuring Unlimited Talk, Text and Web With No Annual Contract, Press
Release, T-Mobile, May 23, 2011.http://newsroom.t-mobile.com/articles/t-mobile-offers-monthly4g-plans"> http://newsroom.t-mobile.com/articles/t-mobile-offers-monthly4g-plans (visited
Oct. 16, 2012); Walmart and T-Mobile Introduce Exclusive No-Annual Contract 4G Offering, Press Release, T-
Mobile, Oct. 3, 2011.http://newsroom.t-mobile.com/articles/walmart-and-t-mobile-introduce-exclusive-no-annual-contract-4g-offering"> http://newsroom.t-mobile.com/articles/walmart-and-t-mobile-introduce-exclusive-no-annual-
contract-4g-offering (visited Oct. 16, 2012).
523 T-Mobile, No Annual Contract Plans, http://prepaid-phones.t-mobile.com/prepaid-plans (visited Oct. 31, 2012).
524 Mike Dano, MetroPCS Promotion: Unlimited Everything for $25 (Minimum of Four Lines), FIERCEWIRELESS,
Oct. 27, 2http://www.fiercewireless.com/story/metropcs-promotion-unlimited-everything-25-minimum-4-lines/2011-10-27">011. http://www.fiercewireless.com/story/metropcs-promotion-unlimited-everything-25-minimum-4-
lines/2011-10-27 (visited Oct. 16, 2012).
525 Mike Dano, MetroPCS Promotion: Unlimited Everything for $25 (Minimum of Four Lines), FIERCEWIRELESS,
Oct. 27, 2http://www.fiercewireless.com/story/metropcs-promotion-unlimited-everything-25-minimum-4-lines/2011-10-27">011. http://www.fiercewireless.com/story/metropcs-promotion-unlimited-everything-25-minimum-4-
lines/2011-10-27 (visited Oct. 16, 2012).

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the offer. 526
167.
Management of Data Consumption in High-End Prepaid Plans. The same network
management issues motivating the ongoing shift from unlimited data pricing to tiered smartphone data
plans in the postpaid segment – namely, the impact of higher bandwidth consumption by smartphone
users on network utilization and capacity constraints527 – are also beginning to induce changes in the
pricing and service terms and conditions of high-end prepaid plans for users of smartphone data.
168.
As discussed above, T-Mobile set an allowance on high-speed data use for each tier of its
Monthly 4G offerings launched in 2011. After customers use up their monthly high-speed data allotment
at up to 4G speeds on T-Mobile’s HSPA+ network, their speeds will potentially be slowed to 2G speeds
for the remainder of the month.528 Verizon Wireless’s Unlimited prepaid plan provides unlimited talk,
text & web, but is offered only with basic phones and does not include full web browsing.529
169.
Sprint’s strategy for managing data consumption in its high-end prepaid plans has
evolved over time. Sprint’s initial strategy was limited to pricing changes. In particular, as shown in
Table 24, Sprint’s Boost Mobile prepaid brand added a $5 monthly charge to its $50 per month unlimited
nationwide talk, texting, and data plan for new customers of its Android smartphones in October 2011,530
and Sprint’s Virgin Mobile prepaid brand also increased the prices of its least expensive Beyond Talk
unlimited data plans in July 2011.531 Subsequently, Sprint began to move away from unlimited data
pricing in its prepaid segment. In particular, while Sprint has so far continued to offer unlimited postpaid
smartphone data offerings marketed under the Sprint brand, in March 2012 the company’s Virgin Mobile
prepaid brand began to reduce the data speeds of smartphone customers on its Beyond Talk plans if their
data usage exceeds a monthly allowance of 2.5 GB of data.532 The data speeds of Beyond Talk customers

526 Mike Dano, MetroPCS Promotion: Unlimited Everything for $25 (Minimum of Four Lines), FIERCEWIRELESS,
Oct. 27, 2http://www.fiercewireless.com/story/metropcs-promotion-unlimited-everything-25-minimum-4-lines/2011-10-27">011. http://www.fiercewireless.com/story/metropcs-promotion-unlimited-everything-25-minimum-4-
lines/2011-10-27 (visited Oct. 16, 2012).
527 Fifteenth Report, 26 FCC Rcd at 9725-27 ¶¶ 85-87; Simon Flannery et al., AlphaWise Survey Points to Ongoing
Postpaid Cannibalization by Prepaid
, Morgan Stanley, Sept. 23, 2011, at 12 (noting that “MetroPCS is seeing
strong uptake on its CDMA network, causing its network to face capacity constraints.”).
528 Sue Marek, T-Mobile Unveils New Tiered Data Plans for Smartphones, Details Throttling Speeds,
FIERCEWIRELESS, May 23, 2011, availablehttp://www.fiercewireless.com/story/t-mobile-quietly-launches-tiered-data-plans-smartphones/2011-05-23#ixzz23X47gEgf"> at http://www.fiercewireless.com/story/t-mobile-quietly-launches-tiered-
data-plans-smartphones/2011-05-23#ixzz23X47gEgf (visited Oct. 16, 2012) (stating “The operator [T-Mobile] also
said that if customers go over their allotted data cap they will not incur overage charges but instead will have their
data speeds throttled down to an EDGE, or 2G, experience of around 100 Kbps or less.”).
529 Verizon, Prepaid Plans, http://www.verizonwireless.com/b2c/splash/prepay.jsp (visited Nov. 1, 2012).
530 Philip Goldstein, Boost Mobile Tacking $5 Charge Onto Unlimited Android Phone Bill, FIERCEWIRELESS, Sept.
16, 2011, available athttp://www.fiercewireless.com/story/boost-mobile-tacking-5-charge-unlimited-android-phone-bill/2011-09-16"> http://www.fiercewireless.com/story/boost-mobile-tacking-5-charge-unlimited-android-
phone-bill/2011-09-16 (visited Oct. 16, 2012) The additional charge took effect the day before Boost started selling
the Samsung Transform Ultra Android device.
531 Philip Goldstein, Virgin Mobile to Raise Beyond Talk Prices But Drop Blackberry Add-On Fee,
FIERCEWIRELESS, Jul. 11, 2011http://www.fiercewireless.com/story/virgin-mobile-raise-paylo-prices-drop-blackberry-add-fee/2011-07-11">. http://www.fiercewireless.com/story/virgin-mobile-raise-paylo-prices-drop-
blackberry-add-fee/2011-07-11 (visited Oct. 16, 2012) Virgin Mobile concurrently cut the price of its most
expensive Beyond Talk plan and dropped an add-on fee for Blackberry devices. These pricing changes were made
just prior to Virgin Mobile’s launch of its first Android smartphone device. All three Beyond Talk plans include
unlimited texting, email and data, but differ with respect to the number of voice minutes included. Id.
532 Philip Goldstein, Virgin Mobile to Begin Smartphone Data Throttling in March, FIERCEWIRELESS, Jan. 19, 2012.
http://www.fiercewireless.com/story/virgin-mobile-begin-smartphone-data-throttling-march/2012-01-19">http://www.fiercewireless.com/story/virgin-mobile-begin-smartphone-data-throttling-march/2012-01-19 (visited
Oct. 16, 2012) The company originally announced plans to reduce the speeds of heavy smartphone data users
beginning in October 2011, but subsequently postponed smartphone data speed reductions until 2012. Sue Marek,
Virgin Mobile Will Throttle Heavy Data Users, FIERCEWIRELESS, Jul. 13, 2011.
(continued….)

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will be reduced to 256 Kbps for the remainder of the month once the 2.5 GB monthly allowance has been
reached, but data speeds will return to normal at the start of the customer’s next billing cycle.533
Customers who want to avoid waiting for the start of the next billing cycle have the option to restart their
plan simply by topping up their account.534
170.
Leap was one of the first wireless providers to switch from unlimited smartphone data
pricing to a tiered pricing structure for smartphone data use and to reduce the data speeds of customers
who exceed their monthly data allowance instead of levying overage charges.535 Leap began conducting
market trials for its new tiered data pricing plans in several Western markets in April 2010, and the
company introduced this tiered data pricing model on a nationwide basis the following August.536 In
September 2012, Leap revised its pricing model again by launching new tiered smartphone data plans that
give customers the option of purchasing additional quantities of full-speed data than their selected tier
provides if they need it.537 The result is essentially a more flexible, blended tiered pricing model with
either speed reductions or overage charges.
171.
Under the new tiered pricing structure introduced in September 2012, Leap’s smartphone
rate plans start at $50 per month for unlimited calling, texting and 3G data, plus an allowance of 1 GB of
full-speed data per month.538 The two higher tiers include 2.5 GB of full-speed data for $60 per month
and 5 GB of data for $70 per month, and both plans also include the ability for customers to tether their
device to power additional wireless devices. If customers use up their allowance of full-speed data before
the end of the month, they have several options: (1) add one or more 1 GB full-speed data add-ons to
(Continued from previous page)
http://www.fiercebroadbandwireless.com/story/virgin-mobile-will-throttle-heavy-data-users/2011-07-13">http://www.fiercebroadbandwireless.com/story/virgin-mobile-will-throttle-heavy-data-users/2011-07-13 (viisted
Oct. 16, 2012); Philip Goldstein, Virgin Mobile Postpones Smartphone Data Throttling Until 2012,
FIERCEWIRELESS, Sept. 30, 2011.http://www.fiercewireless.com/story/virgin-mobile-postpones-smartphone-data-throttling-until-2012/2011-09-30"> http://www.fiercewireless.com/story/virgin-mobile-postpones-smartphone-data-
throttling-until-2012/2011-09-30 (visited Oct. 16, 2012).
533 Philip Goldstein, Virgin Mobile to Begin Smartphone Data Throttling in March, FIERCEWIRELESS, Jan. 19, 2012.
http://www.fiercewireless.com/story/virgin-mobile-begin-smartphone-data-throttling-march/2012-01-19">http://www.fiercewireless.com/story/virgin-mobile-begin-smartphone-data-throttling-march/2012-01-19 (visited
Oct. 16, 2012).
534 Philip Goldstein, Virgin Mobile to Begin Smartphone Data Throttling in March, FIERCEWIRELESS, Jan. 19, 2012.
http://www.fiercewireless.com/story/virgin-mobile-begin-smartphone-data-throttling-march/2012-01-19">http://www.fiercewireless.com/story/virgin-mobile-begin-smartphone-data-throttling-march/2012-01-19 (visited
Oct. 16, 2012).
535 Mike Dano, Leap to Launch Session-Based Data Transactions on Top of Tiered Pricing, FIERCEWIRELESS, Jan.
5, 2012.http://www.fiercewireless.com/story/leap-launch-session-based-data-transactions-top-tiered-pricing/2012-01-05"> http://www.fiercewireless.com/story/leap-launch-session-based-data-transactions-top-tiered-pricing/2012-
01-05 (visisted Oct. 16, 2012).
536 Mike Dano, Leap Experimenting With New Unlimited Broadband Plans, FIERCEWIRELESS, Apr. 28, 2010.
http://www.fiercewireless.com/story/leap-experimenting-new-unlimited-broadband-plans/2010-04-28">http://www.fiercewireless.com/story/leap-experimenting-new-unlimited-broadband-plans/2010-04-28 (visited Oct.
16, 2012); Mike Dano, Leap Overhauls Voice Plans, Intros Tiered Data Pricing, FIERCEWIRELESS, Aug. 3, 2010.
http://www.fiercewireless.com/story/leap-overhauls-voice-plans-intros-tiered-data-pricing/2010-08-03">http://www.fiercewireless.com/story/leap-overhauls-voice-plans-intros-tiered-data-pricing/2010-08-03 (visited Oct.
16, 2012).
537 Leap Wireless, Cricket Introduces New Wireless Rate Plans With More Wireless Choices, More Data Options,
More Ways to Listen to Muve Music and More Ways to Call Internationally
, Press Release, Aug. 29, 2012.
http://phx.corporate-ir.net/phoenix.zhtml?c=95536&p=irol-newsArticle&ID=1729505&highlight=">http://phx.corporate-ir.net/phoenix.zhtml?c=95536&p=irol-newsArticle&ID=1729505&highlight= (visited Oct. 16,
2012); Philip Goldstein, Leap Overhauls Rate Plans, Adds Muve Music to All Android Plans, FIERCEWIRELESS,
Aug. 29, 2012.http://www.fiercewireless.com/story/leap-overhauls-rate-plans-adds-muve-music-all-android-plans/2012-08-29"> http://www.fiercewireless.com/story/leap-overhauls-rate-plans-adds-muve-music-all-android-
plans/2012-08-29 (visited Oct. 16, 2012).
538 Leap Wireless, Cricket Introduces New Wireless Rate Plans With More Wireless Choices, More Data Options,
More Ways to Listen to Muve Music and More Ways to Call Internationally
, Press Release, Aug. 29, 2012.
http://phx.corporate-ir.net/phoenix.zhtml?c=95536&p=irol-newsArticle&ID=1729505&highlight=">http://phx.corporate-ir.net/phoenix.zhtml?c=95536&p=irol-newsArticle&ID=1729505&highlight= (visited Oct. 16,
2012; Philip Goldstein, Leap Overhauls Rate Plans, Adds Muve Music to All Android Plans, FIERCEWIRELESS, Aug.
29, 2012.http://www.fiercewireless.com/story/leap-overhauls-rate-plans-adds-muve-music-all-android-plans/2012-08-29"> http://www.fiercewireless.com/story/leap-overhauls-rate-plans-adds-muve-music-all-android-plans/2012-
08-29 (visited Oct. 16, 2012).

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their plan for $10 each; (2) purchase additional full-speed data on an as needed basis at a rate of one
dollar for 50 MB; (3) upgrade to a rate plan with a higher allowance of full-speed data; or (4) make no
change and use unlimited data at reduced speed through the rest of the month.539
172.
While Leap has managed network congestion with speed reductions since 2010,
MetroPCS did not resort to speed reductions until 2012.540 Instead, MetroPCS initially used a tiered
pricing structure for its LTE service that gave consumers the option of choosing less expensive
“unlimited” data plans with restricted access to multimedia streaming. The company’s most expensive
LTE service plan ($60 per month) included unlimited multimedia streaming and unlimited access to its
Rhapsody music service along with unlimited web and email service, while its entry-level LTE service
plan ($40 per month) limited users to 100 MB of multimedia streaming access and its mid-range LTE
service plan ($50 per month) limited users to 1 GB of multimedia streaming.541 Customers who reached
their monthly multimedia streaming allowances on these plans were no longer able to access that content,
but could still use other data services. In April 2012, MetroPCS raised the price of its unlimited LTE
smartphone data plan to $70 per month and eliminated the distinction between web browsing and
multimedia streaming on its lower-tiered LTE plans by introducing monthly data allowances and reducing
the data speeds of users who exceed the allowances in a monthly billing cycle. 542 In particular, the
company set LTE data usage allowances at 5 GB on its $60 plan, 2.5 GB on its $50 plan and 250 MB on
its $40 plan.543 Customers who exceed their monthly data allowances remain on the LTE network and
can continue to use their data service but at a reduced speed similar to what they might experience on the
company’s EV-DO networks.544
173.
In August 2012, MetroPCS began offering its unlimited LTE data plan for $55 per month
on a promotional basis for a limited time.545 The new promotional plan, which includes unlimited voice
and text messaging, does not have any data limits or speed reductions. In an apparent response to the new
shared data plans launched by Verizon and AT&T, MetroPCS also offered families the option of
purchasing up to four additional lines for a discounted price of $50 per month if they purchase the first

539 Leap Wireless, Cricket Introduces New Wireless Rate Plans With More Wireless Choices, More Data Options,
More Ways to Listen to Muve Music and More Ways to Call Internationally
, Press Release, Aug. 29, 2012.
http://phx.corporate-ir.net/phoenix.zhtml?c=95536&p=irol-newsArticle&ID=1729505&highlight=">http://phx.corporate-ir.net/phoenix.zhtml?c=95536&p=irol-newsArticle&ID=1729505&highlight= (visited Oct. 16,
2012).
540 Philip Goldstein, MetroPCS Adds Data Throttling to LTE, Increases Unlimited Data to $70, FIERCEWIRELESS,
Apr. 3, 201http://www.fiercewireless.com/story/metropcs-adds-data-throttling-lte-increases-unlimited-data-70/2012-04-03">2. http://www.fiercewireless.com/story/metropcs-adds-data-throttling-lte-increases-unlimited-data-
70/2012-04-03 (visited Oct. 16, 2012); Simon Flannery et al., AlphaWise Survey Points to Ongoing Postpaid
Cannibalization by Prepaid
, Morgan Stanley, Sept. 23, 2011, at 12.
541 MetroPCS, Plans and Services, http://www.metropcs.com/metro/category/4G+LTE/cat270022 (visited Feb 2,
2012); Philip Goldstein, MetroPCS Slashes Base LTE Smartphone Plan by $10, to $40/Month, FIERCEWIRELESS,
Feb. 2, 2012.http://www.fiercewireless.com/story/metropcs-slashes-base-lte-smartphone-plan-10-40month/2012-02-02"> http://www.fiercewireless.com/story/metropcs-slashes-base-lte-smartphone-plan-10-40month/2012-
02-02 (visited Oct. 16, 2012); Philip Goldstein, MetroPCS: Our New Plans Comply With FCC’s Net Neutrality
Order
, FIERCEWIRELESS, Jan. 12, 2http://www.fiercewireless.com/story/metropcs-our-new-plans-comply-fccs-net-neutrality-order/2011-01-12">011. http://www.fiercewireless.com/story/metropcs-our-new-plans-comply-fccs-
net-neutrality-order/2011-01-12 (visited Oct. 16, 2012). The $50 plan also provides access to some of the features
in the provider’s MetroStudio content storefront, but only through a WiFi connection. Id.
542 Philip Goldstein, MetroPCS Adds Data Throttling to LTE, Increases Unlimited Data to $70, FIERCEWIRELESS,
Apr. 3, 201http://www.fiercewireless.com/story/metropcs-adds-data-throttling-lte-increases-unlimited-data-70/2012-04-03">2. http://www.fiercewireless.com/story/metropcs-adds-data-throttling-lte-increases-unlimited-data-
70/2012-04-03 (visited Oct. 16, 2012).
543 Id.
544 Id.
545 Sue Marek, MetroPCS Launches $55 Unlimited LTE Rate Plan, FIERCEWIRELESS, Aug. 21, 2012.
http://www.fiercewireless.com/story/metropcs-launches-55-unlimited-lte-rate-plan/2012-08-21">http://www.fiercewireless.com/story/metropcs-launches-55-unlimited-lte-rate-plan/2012-08-21 (visited Oct. 16,
2012).

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unlimited LTE plan for $55 per month. MetroPCS indicated it would determine how long the promotion
lasts based on the customer response.
174.
Low-End Segment Prepaid Plans. TracFone, an MVNO, is generally regarded as the
leader in the low-end prepaid segment.546 Although Tracfone’s rates are slightly higher on a per minute
basis than some alternative prepaid offerings, the company targets low-usage customers whom other
prepaid service providers are reluctant to target because the ARPU they generate is so low. In the first
half of 2012, the monthly ARPU of Tracfone was $16, which was $3 less than the average monthly
prepaid ARPU of the nationwide providers.547 TracFone purchases capacity wholesale from facilities-
based providers and resells them through a national distribution network under various brands, including
TracFone, Net10, and Safelink.548 The company’s phones and prepaid calling cards are sold at Wal-Mart
Stores, Target, and RadioShack, in addition to drug stores and other local retail outlets.549 Analysts
attribute much of TracFone's subscriber growth to its Safelink offer, a product that is supported by the
Universal Service Fund through the Lifeline program.550 T-Mobile launched new pay-by-the-day prepaid
plans in October 2011.551 The company’s $1.00 per day plan includes unlimited text messages, with an
additional charge of $0.10 per minute of voice service. In addition, the $2.00 per day plan includes
unlimited calls, text messages and data at 2G (EDGE) speeds, while the $3.00 per day plan includes
unlimited calls, text messages and data, with the first 200 MB per day at up to 4G speeds. Customers pay
the daily charge only on the days they actually use their phones. As discussed above, T-Mobile also
launched a new lineup of monthly prepaid plans in 2011, but the pay-per-day plans are targeted at “more
down-market customers” than the monthly prepaid plans.552
3.

Early Termination Fees (ETFs) for Postpaid Service

175.
Service providers assess ETFs to postpaid subscribers when they cancel their wireless
service agreements or plans before the expiration of their terms. Service providers may view ETFs as part
of their service plan rates. For instance, T-Mobile states “The Early Termination Fee is part of our rates
and is not a penalty.”553 Smartphones and other advanced devices typically have higher ETFs than more
basic handsets, reflecting the prevailing model of handset distribution for postpaid plans in which
providers sell handsets to customers below cost and subsequently recover the cost over the term of the

546 The Haves and the Have-Nots Diverge, at 9; Slumdog Millionaires, at 1; Roger Cheng, TracFone’s Prepaid
Niche
, WALL STREET JOURNAL, Mar. 4, 2009 available at
http://online.wsj.com/article/0,,SB123614292392926907,00.html">http://online.wsj.com/article/0,,SB123614292392926907,00.html (visited Oct. 16, 2012).
547 See Section V.F, Revenue and ARPU, infra; Footnote 845.
548 Slumdog Millionaires, at 24.
549 Roger Cheng, TracFone’s Prepaid Niche, WALL STREET JOURNAL, Mar. 4, 2009.
http://online.wsj.com/article/0,,SB123614292392926907,00.html">http://online.wsj.com/article/0,,SB123614292392926907,00.html (visited Oct. 16, 2012).
550 The Safelink offering for eligible low-income consumers includes a free phone, which is not supported by the
Universal Service Fund, and approximately 250 minutes of free monthly wireless service. See Section III.B.2 supra
for a complementary discussion of TracFone.
551 T-Mobile Adds New Plans to Monthly Lineup, Press Release, T-Mobile, Oct. 17, 2011.http://newsroom.t-mobile.com/articles/t-mobile-adds-new-monthly4g-plans"> http://newsroom.t-
mobile.com/articles/t-mobile-adds-new-monthly4g-plans (visited Oct.16, 2012); Philip Goldstein, T-Mobile
Launches New Monthly and Pay-by-the-Day Plans
, FIERCEWIRELESS, Oct. 18, 2011.
http://www.fiercewireless.com/story/t-mobile-launches-new-monthly-and-pay-day-plans/2011-10-18">http://www.fiercewireless.com/story/t-mobile-launches-new-monthly-and-pay-day-plans/2011-10-18 (visited Oct.
16, 2012); T-Mobile, No Annual Contract Plans, http://prepaid-phones.t-mobile.com/prepaid-plans (visited Oct. 31,
2011).
552 Philip Goldstein, T-Mobile Launches New Monthly and Pay-by-the-Day Plans, FIERCEWIRELESS, Oct. 18, 2011.
http://www.fiercewireless.com/story/t-mobile-launches-new-monthly-and-pay-day-plans/2011-10-18">http://www.fiercewireless.com/story/t-mobile-launches-new-monthly-and-pay-day-plans/2011-10-18 (visited Oct.
16, 2012).
553 T-Mobile, Terms and Conditions, available athttp://www.tmobile.com/"> www.tmobile.com (visited Aug. 14, 2012).

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service agreement.554 As detailed in the Fourteenth Report, the nationwide providers have described their
practices regarding the disclosure of ETFs to consumers and state generally that they give consumers
adequate notice about the applicable ETFs that apply; that ETFs allow them to subsidize handset
purchases — including purchases of smartphones — for customers; and that wireless providers normally
recover those subsidies over the life of a contract, but cannot do so when a customer ends a contract
early.555
176.
In 2012, all four nationwide providers had policies to pro-rate ETFs over the course of
the standard two-year contract by progressively reducing the fee postpaid customers pay to terminate their
service contracts before the expiration of their terms. The AT&T ETF for advanced smartphones and
devices starts at $325 and is reduced by $10 for each full month of service completed.556 AT&T’s
standard ETF starts at $150 and is reduced by $4 for each full month of service completed. The Verizon
ETF for advanced smartphones and devices starts at $350 and is reduced by $10 for each full month of
service completed.557 Verizon’s standard ETF starts at $175 and is reduced by $5 for each full month of
service completed. The Sprint ETF for advanced smartphones and devices is $350 for the first six
months, and then is reduced by $20 for each full month of service completed until the ETF reaches
$100.558 Sprint’s standard ETF is $200 for the first four months, and then is reduced by $10 for each full
month of service completed until the ETF reaches $50. The T-Mobile ETF is $200 if more than six
months remain on the service contract, $100 if three to six months remain on the service contract, $50 if
one to three months remain on the service contract, and the smaller of $50 or the monthly recurring
charges if less than one month remains on the contract.559
177.
There are service plans available to customers that do not involve ETFs and service plans
that include ETFs generally have a return period in which the ETF will not be triggered. Consumers can

554 We note that ETFs are not necessarily confined to the handset subsidy model. For example, T-Mobile’s Value
plans offer a lower monthly service rate to customers who pay full price for their handsets up front, but customers
who take advantage of these Value plans are required to sign a two-year agreement with an early cancellation fee of
up to $200 per line. T-Mobile, Value Planshttp://www.t-mobile.com/shop/Packages/ValuePackages.aspx">, http://www.t-mobile.com/shop/Packages/ValuePackages.aspx (visited
Oct. 22, 2012).
555 Letter from Kathleen Grillo, Senior Vice President, Federal Regulatory Affairs, Verizon, to Joel Gurin, Chief,
Consumer and Government Affairs Bureau, and Ruth Milkman, Chief, Wireless Telecommunications Bureau, FCC,
CG Docket No. 09-158 (Feb. 23, 2010); Letter from Robert W. Quinn, Jr., Esq., Senior Vice President-Federal
Regulatory, AT&T Services, Inc., dated Feb. 23, 2010 in CG Docket No. 09-158 to Joel Gurin, Chief, Consumer
and Government Affairs Bureau, and Ruth Milkman, Chief, Wireless Telecommunications Bureau, FCC; Letter
from Thomas J. Sugrue, Vice President, Government Affairs, T-Mobile, dated Feb. 23, 2010 in CG Docket No. 09-
158 to Joel Gurin, Chief, Consumer and Government Affairs Bureau, and Ruth Milkman, Chief, Wireless
Telecommunications Bureau, FCC; Letter from Vonya B. McCann, Esq., Senior Vice President, Government
Affairs, Sprint Nextel Corporation, dated Feb. 23, 2010 in CG Docket No. 09-158 to Joel Gurin, Chief, Consumer
and Government Affairs Bureau, and Ruth Milkman, Chief, Wireless Telecommunications Bureau, FCC; and Letter
from Richard S. Whitt, Esq., Washington Telecom and Media Counsel, Google, Inc., dated Feb. 23, 2010 in CG
Docket No. 09-158 to Joel Gurin, Chief, Consumer and Government Affairs Bureau, and Ruth Milkman, Chief,
Wireless Telecommunications Bureau, FCC.
556 AT&T, Early Termination Fees, available athttp://www.wireless.att.com/learn/articles-resources/early-term-fees.jsp"> http://www.wireless.att.com/learn/articles-resources/early-term-
fees.jsp (visited Aug. 14, 2012).
557 Verizon Wireless, Customer Agreement and Important Information, available at
http://youreguide.vzw.com/legal-customer-agreement/">http://youreguide.vzw.com/legal-customer-agreement/ (visited Aug. 14, 2012).
558 Sprint, Learn About Early Termination Fee, available at
http://support.sprint.com/support/article/Learn_about_early_termination_fee/case-sp061027-20110823-171256">http://support.sprint.com/support/article/Learn_about_early_termination_fee/case-sp061027-20110823-171256
(visited Aug. 14, 2012).
559 T-Mobile, T-Mobile Terms and Conditions, available athttp://www.t-mobile.com/Templates/Popup.aspx?PAsset=Ftr_Ftr_TermsAndConditions&print=true"> http://www.t-
mobile.com/Templates/Popup.aspx?PAsset=Ftr_Ftr_TermsAndConditions&print=true (visited Aug. 14, 2012).

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avoid ETFs entirely by purchasing mobile wireless service on a prepaid basis, which offers service at
attractive prices and has grown to include smartphone data plans.560 Some service providers have return
policies that allow customers to cancel their contracts and return their handsets for a limited period of
time without having to pay an ETF. In 2012, AT&T permitted service cancellations and handset returns
for a full refund for up to 30 days.561 T-Mobile, Sprint, and Verizon Wireless granted full refunds if a
customer canceled a new account and returned the handset within 14 days of activation.562
178.
The emergence of a secondary market segment for mobile wireless service contracts may
facilitate consumers’ ability to switch service providers. In most cases, wireless service providers allow
consumers to leave their contracts without paying an ETF by transferring the remaining contract term to
someone else who meets the provider’s credit requirements. A number of websites exist to facilitate
transfers of mobile wireless contracts from one consumer to another under these provisions.563 In
particular, the websites help mobile wireless customers avoid paying penalties for early termination by
putting them in touch with people seeking a mobile wireless contract. Although these sites charge
existing mobile wireless customers a range of fees to transfer or cancel a contract, these fees are typically
much lower than the ETFs customers would otherwise have to pay. 564 Other potential advantages
include avoiding a service activation fee and obtaining a shorter contract than if they had contracted
directly with a mobile wireless service provider.
179.
In addition to the secondary market for cellphone service contracts, there is a secondary
market for iPhones and other high-end smartphones and devices. Customers on contracts that are not yet
eligible for subsidized devices and who therefore have to pay more to upgrade immediately can partially
offset the increased cost of upgrading, including ETFs and upgrade fees, by trading in their old devices.565
Trade-in options include Gazelle, Amazon and programs offered by both Sprint and Verizon.566 Gazelle
purchases a range of devices for various forms of payment, including check, direct deposit to a Paypal
account and Amazon gift card. Amazon offers better trade-in values than Gazelle, but the only form of
payment is an Amazon gift card and it only offers trade-ins for Apple iPhones.567 Sprint offers account
credit and Verizon offers gift cards for used devices, but trade-in programs are limited to iPhones and the
latest and most popular Android smartphones.568 Customers may also buy and sell smartphones on eBay,

560 See Section IV.A.2, Prepaid Service, supra.
561 AT&T, AT&T Returns Policy and Early Termination Fee, available at
http://www.att.com/shop/wireless/returnpolicy.html?#fbid=y3KQeyUTqdO?tab2">http://www.att.com/shop/wireless/returnpolicy.html?#fbid=y3KQeyUTqdO?tab2 (visited Aug. 14, 2012). All
nationwide providers may charge a handset restocking fee if the device is returned.
562 T-Mobile, T-Mobile Terms and Conditions, available athttp://www.t-mobile.com/Templates/Popup.aspx?PAsset=Ftr_Ftr_TermsAndConditions&print=true"> http://www.t-
mobile.com/Templates/Popup.aspx?PAsset=Ftr_Ftr_TermsAndConditions&print=true (visited Aug. 14, 2012).
Sprint, Sprint Return and Exchange Policy, available athttp://www.sprint.com/landings/returns/"> http://www.sprint.com/landings/returns/ (visited Aug. 14,
2012). Verizon Wireless, Customer Agreement and Important Information, available at
http://youreguide.vzw.com/legal-customer-agreement/">http://youreguide.vzw.com/legal-customer-agreement/ (visited Aug. 14, 2012). All nationwide providers may
charge a handset restocking fee if the device is returned.
563 Examples includehttp://www.trademycellular.com/"> www.trademycellular.com andhttp://www.celltradeusa.com/"> www.celltradeusa.com, (visited Aug. 14, 2012).
564 See Breaking Free of a Cellular Contract.
565 Philip Cusick et al, Secondary Markets for iPhones and Other High-End Smartphones Mitigate Carrier Upgrade
Policies, ETFs
, J.P. Morgan, Equity Research, Sept. 14, 2012.
566 Philip Cusick et al, Telecom Services: Update on Secondary Markets for iPhones: Values Dropping Quickly on
All but Samsung Galaxy S3
, J.P. Morgan, Equity Research, Nov. 5, 2012.
567 Philip Cusick et al, Telecom Services: Update on Secondary Markets for iPhones: Values Dropping Quickly on
All but Samsung Galaxy S3
, J.P. Morgan, Equity Research, Nov. 5, 2012.
568 Philip Cusick et al, Telecom Services: Update on Secondary Markets for iPhones: Values Dropping Quickly on
All but Samsung Galaxy S3
, J.P. Morgan, Equity Research, Nov. 5, 2012.

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ReCellular.com, and Cellitused.com.569

B.

Non-Price Rivalry

180.
Mobile wireless service providers also compete for customers on other dimensions in
addition to price. This section presents evidence in three broad categories of non-price rivalry among
mobile wireless service providers: 1) network coverage, quality, and investment; 2) portfolios of
innovative devices and services; and 3) advertising campaigns and expenditures to create retail
distribution networks, distribute product information, and establish and increase brand recognition .
1.

Network Coverage and Technology Upgrades

181.
Network investment remains a centerpiece of service providers’ efforts to improve their
customers’ mobile wireless service experience. During 2010, 2011, and early 2012, several providers
continued to upgrade and expand their networks with technologies that enable faster data transfer speeds.
Other providers announced plans to make additional upgrades in the near future.570 As discussed below, a
critical way in which mobile wireless service providers differentiate themselves is with the speeds,
reliability, capabilities, and coverage of their mobile broadband networks.571
182.
As a component of upgrading their networks, service providers can improve capacity,
coverage, and service quality by improving and expanding their spectrum portfolios. Several service
providers have been able to expand into new geographic areas and/or upgrade networks in existing
markets after adding to their spectrum portfolios through participation in spectrum auctions and
secondary market transactions.572
183.
The Commission largely has adopted flexible licensing policies to the extent that they do
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.573 As
a result of this approach, U.S. service providers have deployed, over the past 15 years, different digital
network technologies with divergent technology migration paths. The two main technology migration
paths have been the CDMA and GSM paths, shown in Figure 2 below.574 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, as discussed below.575
184.
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

569 Gregory Tarp, APT to Upgrade to iPhone5? You’re Not Alone, Chicago Tribune, October 4, 2011.
570 See Section IV.B.1.A, Service Provider Technology Deployments, infra.
571 See Fifteenth Report, 26 FCC Rcd at 9733 ¶ 104; AT&T Comments at 31; WCAI Reply at 5.
572 See Section III.F.2, Current Spectrum Transactions, supra; Section VII.A.1, Infrastructure Facilities, infra;
Fifteenth Report, 26 FCC Rcd at 9733 ¶ 105.
573 In contrast, the European Community mandated a single harmonized standard for second-generation mobile
telecommunications services (GSM), and also has adopted a single standard for third-generation services
(WCDMA). Neil Gandal, et al., Standards in Wireless Telephone Networks, Telecommunications Policy, Vol. 27,
No. 5-6, June-July 2003, at 325. The authors note that, although the European Community backed away from
mandating a single standard for third-generation services, the absence of a mandate has had little practical effect as
all European mobile operators have opted for the same standard and migration path. Id. at 330.
574 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 also used iDEN technology as a result of its acquisition of Nextel.
575 See Table 27; AT&T Comments at 29-31.

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equipment.576 This, in turn, may promote more rapid adoption of mobile wireless services, a greater
variety of handsets, and more price competition.577

Figure 2

Mobile Wireless Network Technology Evolution


EV-DO


1xRTT

EV-DO

Rev. A

CDMA

Rev. 0


LTE

GSM/

WCDMA/

GPRS EDGE

HSPA+

TDMA

HSPA


WiMAX

Increasing data transfer speeds



a.

Service Provider Technology Deployments

185.
While service providers initially adopted different plans for upgrading their networks
with newer technologies, all of the major mobile wireless providers now offer or plan to deploy LTE.
During 2009 and 2010, Verizon Wireless launched LTE, Sprint was offering WiMAX through its
investment in Clearwire, and T-Mobile and AT&T deployed different versions of HSPA+ technology.578
While these providers continue to maintain these divergent networks, as of April 2012, all of the major
providers had either begun to deploy, or announced plans to migrate to, LTE technology.
186.
Below we discuss in detail the mobile network upgrades of the major mobile wireless
providers in 2010, 2011, and early 2012. For purposes of this Report, we include all 3G and 4G network
technologies – CDMA EV-DO, EV-DO Rev. A, WCDMA/UMTS/HSPA, HSPA+, LTE, and mobile
WiMAX – in our discussion of mobile broadband.579 While the Mosaik deployment data distinguish

576 See Fourteenth Report 25 FCC Rcd at 11478-79 ¶ 109.
577 See Fourteenth Report 25 FCC Rcd at 11478-79 ¶ 109.
578 See Fifteenth Report, 26 FCC Rcd at 9735 ¶ 108.
579 The terms “3G” and “4G” are used by industry for marketing purposes, as well as by the International
Telecommunications Union (ITU) for technical specifications. For example, Clearwire, T-Mobile, AT&T, and
Verizon Wireless refer to their WiMAX, HSPA+, and LTE networks as “4G.” However, these networks, as
currently deployed, do not provide download speeds high enough to meet the ITU technical specifications of “IMT-
Advanced” or “4G.” Nevertheless, the ITU stated in December 2010 that the term 4G “while undefined, may also
be applied to the forerunners of these technologies, LTE and WiMax, and to other evolved 3G technologies
providing a substantial level of improvement in performance and capabilities with respect to the initial third
generation systems now deployed.” See ITU World Radio Communication Seminar Highlights Future
Communication Technologies
, Press Release, ITU, Dec. 6, 2010, available at
http://www.itu.int/net/pressoffice/press_releases/2010/48.aspx">http://www.itu.int/net/pressoffice/press_releases/2010/48.aspx (visited Oct. 16, 2012); Sara Yin, ITU Redefines 4G.
Again
, PCMagazine, Dec. 20, 2010, athttp://www.pcmag.com/print_article2/0,1217,a=258308,00.asp?hidPrint=true"> http://www.pcmag.com/print_article2/0,1217,a=258308,00.asp?hidPrint=true
(visited Oct. 16, 2012); Derek Kerton, Will the Real 4G Please Stand Up?, RCR Wireless News, Dec. 22, 2010, at
(continued….)

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among different mobile wireless network technologies, other factors than network technology may affect
network performance, including the configuration of the network, the amount of spectrum used, and the
type of backhaul connection to the cell site.580

Table 28

3G/4G Deployment by Selected Mobile Wireless Service Providers, 2011-2012

Service

HSPA, HSPA+, and EV-DO

LTE and WiMAX Deployment

Provider

Deployment

Verizon
As of May 2012, EV-DO Rev. A
As of Nov. 2012, LTE network
Wireless
network covered 290 million POPs.
covered more than 250 million POPs.
Plans to expand LTE nationwide in
2013 to have LTE coverage similar to
its 3G network.
Verizon

As of March 2013, the program
Wireless – LTE
included 20 small, rural providers that
in Rural
have launched or plan to launch LTE
America
to areas covering approximately 2.8
Partners
million people across 14 states. By
March 2013, 7 of these providers had
launched LTE: Bluegrass Cellular
(Kentucky), Pioneer Cellular
(Oklahoma), Cellcom (Wisconsin),
Thumb Cellular (Michigan), Strata
Networks (Utah), Chariton Valley
(Missouri) and Cross Wireless
(Oklahoma).
AT&T Wireless As of mid-year 2012, all of AT&T’s
As of Nov. 2012, LTE network
network is covered by HSPA+,
covered 150 million POPs. AT&T
covering 275 million POPs.
plans to deploy LTE to 80 percent of
the U.S. population, or approximately
250 million POPs, by the end of 2013,
and to 300 million by the end of 2014.
Sprint Nextel
As of January 2012, EV-DO Rev. A
As of September 2012, LTE service is
network covered approximately 274
offered in 19 cities and plans to deploy
million POPs.
LTE to 100 additional cities within the
next several months and to complete
LTE build-out by the end of 2013.
Clearwire

As of June 2012, WiMAX network
covered approximately 134 million
POPs. Plans to launch LTE in 31
urban markets by June 2013.
T-Mobile
As of September 2012, HSPA+ 21
As of December 2012, plans to deploy
network covered over 200 million POPs its LTE network in the United States to
and HSPA+ 42 network covered 184
100 million people by July 2013 and
million POPs.
200 million people by year-end July
2013.
MetroPCS

As of the end of July 2012, LTE
(Continued from previous page)
http://www.rcrwireless.com/article/20101222/OPINION/101229976/analyst-angle-will-the-real-4g-please-stand-up">http://www.rcrwireless.com/article/20101222/OPINION/101229976/analyst-angle-will-the-real-4g-please-stand-up#
(visited Oct. 16, 2012).
580 2012 Eighth Broadband Progress Report, GN Docket No. 11-121, (rel. Aug. 21, 2012), ¶ 40.

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network covered all of the major
metropolitan areas MetroPCS serves,
including Atlanta, Boston, Dallas,
Detroit, Jacksonville, Las Vegas, Los
Angeles, Miami, New York, Orlando,
Philadelphia, Sacramento, San
Francisco, and Tampa.
Leap
EV-DO deployed to entire network
As of October 2012, Leap had
footprint, which covered approximately
launched LTE service in Tucson, AZ
95.3 million POPs at the end of 2011.
and Las Vegas, Nevada. Leap expects
its LTE network to cover
approximately 21 million POPs by the
end of 2012. The company plans to
deploy LTE to approximately two-
thirds of its network footprint over the
next two to three years.
US Cellular
EV-DO network covers 98 percent of
As of June 2012, LTE network covers
its customers.
30 percent of customers and expects to
cover 58 percent by the end of 2012.
C-Spire
EV-DO network covered approximately As of October 2012, C-Spire offered
4.7 million POPs at the end of 2011.
LTE service in 31 cities in Mississippi.
C-Spire plans to further expand its
LTE network to 6 more cities by the
end of 2012.

187.
Verizon Wireless. Verizon Wireless’s EV-DO Rev. A network – which provides
advertised average download speeds of 600 kbps to 1.4 megabits per second (Mbps) and upload speeds of
500-800 kbps – was available to more than 290 million people as of May 2012, slightly higher than the
289 million covered by its network in September 2010.581 As discussed in the Fifteenth Report, Verizon
Wireless launched its LTE network in December 2010, deploying in 20 megahertz in 38 major U.S. cities
covering approximately 110 million people.582 As of May 2012, Verizon Wireless’s LTE network
covered more than 200 million people, and the company plans to expand its LTE network to 260 million
people by the end of 2012 and to its entire EV-DO footprint by the end of 2013.583 Verizon Wireless
advertises that its LTE network provides average data rates of 5-12 Mbps downstream and 2-5 Mbps
upstream.584
188.
In addition to upgrading its own network to LTE, Verizon Wireless in 2010 launched an
initiative called the LTE in Rural America Program to expand LTE coverage in rural areas. Under this
program, Verizon Wireless leases portions of its 700 MHz Upper C Block spectrum licenses to facilities-
based mobile wireless service providers in rural areas where Verizon Wireless currently lacks coverage

581 Verizon Wireless, Network Factshttp://aboutus.vzw.com/bestnetwork/network_facts.html">, http://aboutus.vzw.com/bestnetwork/network_facts.html (visited May 8,
2012); Verizon Comments at 33-34. See Fifteenth Report, 26 FCC Rcd at 9736 ¶ 109. Estimates of coverage
represent mobile network deployment and may not indicate the extent to which providers actually offer service in
the covered areas or have customers living in those areas.
582 See Fifteenth Report, 26 FCC Rcd at 9736 ¶ 109.
583 Verizon Wireless, 3Q 2012 Quarter Earnings Conference Call, Transcript, Oct. 18, 2012, available at
http://www22.verizon.com/investor/webcast_3q_2012_quarter_earnings_conference_call_webcast_10182012.htm">http://www22.verizon.com/investor/webcast_3q_2012_quarter_earnings_conference_call_webcast_10182012.htm
Verizon Wireless, Network Factshttp://aboutus.vzw.com/bestnetwork/network_facts.html">, http://aboutus.vzw.com/bestnetwork/network_facts.html (visited May 8, 2012);
Fifteenth Report, 26 FCC Rcd at 9736 ¶ 109.
584 Verizon Wireless, Network Factshttp://aboutus.vzw.com/bestnetwork/network_facts.html">, http://aboutus.vzw.com/bestnetwork/network_facts.html (visited May 8, 2012).

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and does not intend to build out.585 The rural providers then use this spectrum to build out an LTE
network in those areas.586 As of March 2013, the program included 20 small, rural providers that have
launched or plan to launch LTE to areas covering approximately 2.8 million people across 14 states.587 In
April 2012, Pioneer Cellular became the first rural provider to launch LTE service, to six counties in
Oklahoma, as part of the program.588 The program includes reciprocal roaming rights; the LTE customers
of the rural providers can roam on Verizon Wireless’s nationwide LTE network, while Verizon
Wireless’s customers can roam on the rural providers’ LTE networks when traveling in such areas.589
189.
AT&T. AT&T is using both HSPA+ and LTE technologies, as well as enhanced
backhaul connections, to increase data transfer speeds for customers on its network.590 As of January

585 Verizon Comments at 33; Bernie Arnason, Nemont Partners with Verizon for Rural LTE Program,
Telecompetitor, Mar. 22, 2012http://www.telecompetitor.com/nemont-partners-with-verizon-for-rural-lte-program/.(visited">, http://www.telecompetitor.com/nemont-partners-with-verizon-for-rural-lte-
program/.(visited Oct. 16, 2012).
586 See, e.g. Chariton Valley 4G LTE,http://www.cv4g.com/2012-07-16-14-32-05/2012-05-23-17-36-24"> http://www.cv4g.com/2012-07-16-14-32-05/2012-05-23-17-36-24 (visited
Mar. 13, 2013). See e.g. Bluegrass Launches 4G LTE Network
https://bluegrasscellular.com/index.php/about/news/bluegrass_launches_4g_lte_network">https://bluegrasscellular.com/index.php/about/news/bluegrass_launches_4g_lte_network visited Mar. 13, 2013) .
587 Communications Daily, September 19, 2012, at 11. Joan Engecretson, Pioneer Cellular Is First Verizon Rural
Partner to Launch 4G LTE
, Telecompetitor, Apr. 30, 2012,http://www.telecompetitor.com/pioneer-cellular-is-first-verizon-rural-partner-to-launch-4g-lte/"> http://www.telecompetitor.com/pioneer-cellular-is-first-
verizon-rural-partner-to-launch-4g-lte/ (visited Oct. 16, 2012); Bernie Arnason, Nemont Partners with Verizon for
Rural LTE Program
, Telecompetitor, Mar. 22, 2012,http://www.telecompetitor.com/nemont-partners-with-verizon-for-rural-lte-program/(visited"> http://www.telecompetitor.com/nemont-partners-with-verizon-
for-rural-lte-program/(visited Oct. 16, 2012).
588 Kevin Fitchard, Pioneer Launches Rural LTE Over Verizon Spectrum, GigaOm, May 3, 2012,
http://gigaom.com/broadband/pioneer-launches-rural-lte-over-verizon-spectrum/(visited">http://gigaom.com/broadband/pioneer-launches-rural-lte-over-verizon-spectrum/(visited Oct. 16, 2012); Joan
Engecretson, Pioneer Cellular Is First Verizon Rural Partner to Launch 4G LTE, Telecompetitor, Apr. 30, 2012
http://www.telecompetitor.com/pioneer-cellular-is-first-verizon-rural-partner-to-launch-4g-lte/(visited">http://www.telecompetitor.com/pioneer-cellular-is-first-verizon-rural-partner-to-launch-4g-lte/(visited Oct. 16,
2012). See Verizon Wireless, Pioneer Cellular’s 4G LTE Network Testing Signals All Systems Go, Dec. 16, 2011. V
(visited Oct. 16, 2012) (stating “Verizon Wireless announced the LTE in Rural America initiative in June 2010 to
bring the benefits of high-speed mobile broadband to rural areas of the United States where Verizon Wireless
currently does not have a network. Under the program, Verizon Wireless shares access to its 700 MHz spectrum
with rural operators who use their tower and backhaul assets to build a 4G LTE network.”). See Telecompetitor,
Pioneer Cellular is First Verizon Rural Partner to Launch 4G LTE, available at
http://www.telecompetitor.com/pioneer-cellular-is-first-verizon-rural-partner-to-launch-4g-lte/">http://www.telecompetitor.com/pioneer-cellular-is-first-verizon-rural-partner-to-launch-4g-lte/, April 30, 2012
(stating “Initiallyhttps://www.wirelesspioneer.com/index.php"> Pioneer will offer three devices for use with the network, said Pioneer Cellular CEO Richard Ruhl
in an interview. These include a MiFi hot spot, a dongle for a personal computer and a fixed home router. Within 30
days, Pioneer hopes to offer mobile handsets for use with the service.”) Verizon Wireless, 4G LTE Goes Live in
Rural America
, May 11, 2012, available athttp://news.verizonwireless.com/news/2012/05/4g-lte-goes-live-in-rural-america.html"> http://news.verizonwireless.com/news/2012/05/4g-lte-goes-live-in-rural-
america.html. Cellcom, Cellcom Provides High Speed Internet to Hannahville Community, news release, June 13,
2012.http://www.nsightnews.com/nsight-cellcom-news/nsight-cellcom-press-releases/241-cellcom-provides-high-speed-internet-to-hannahville-community-"> http://www.nsightnews.com/nsight-cellcom-news/nsight-cellcom-press-releases/241-cellcom-provides-high-
speed-internet-to-hannahville-community- (visited Oct. 16, 2012) (stating “Cellcom launched 4G LTE in portions of
their service area in April of 2012. This is the first area where a residential product is being offered. Cellcom plans
to roll out 4G residential broadband to additional areas in the future and will continue to add 4G coverage
throughout its service area in the coming years.”). Cellcom states that 4G LTE mobile handsets will be in stock
soon. Cellcom,http://www.cellcom.com/"> www.cellcom.com (visited Sept. 17, 2012).
589 Kevin Fitchard, Pioneer Launches Rural LTE Over Verizon Spectrum, GigaOm, May 3, 2012,
http://gigaom.com/broadband/pioneer-launches-rural-lte-over-verizon-spectrum/">http://gigaom.com/broadband/pioneer-launches-rural-lte-over-verizon-spectrum/ (visited Oct. 16, 2012); Two
Verizon Rural LTE Partners Nearing Launch; Scheme Gains Two New Operators,
TeleGeography, Mar. 28, 2012,
http://www.telegeography.com/products/commsupdate/articles/2012/03/28/two-verizon-rural-lte-partners-nearing-launch-scheme-gains-two-new-operators/">http://www.telegeography.com/products/commsupdate/articles/2012/03/28/two-verizon-rural-lte-partners-nearing-
launch-scheme-gains-two-new-operators/ (visited Oct. 16, 2012); Dan Meyer, Verizon Wireless Adds Chariton to
Rural LTE Program
, RCR Wireless, Sept. 12, 20http://www.rcrwireless.com/article/20110912/carriers/verizon-wireless-adds-chariton-to-rural-lte-program/">11, http://www.rcrwireless.com/article/20110912/carriers/verizon-
wireless-adds-chariton-to-rural-lte-program/ (visited Oct 16, 2012).
590 AT&T Comments at 29-30.

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2012, AT&T’s HSPA+ network covered approximately 234 million people,591 and AT&T has announced
that it plans to expand HSPA+ technology to its full wireless footprint, covering approximately 97 percent
of the U.S. population, or 303 million people, by the end of 2012.592 As mentioned in the Fifteenth
Report
, in January 2011, AT&T had upgraded most of its HSPA footprint from HSPA 7.2 to HSPA+ 14
technology, which provides theoretical peak download speeds of 14.4 Mbps.593 During 2011, AT&T
began further upgrading its HSPA+ network with HSPA+ 21 technology, which provides theoretical peak
download speeds of 21 Mbps.594 As of March 2012, AT&T’s HSPA+ 21 footprint reportedly covered
more than 200 million POPs.595 In September 2011, AT&T launched its LTE network in five cities –
Atlanta, Chicago, Dallas, Houston, and San Antonio – and announced at that time that it planned to
extend LTE to a total of 15 cities covering 70 million people by the end of 2011.596 By March 2012,
AT&T had expanded its LTE network to 74 million people in 28 cities,597 and by September 2012, AT&T
announced that it has LTE coverage in 63 markets, utilizing approximately 20 megahertz in most of
those.598 AT&T has stated that it expedited its rollout of LTE by a year in order to compete with other
firms on the basis of network speeds and because LTE is a more spectrally efficient technology than those
on the UMTS/HSPA migration path.599 AT&T has stated that it plans to deploy LTE to 80 percent of the
U.S. population, or approximately 250 million people, by the end of 2013.600
190.
In conjunction with upgrading its cell sites with HSPA+ and LTE technologies, AT&T is
rolling out high-speed backhaul connections, primarily fiber, to many of its cell sites in order to increase
network capacity.601 These connections are meant to accommodate the faster data speeds that HSPA+
and LTE enable and the increasing traffic that results from the faster data connections and more advanced
end-user devices. In 2011, AT&T began using the term “4G” to refer to the portions of its network where

591 As stated above, these estimates of coverage represent mobile network deployment and may not indicate the
extent to which providers actually offer service in the covered areas or have customers living in those areas. We
estimate this coverage based on a census block analysis of Mosaik CoverageRight coverage maps (AT&T’s HSPA+
coverage) for January 2012. Population data are derived from the 2010 Census. See Section III.B Overview of the
Mobile Wireless Industry supra.
592 Applications of AT&T Inc. and Deutsche Telekom AG for Consent to Transfer Control of Licenses and
Authorizations, WT Docket No. 11-65, Order, 26 FCC Rcd 16184, 16286 ¶ 245 (WTB 2011) (Bureau Order
dismissing transfer applications without prejudice, Staff Analysis and Findings
).
593 See Fifteenth Report, 26 FCC Rcd at 9737 ¶ 110.
594 Sascha Segan, AT&T Defines 4G as HSPA 14.4, PCMag.com, May 5, 2011,
http://www.pcmag.com/article2/0,2817,2384959,00.asp">http://www.pcmag.com/article2/0,2817,2384959,00.asp (visited Oct. 16, 2012).
595 Phil Goldstein, AT&T to Expand LTE Coverage to 12 More Markets, FierceWireless, Mar. 12, 2012,
http://www.fiercewireless.com/story/att-expand-lte-coverage-12-more-markets/2012-03-12">http://www.fiercewireless.com/story/att-expand-lte-coverage-12-more-markets/2012-03-12. (visited Oct. 16, 2012).
596 4G LTE from AT&T Available in Chicago, Press Release, AT&T, Sept. 19, 2011, available at
http://www.att.com/gen/press-room?pid=21165&cdvn=news&newsarticleid=32813&mapcode=wireless-networks-general|consumer%20(visited">http://www.att.com/gen/press-room?pid=21165&cdvn=news&newsarticleid=32813&mapcode=wireless-networks-
general|consumer (visited Nov. 30, 2012), AT&T Comments at 31.
597 Phil Goldstein, AT&T to Expand LTE Coverage to 12 More Markets, FierceWireless, Mar. 12, 2012,
http://www.fiercewireless.com/story/att-expand-lte-coverage-12-more-markets/2012-03-12">http://www.fiercewireless.com/story/att-expand-lte-coverage-12-more-markets/2012-03-12 (visited Oct 16, 2012);
Phil Goldstein, Study: AT&T, T-Mobile Top Network Speed Tests, FierceWireless, Apr. 17, 2012, at
http://www.fiercewireless.com/story/study-att-t-mobile-top-network-speed-tests/2012-04-17">http://www.fiercewireless.com/story/study-att-t-mobile-top-network-speed-tests/2012-04-17 (visited Oct. 16, 2012).
598 AT&T,http://www.att.com/network/"> http://www.att.com/network/ (Visited Sept. 18, 2012).
599 AT&T Comments at 31.
600 Applications of AT&T Inc. and Deutsche Telekom AG for Consent to Transfer Control of Licenses and
Authorizations, WT Docket No. 11-65, Order, 26 FCC Rcd 16184, 16286 ¶ 245 (WTB 2011) (Bureau Order
dismissing transfer applications without prejudice, Staff Analysis and Findings
). AT&T is using both its 700 MHz
and AWS spectrum holdings for its LTE deployment. See Fifteenth Report, 26 FCC Rcd at 9737 ¶ 110.
601 See Fifteenth Report, 26 FCC Rcd at 9737 ¶111.

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LTE or HSPA+ with enhanced backhaul had been deployed.602 Its 4G network covered 250 million POPs
in April 2012.603
191.
Sprint Nextel/Clearwire. Sprint operates an extensive CDMA EV-DO network that
covered approximately 274 million POPs as of January 2012.604 As discussed in the Fifteenth Report, in
2011, Sprint began its Network Vision upgrade to consolidate its multiple network technologies operating
in a range of spectrum bands into multi-mode base stations.605 According to Sprint, this upgrade, in
conjunction with backhaul upgrades and background applications that shift data sessions to Wi-Fi,
improves the network speed, coverage, and efficiency for the company’s EV-DO customers.606 The
Network Vision upgrade will also result in Sprint shutting down its iDEN network in 2013.607
192.
As part of its Network Vision implementation, Sprint announced that it would begin
deploying an LTE network in 2012, with its initial launch of LTE service in Atlanta, Baltimore, Dallas,
Houston, Kansas City, and San Antonio by mid-2012.608 In anticipation of its launch, it began selling
LTE-compatible devices in April 2012.609 As of September 2012, Sprint Nextel offers LTE service in 19
metropolitan areas and has plans to expand coverage to more than 100 additional cities in the coming
months.610 Sprint has deployed the LTE network using its 10 megahertz PCS G block licenses in the
1910-1915 MHz and 1990-1995 MHz bands.611 Because the LTE network is deployed initially in 10,
rather than 20 or more, megahertz of spectrum, its average connection speeds will be lower than those

602 Sascha Segan, AT&T Defines 4G as HSPA 14.4, PCMag.com, May 5, 2011,
http://www.pcmag.com/article2/0,2817,2384959,00.asp%20(visited">http://www.pcmag.com/article2/0,2817,2384959,00.asp (visited Nov. 30, 2012).
603 Mike Dano, AT&T, T-Mobile Wrangling Over Who Has the Largest 4G Network, FierceWireless, April 18, 2012,
ahttp://www.fiercewireless.com/story/att-t-mobile-wrangling-over-who-has-largest-4g-network/2012-04-18">t http://www.fiercewireless.com/story/att-t-mobile-wrangling-over-who-has-largest-4g-network/2012-04-18 (citing
Steven Schwadron of AT&T).
604 As stated above, these estimates of coverage represent mobile network deployment and may not indicate the
extent to which providers actually offer service in the covered areas or have customers living in those areas. We
estimate this coverage based on a census block analysis of Mosaik CoverageRight coverage maps (AT&T’s HSPA+
coverage) for January 2012. Population data are derived from the 2010 Census. See Section III.B Overview of the
Mobile Wireless Industry supra.
605 See Fifteenth Report, 26 FCC Rcd at 9738 ¶ 112.
606 Sascha Segan, Sprint: A Better Network Is Coming, PCMag.com, May 9, 2012,
http://www.pcmag.com/article2/0,2817,2404184,00.asp">http://www.pcmag.com/article2/0,2817,2404184,00.asp. (visited Oct. 16, 2012).
607 Roger Cheng, Sprint to Launch Own 4G LTE Network in Early 2012, CNET News, Sept. 27, 2011,
http://news.cnet.com/8301-1035_3-20112095-94/sprint-to-launch-own-4g-lte-network-in-early-2012-scoop/">http://news.cnet.com/8301-1035_3-20112095-94/sprint-to-launch-own-4g-lte-network-in-early-2012-scoop/
(visited Oct. 16, 2012).
608 Baltimore and Kansas City Sprint Customers to Benefit from 4G LTE and 3G Enhancements in 2012, Press
Release, Sprint, Feb. 8, 2012, availablehttp://newsroom.sprint.com/article_display.cfm?article_id=2180"> at http://newsroom.sprint.com/article_display.cfm?article_id=2180 (visited
Oct. 16, 2012).
609 Sprint Continues 4G LTE Momentum with Launch of Galaxy Nexus by Samsung on April 22 for $199.99, Press
Release, Sprint, Apr. 16, 2012, available athttp://newsroom.sprint.com/article_display.cfm?article_id=2240"> http://newsroom.sprint.com/article_display.cfm?article_id=2240
(visited Oct. 16, 2012); Sprint Debuts HTC EVO 4G LTE on May 18 for $199.99, Press Release, Sprint, May 9,
2012, available ahttp://newsroom.sprint.com/article_display.cfm?article_id=2269">t http://newsroom.sprint.com/article_display.cfm?article_id=2269 (visited Oct. 16, 2012).
610 Sprint, News Release, Sprint 4G LTE Available in More Than 100 Additional Cities in the Coming Months, Sept.
10, 2012, available athttp://newsroom.sprint.com/article_display.cfm?article_id=2382"> http://newsroom.sprint.com/article_display.cfm?article_id=2382 (visited Sept. 19, 2012).
611 Sascha Segan, Sprint: A Better Network Is Coming, PCMag.com, May 9, 2012,
http://www.pcmag.com/article2/0,2817,2404184,00.asp">http://www.pcmag.com/article2/0,2817,2404184,00.asp (visited Oct. 16, 2012); Roger Cheng, Sprint to Launch
Own 4G LTE Network in Early 2012
, CNET News, Sept. 27, 2011,http://news.cnet.com/8301-1035_3-20112095-94/sprint-to-launch-own-4g-lte-network-in-early-2012-scoop/"> http://news.cnet.com/8301-1035_3-20112095-
94/sprint-to-launch-own-4g-lte-network-in-early-2012-scoop/ (visited Oct. 16, 2012).

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offered on the LTE networks of Verizon Wireless or AT&T.612
193.
Sprint continues to resell the mobile WiMAX service offered by Clearwire, in which
Sprint has a significant ownership interest.613 Many of the devices sold by Sprint are compatible with
both EV-DO and WiMAX, allowing users to connect to both types of networks.614 In December 2011,
Sprint announced a new agreement with Clearwire under which Sprint will continue to resell WiMAX,
will have access to Clearwire’s network through at least 2015, and will eventually resell the LTE services
offered by Clearwire’s planned LTE network to supplement its own LTE services.615
194.
Clearwire operates an extensive WiMAX network and has announced plans to deploy
LTE in the future. As of year-end 2011, Clearwire’s WiMAX network covered 132 million people in 71
markets, compared to approximately 120 million people at the end of 2010.616 The network operates on
spectrum in the 2.5 GHz BRS/EBS band and, according to Clearwire, provides average download speeds
of 3-6 Mbps with burst rates up to 10 Mbps.617 As discussed in the Fifteenth Report, Clearwire began
testing LTE in the 2.5 GHz band in 2010.618 The company has continued with its plans to deploy LTE
and is expected to launch its LTE network in mid-2013.619 Clearwire’s initial LTE plans are to overlay
5,000 of its existing WiMAX sites in 31 urban markets with TDD (Time Division Duplex) LTE
technology by June 2013.620
195.
In contrast to other facilities-based providers, Clearwire is focused on pursuing a
wholesale, rather than a retail, business model. While it has maintained its retail service under the
CLEAR brand, the majority of Clearwire’s customers are wholesale, it has added wholesale partners over
the past year, and it is focused on growing its business through wholesale agreements.621 In addition to

612 Sascha Segan, Sprint: A Better Network Is Coming, PCMag.com, May 9, 2012,
http://www.pcmag.com/article2/0,2817,2404184,00.asp">http://www.pcmag.com/article2/0,2817,2404184,00.asp (visited Oct. 16, 2012) (citing Sprint Senior Vice President,
Bob Azzi).
613See Footnote 612, infra.
614 Sprint, Phoneshttp://shop.sprint.com/mysprint/shop/phone_wall.jsp?INTNAV=ATG:HE:Phones_Devices">, http://shop.sprint.com/mysprint/shop/phone_wall.jsp?INTNAV=ATG:HE:Phones_Devices
(visited May 31, 2012).
615 Sprint and Clearwire Announce New Agreements, Press Release, Sprint, Dec. 1, 2011, available at
http://newsroom.sprint.com/article_display.cfm?article_id=2121">http://newsroom.sprint.com/article_display.cfm?article_id=2121 (visited Oct. 16, 2012); Clearwire, SEC Form 10-
K, filed Feb. 16, 2012, at 7.
616 Clearwire, SEC Form 10-K, filed Feb. 16, 2012, at 2; See Fifteenth Report, 26 FCC Rcd at 9738 ¶ 113.
Estimates of coverage represent mobile network deployment and may not indicate the extent to which providers
actually offer service in the covered areas or have customers living in those areas.
617 See Fifteenth Report, 26 FCC Rcd at 9739 ¶ 113.
618 See Fifteenth Report, 26 FCC Rcd at 9739 ¶ 113.
619 Clearwire, SEC Form 10-K, filed Feb. 16, 2012, at 2; Philip Cusick, et al., Clearwire, J.P. Morgan, North
America Equity Research, Apr. 27, 2012, at 1.
620 Clearwire, SEC Form 10-K, filed Feb. 16, 2012, at 2; Philip Cusick, et al., Clearwire, J.P. Morgan, North
America Equity Research, Apr. 27, 2012, at 1; Clearwire, Announcing the Future of LTE,
http://www.clearwire.com/company/featured-story">http://www.clearwire.com/company/featured-story (visited May 10, 2012). The TDD version of LTE is different
from the FDD (Frequency Division Duplex) version of LTE being deployed by most other providers. FDD-LTE
uses two separate sets of frequencies for uplink and downlink transmissions, while TDD-LTE uses a single set of
frequencies for both and being adopted more widely in other countries. Ed Oswald, Is Clearwire the Savior of
Global LTE?
, ExtremeTech, May 9, 2012, athttp://www.extremetech.com/extreme/129090-is-clearwire-the-savior-of-global-lte"> http://www.extremetech.com/extreme/129090-is-clearwire-the-savior-
of-global-lte (visited Oct. 16, 2012).
621 Clearwire, SEC Form 10-K, filed Feb. 16, 2012, at 2-3; Clearwire Reports Record Fourth Quarter and Full 2010
Growth
, Financial Release, Clearwire, Feb. 17, 2011, available at
http://investors.clearwire.com/phoenix.zhtml?c=214419&p=irol-newsArticle&ID=1530258&highlight">http://investors.clearwire.com/phoenix.zhtml?c=214419&p=irol-newsArticle&ID=1530258&highlight= (visited
Oct. 16, 2012).

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reselling to Sprint, Clearwire has also resold its WiMAX service to Comcast, Time Warner, Best Buy,
and NetZero, and in March 2012, announced an LTE wholesale agreement with Leap.622 Clearwire has
stated that it hopes to obtain wholesale partners seeking to offload data traffic onto Clearwire’s WiMAX
or planned LTE networks.623 To help facilitate such arrangements, Clearwire signed a deal with
Qualcomm in May 2012 under which Qualcomm will manufacture chipsets that connect to the different
versions of LTE that the different mobile wireless service providers, including Clearwire, are
deploying.624 This deal would enable LTE subscribers of other mobile wireless service providers, such as
AT&T and T-Mobile, to roam onto Clearwire’s LTE network in capacity-constrained areas if those
providers established a wholesale sale agreement with Clearwire.625
196.
T-Mobile. T-Mobile, like AT&T, is deploying HSPA+ technology across its mobile
wireless network and, in early 2012, announced plans to launch an LTE network in 2013. As mentioned
in the Fifteenth Report, T-Mobile began upgrading its HSPA+ network to HSPA+ 21 technology in late
2009, and this network covered 200 million people as of the end of 2010.626 During 2011, T-Mobile
further upgraded its HSPA+ network with HSPA+ 42 technology, which doubles the peak downstream
rate of HSPA+ 21 technology to 42 Mbps. In January 2012, T-Mobile reported that its HSPA+ 42
network covered 184 million people and that its HSPA+ 21 network covered more than 200 million
people.627 The company reports that customers using HSPA+ 42-compatible devices experience average
download speeds of 8 Mbps.628
197.
In 2012, T-Mobile announced plans to deploy an LTE network using the AWS-1
spectrum licenses it acquired from AT&T as a result of the breakup of the companies’ proposed merger.
T-Mobile plans to launch the LTE network in 18 to 19 of the top 25 U.S. markets in 2013 by deploying
“LTE-Advanced” Release 10 technology at 37,000 cell sites. T-Mobile expects its LTE network in the
United States to cover 100 million people by July 2013 and 200 million people by year-end July 2013.629
In conjunction with its roll out of LTE in the AWS-1 band, T-Mobile is also refarming its PCS spectrum

622 Clearwire, SEC Form 10-K, filed Feb. 16, 2012, at 7-8; Cricket and Clearwire Announce Long-Term Wholesale
4G LTE Agreement
, Press Release, Leap, Mar. 14, 2012, available at
http://leapwireless.mediaroom.com/index.php?s=13383&item=124331">http://leapwireless.mediaroom.com/index.php?s=13383&item=124331 (visited Oct. 16, 2012). Clearwire stated that
it expects Comcast and Time Warner to reduce or eliminate additional sales of Clearwire’s services during 2012 as a
result of the cable companies’ co-marketing agreements with Verizon Wireless. Id.
623 Clearwire, SEC Form 10-K, filed Feb. 16, 2012, at 7-8. Clearwire stated that it would consider upgrading
additional sites in its network with LTE in areas where Sprint or other existing or future wholesale partners
expressed a need for additional capacity. Id. at 2.
624 Greg Bensinger, Clearwire Says Qualcomm Pact to Help with Wholesale Deals, Dow Jones Newswires, May 8,
2012, ahttp://online.wsj.com/article/BT-CO-20120508-715265.html">t http://online.wsj.com/article/BT-CO-20120508-715265.html (visited Oct. 16, 2012).
625 Greg Bensinger, Clearwire Says Qualcomm Pact to Help with Wholesale Deals, Dow Jones Newswires, May 8,
2012, ahttp://online.wsj.com/article/BT-CO-20120508-715265.html">t http://online.wsj.com/article/BT-CO-20120508-715265.html (visited Oct. 16, 2012) (citing Cleawire CEO
Erik Prusch).
626 See Fifteenth Report, 26 FCC Rcd at 9739 ¶ 114. Estimates of coverage represent mobile network deployment
and may not indicate the extent to which providers actually offer service in the covered areas or have customers
living in those areas.
627 T-Mobile Expands America’s Largest 4G Network and Showcases 4G Experiences at 2012 CES, Press Release,
T-Mobile, Jan. 10, 2012http://newsroom.t-mobile.com/articles/t-mobile-expands-network-showcases-4g-at-ces">. http://newsroom.t-mobile.com/articles/t-mobile-expands-network-showcases-4g-at-ces
(visited Oct. 16, 2012)
628 T-Mobile USA Selects Infrastructure Vendors to Support $4 Billion 4G Network Evolution Plan, Press Release,
T-Mobile USA, May 7, 2012, availablehttp://newsroom.t-mobile.com/articles/4GNetworkEvolutionVendorsSelected"> at http://newsroom.t-
mobile.com/articles/4GNetworkEvolutionVendorsSelected (visited Oct. 16, 2012).
629 Deutsche Telekom Capital Markets Day 2012, Press Conference, p. 22, available at
http://www.telekom.com/media/company/164844">http://www.telekom.com/media/company/164844 (visited Dec. 10, 2012).

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to be able to deploy HSPA+ technology in that band. T-Mobile claims that these refarming efforts will
increase average data transfer speeds on its HSPA+ network, improve in-building coverage, and allow
consumers to use a broader range of HSPA+ devices.630
198.
MetroPCS. MetroPCS, which never generally upgraded its CDMA network with EV-DO
technology, became the first U.S. mobile wireless service provider to launch LTE – in Las Vegas and
Dallas – in September 2010.631 As of the end of 2011, the operator had deployed LTE in all of the major
metropolitan areas it serves, including Atlanta, Boston, Dallas, Detroit, Jacksonville, Las Vegas, Los
Angeles, Miami, New York, Orlando, Philadelphia, Sacramento, San Francisco, and Tampa.632 It has
been reported that MetroPCS’s LTE average data speeds are lower than those offered on the LTE
networks of other providers.633
199.
Leap. Leap has deployed EV-DO across its entire network footprint, which covered
approximately 95.3 million POPs at the end of 2011, and has begun rolling out LTE.634 In December
2011, Leap launched LTE service in Tucson, AZ and plans to cover approximately 25 million people with
LTE by the end of 2012.635 The company plans to deploy LTE to approximately two-thirds of its network
footprint by sometime in 2014.636
200.
US Cellular. US Cellular has deployed an EV-DO network covering 98 percent of its
customers, and in March 2012, the company launched LTE service.637 US Cellular initially rolled out

630 T-Mobile USA Selects Infrastructure Vendors to Support $4 Billion 4G Network Evolution Plan, Press Release,
T-Mobile USA, May 7, 2012, availablehttp://newsroom.t-mobile.com/articles/4GNetworkEvolutionVendorsSelected"> at http://newsroom.t-
mobile.com/articles/4GNetworkEvolutionVendorsSelected. (visited Oct. 16, 2012)
631 MetroPCS Launches First 4G LTE Services in the United States and Unveils World’s First Commercially
Available 4G LTE Phone
, Press Release, MetroPCS, Sept. 21, 2010, available at
http://investor.metropcs.com/phoenix.zhtml?c=177745&p=irol-newsArticle&ID=1473355&highlight">http://investor.metropcs.com/phoenix.zhtml?c=177745&p=irol-newsArticle&ID=1473355&highlight (visited Oct.
16, 2012); MetroPCS Launches Commercial 4G LTE Services in the Dallas/Fort Worth Metroplex, Press Release,
MetroPCS, Sept. 29, 2010, available athttp://investor.metropcs.com/phoenix.zhtml?c=177745&p=irol-newsArticle&ID=1475926&highlight"> http://investor.metropcs.com/phoenix.zhtml?c=177745&p=irol-
newsArticle&ID=1475926&highlight(visited Oct. 16, 2012) =. At the same time MetroPCS launched its LTE
network, the company also began offering the first commercially available, dual-mode LTE/CDMA device in the
United States, the Samsung Craft. For more information, see Section IV.B.1.b, infra.
632MetroPCS, SEC Form 10-K, filed Feb. 29, 2012, at 6.
633 Roger Cheng, MetroPCS’s 4G Isn’t Exactly Greased Lightning, CNET News, Aug. 3, 2011,
http://news.cnet.com/8301-1035_3-20087512-94/metropcss-4g-isnt-exactly-greased-lightning/">http://news.cnet.com/8301-1035_3-20087512-94/metropcss-4g-isnt-exactly-greased-lightning/ (visited Oct. 16,
2012); Sascha Segan, The Fastest Mobile Networks 2011, PCMag.com, June 27, 2011,at
http://www.pcmag.com/Fastest-Mobile-Networks-2011">http://www.pcmag.com/Fastest-Mobile-Networks-2011(visited Oct. 16, 2012).
634 Leap Wireless International, Inc., SEC Form 10-K, filed Feb. 21, 2012, at 4. Estimates of coverage represent
mobile network deployment and may not indicate the extent to which providers actually offer service in the covered
areas or have customers living in those areas.
635 Leap’s Cricket Service Begins Network Transition to 4G LTE with First Commercial Market Launch in Tucson,
Arizona
, Press Release, Leap, Dec. 21, 2011, available at
http://leapwireless.mediaroom.com/index.php?s=13383&item=97670">http://leapwireless.mediaroom.com/index.php?s=13383&item=97670 (visited Oct. 16, 2012) ; Leap Wireless
International, Inc., SEC Form 10-K, filed Feb. 21, 2012, at 4; Leap Reply at 4.
636 Leap Wireless International, Inc., SEC Form 10-K, filed Feb. 21, 2012, at 4; Leap Reply at 4.
637 United States Cellular Corporation, SEC Form 10-K, filed Feb. 27, 2012, at 7; United States Cellular
Corporation, SEC Form 10-Q, filed May 4, 2012, at 7; Stephen Lawson, U.S. Cellular Throws Its 4G LTE Hat in the
Ring,
ComputerWorld, Mar. 22, 2012, at
http://www.computerworld.com/s/article/9225498/U.S._Cellular_throws_its_4G_LTE_hat_in_the_ring">http://www.computerworld.com/s/article/9225498/U.S._Cellular_throws_its_4G_LTE_hat_in_the_ring (visited Oct.
16, 2012).

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LTE to 25 percent of its customers and plans to cover 54 percent of its customers by the end of 2012.638
201.
Other Providers. In addition to the providers discussed above, several other smaller,
regional operators had deployed 3G and 4G technologies within their networks as of January 2012. These
networks combined had been deployed in census blocks covering 66.6 million people, or 21.3 percent of
the U.S. population, as of January 2012.639
b.

Coverage by Technology Type

202.
We present estimates of coverage by air interference type in approximately 11 million
census blocks in the U.S. 640 This census block level analysis is based on data from Mosaik Solutions, and
while this analysis likely overstates the coverage experienced by consumers because of limitations in
Mosaik data, we find that this analysis is useful because it provides a general baseline that can be
compared over time across network types, technologies, and providers. As of October 2012, an estimated
99.9 percent of the United States population lived in census blocks where operators have deployed digital
mobile wireless coverage over at least part of the census block using CDMA, GSM/TDMA, or iDEN
(including their respective next generation technologies), or some combination of the three. As shown in
Table 30 below, we estimate that both CDMA and GSM/TDMA have been deployed in census blocks
containing 310.3 million people. As stated above, these estimates of coverage represent deployment of
mobile wireless networks and do not indicate the extent to which providers actually offer service in the
covered areas or have customers residing in those areas. iDEN coverage has declined slightly as Sprint
has been phasing out its iDEN network. The technology covered 89 percent of the U.S. population as of
October 2012, down from 91 percent in July 2010. A map showing coverage by mobile wireless digital
technologies can be found in Appendix C, Maps C-23 to C-30.














638 Stephen Lawson, U.S. Cellular Throws Its 4G LTE Hat in the Ring, ComputerWorld, Mar. 22, 2012, at
http://www.computerworld.com/s/article/9225498/U.S._Cellular_throws_its_4G_LTE_hat_in_the_ring">http://www.computerworld.com/s/article/9225498/U.S._Cellular_throws_its_4G_LTE_hat_in_the_ring (visited Oct.
16, 2012).
639 Commission estimates based on census block analysis of Mosaik CoverageRight coverage maps, January 2012.
Population data are from the 2010 Census. Estimates of coverage represent mobile network deployment and may
not indicate the extent to which providers actually offer service in the covered areas or have customers living in
those areas.
640 See Section IV.B.1.b, Coverage by Technology Type, supra, for a discussion of the limitations of Mosaik data.

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Table 29

Estimated Mobile Wireless Coverage by Technology, Jan. 2012641


Technology

POPs in

% of

Square Miles % of Total Road Miles % of Total

Covered

Total

Contained in

Square

Contained U.S. Road

Blocks

POPs

Those Blocks

Miles

in Those

Miles

(Thousands)
(Thousands)

Blocks

(Thousands)
CDMA
310,306
99.3%
2,656
67.0%
6,140
90.0%
GSM/TDMA
310,276
99.3%
2,419
65.0%
6,030
88.4%
iDEN
281,138
90.0%
1,135
25.1%
3,338
48.9%

Total Digital

311,982
99.8%
2,895
73.3%
6,462
94.7%

Table 30

Estimated Mobile Wireless Coverage by Technology, Oct. 2012642


Technology

POPs in

% of

Square Miles % of Total Road Miles % of Total

Covered

Total

Contained in

Square

Contained U.S. Road

Blocks

POPs

Those Blocks

Miles

in Those

Miles

(Thousands)
(Thousands)

Blocks

(Thousands)
CDMA
310,370
99.3%
2,547
67.0%
6,147
90.1%
GSM/TDMA
310,315
99.3%
2,495
65.6%
6,059
88.8%
iDEN
278,435
89.1%
895
23.5%
3,200
46.9%

Total Digital

312,004
99.9%
2,791
73.4%
6,465
94.8%


203.
Table 31 below provides estimates of the extent of mobile data and mobile broadband
network coverage in the United States based on Mosaik data. Table 31 shows that 2.5G mobile data
networks, which were widely deployed several years ago, covered an estimated 99.8 percent of the total
U.S. population as of October 2012. We estimate that 99.3 percent of the population is covered by the
individual CDMA and GSM path technologies – 1xRTT and GPRS/EDGE. For mobile broadband
coverage, Table 31 shows that an estimated 99.5 percent of the U.S. population (residing in an estimated
67.8% of the U.S. land area) was covered by at least one mobile provider using a 3G or 4G network
technology as of October 2012, up from 98.5 percent in August 2010.643 We also estimate that EV-DO

641 Includes Federal lands. Commission estimates based on census block analysis of Mosaik CoverageRight
coverage maps, January 2012. Population data are from the 2010 Census, and the square miles include the United
States and Puerto Rico. Our analysis of road miles includes the following road miles categories from census:
Primary Road (S1100), Secondary Road (S1200), Local Neighborhood Road, Rural Road, City Street (S1400),
Vehicular Trail [4WD] (S1500), Service Drive usually along a limited access highway (S1640), and Private Road
for service vehicles (S1740) as defined in MAF/TIGER Feature Class Code (MTFCC) Definitions, pages F-186 and
F-187 athttp://www.census.gov/geo/www/tiger/tgrshp2010/documentation.html"> http://www.census.gov/geo/www/tiger/tgrshp2010/documentation.html (visited Sep 26, 2012). In
calculating the number of road miles associated with each census block, we also used two tables (“Faces” and
“Edges”), published by the US Census Bureau as part of the TIGER database. A description of these relationship
tables can be foundhttp://www.census.gov/geo/www/tiger/rel_file_desc.pdf"> at http://www.census.gov/geo/www/tiger/rel_file_desc.pdf (visited Oct. 16, 2012) . The datasets
themselves are available in the FACES and EDGES directories atftp://ftp2.census.gov/geo/tiger/TIGER2010/"> ftp://ftp2.census.gov/geo/tiger/TIGER2010/
(visited Oct. 16, 2012).
642 Includes Federal lands. Commission estimates based on census block analysis of Mosaik CoverageRight
coverage maps, October 2012. Population data are from the 2010 Census, and the square miles include the United
States and Puerto Rico.
643 See Fifteenth Report, 26 FCC Rcd at 9742 ¶ 120, Table 13.

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coverage increased from 98.3 percent to 99.2 percent of the U.S. population, while estimated HSPA
coverage grew from 79.8 percent to 95.3 percent of the U.S. population.644 In addition, we estimate that
LTE networks, which had not been deployed in the U.S. as of July/August 2010, covered 267.5 million
people, or 85.6 percent of the U.S. population as of October 2012. Finally, we estimate that mobile
WiMAX network coverage increased from 17.7 percent to 33.6 percent.645

Table 31

Estimated Mobile Wireless Data/Broadband Network Coverage by Census Block, Jan. 2012646


Technology

POPs in

% of

Square

% of

Road Miles

% of

Covered

Total

Miles

Total

Contained in Total

Blocks

POPs

Contained

Square

Those Blocks

U.S.

(Thousands)
in Those

Miles

(Thousands)

Road

Blocks

Miles

(Thousands)
2.5G
CDMA 1xRTT
310,226
99.3%
2,530
66.6%
6,121
90.0%
GPRS/EDGE
310,258
99.3%
2,464
64.9%
6,028
88.4%

Total 2.5G Mobile

311,960
99.8%
2,771
72.9%
6,453
94.6%

Data Network
Coverage

3G/
WCDMA/HSPA/HSPA+
291,056
93.1%
1,597
42.0%
4,341
63.6%
4G
EV-DO/EV-DO Rev. A
309,486
99.0%
2,365
62.3%
5,917
86.8%
Mobile WiMAX
105,124
33.6%
43
1.1%
416
6.1%
LTE
210,940
67.5%
292
7.7%
1,475
21.6%

Total Mobile

310,519
99.4%
2,517
66.2%
6,115
89.6%

Broadband
Coverage (3G/4G)








644 See Fifteenth Report, 26 FCC Rcd at 9742 ¶ 120, Table 13.
645 Mobile broadband coverage across different states and areas of the country is shown in Map D-29 in Appendix
C.
646 Includes Federal lands. Commission estimates based on census block analysis of Mosaik CoverageRight
coverage maps, January 2012. Population data are from the 2010 Census, and the square miles include the United
States and Puerto Rico. 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. Our
analysis of road miles includes the following road miles categories from census: Primary Road (S1100), Secondary
Road (S1200), Local Neighborhood Road, Rural Road, City Street (S1400), Vehicular Trail [4WD] (S1500), Service
Drive usually along a limited access highway (S1640), and Private Road for service vehicles (S1740) as defined in
MAF/TIGER Feature Class Code (MTFCC) Definitions, pages F-186 and F-187 at
http://www.census.gov/geo/www/tiger/tgrshp2010/documentation.html">http://www.census.gov/geo/www/tiger/tgrshp2010/documentation.html (last visited Sep 26, 2012). In calculating
the number of road miles associated with each census block, we also used two tables (“Faces” and “Edges”),
published by the US Census Bureau as part of the TIGER database. A description of these relationship tables can be
found ahttp://www.census.gov/geo/www/tiger/rel_file_desc.pdf">t http://www.census.gov/geo/www/tiger/rel_file_desc.pdf(visited Oct. 16, 2012) . The datasets themselves
are available in the FACES and EDGES directories atftp://ftp2.census.gov/geo/tiger/TIGER2010/"> ftp://ftp2.census.gov/geo/tiger/TIGER2010/(visited Oct. 16,
2012).

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Table 32

Estimated Mobile Wireless Data/Broadband Network Coverage by Census Block, Oct. 2012647


Technology

POPs in

% of

Square

% of

Road Miles

% of

Covered

Total

Miles

Total

Contained in Total

Blocks

POPs

Contained

Square

Those Blocks

U.S.

(Thousands)
in Those

Miles

(Thousands)

Road

Blocks

Miles

(Thousands)
2.5G
CDMA 1xRTT
310,296
99.3%
2,534
66.6%
6,129
89.9%
GPRS/EDGE
310,312
99.3%
2,488
65.4%
6,058
88.8%

Total 2.5G Mobile

311,986
99.8%
2,777
73.1%
6,455
94.6%

Data Network
Coverage

3G/
WCDMA/HSPA/HSPA+ 297,921
95.3%
1,782
46.9%
4,771
69.9%
4G
EV-DO/EV-DO Rev. A
310,011
99.2%
2,431
63.9%
6,012
88.1%
Mobile WiMAX
105,340
33.7%
44
1.2%
418
6.1%
LTE
267,464
85.6%
766
20.2%
2,816
41.3%

Total Mobile

311,025
99.5%
2,577
67.8%
6,209
91.0%

Broadband
Coverage (3G/4G)



204.
Additional information on mobile broadband network deployment can be found in the
National Broadband Map.648 The National Broadband Map displays the geographic areas where
broadband service is available, the technology used to provide the service, and the speeds of the
service.649 The Map is searchable by address and indicates the broadband providers offering service in
the corresponding census block or street segment.650 According to a Commission analysis of State
Broadband Initiative map data submitted for the National Broadband Map, mobile broadband networks
offering speeds of 3 Mbps downstream and 768 kbps upstream covered an estimated 93.8 percent of the
U.S. population as of June 2011.651
205.
Chart 7 below depicts the pace of 3G/4G network deployment over the past seven years.
As stated above, these estimates of coverage represent mobile network deployment and may not indicate
the extent to which providers actually offer service in the covered areas or have customers residing in
those areas. EV-DO network coverage has grown from 62.6 percent of the U.S. population in 2006 to
99.2 percent in 2012. HSPA network coverage was not nearly as extensive as EV-DO coverage in 2006,
covering only 20 percent of the U.S. population. However, HSPA deployment has been increasing in
recent years, and HSPA networks covered 95.3 percent of the population in October 2012. Looking at the
more recently-launched network technologies, WiMAX and LTE, we see that WiMAX coverage has
increased since 2009 but still only covers about a third of the U.S. population and actually declined

647 Includes Federal lands. Commission estimates based on census block analysis of Mosaik CoverageRight
coverage maps, October 2012. Population data are from the 2010 Census, and the square miles include the United
States and Puerto Rico.
648 The National Broadband Map was created by the National Telecommunications and Information Administration
(NTIA) in partnership with Commission, 50 states, five territories, and the District of Columbia. It can be accessed
ahttp://www.broadbandmap.gov/.(visited">t http://www.broadbandmap.gov/.(visited Oct. 16, 2012).
649http://www.broadbandmap.gov/"> http://www.broadbandmap.gov/. (visited Oct. 16, 2012).
650http://www.broadbandmap.gov/"> http://www.broadbandmap.gov/. (visited Oct. 16, 2012).
651 2012 Eighth Broadband Progress Report, GN Docket No. 11-121, ¶ 86.

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slightly from 2011 to 2012. LTE coverage, on the other hand, has grown rapidly over the past year-and-
a-half, from nothing in mid-2010 to 86 percent of the U.S. population as of October 2012. This trend
reflects the LTE network launches by the major providers that began in the fall of 2010.652

Chart 7

Estimated 3G and 4G Network Coverage, 2006-2012

653
(Percent of U.S. Population Covered)

98
98
99
99
100
95
92
89
90
86
82
80
80
76
70
63
60
54
50
43
41.3
40
35
34
30
20
18
20
10
3
0
2006
2007
2008
2009
2010
2011
2012
Source: Mosaik Data
HSPA
EV-DO
WiMax
LTE


206.
While mobile broadband network deployment has grown in recent years, certain
geographic areas of the country remain unserved. To expand mobile network deployment into such
unserved areas, the Commission adopted rules creating the Mobility Fund in November 2011.654 The
Mobility Fund will use Universal Service Fund reserves to support the deployment of current- or future-
generation mobile network technologies that provide mobile voice and Internet services.655 Phase I of the
Mobility Fund used a reverse auction to assign approximately $300 million in one-time support to service

652 See Section IV.B.1.a, Service Provider Technology Deployments, supra.
653 Commission estimates based on census block analysis of Mosaik CoverageRight coverage maps, April 2011 and
October 2012. Estimates for previous years were obtained from the Annual Mobile Wireless Competition Reports
and the Annual CMRS Competition Reports. See Fifteenth Report, 26 FCC Rcd at 9743 ¶ 122; Fourteenth Report,
25 FCC Rcd at 11487-88 ¶ 122, Table 13; Thirteenth Report, 24 FCC Rcd at 6257 ¶ 145; Twelfth Report, 23 FCC
Rcd at 2304 ¶ 143; Eleventh Report, 21 FCC Rcd at 10995 ¶ 117.
654 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, Federal-State 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.
655 Id.

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providers seeking to deploy 3G or better mobile networks in census blocks with no 3G network coverage
as of January 2012.656 The Mobility Fund Phase I auction occurred on September 27, 2012.657 The
auction assigned support to 33 winning bidders to provide services covering up to 83,494.23 road miles in
795 biddable geographic areas located in 31 states and 1 territory.658
c.

Roaming

207.
Some providers offer their customers coverage outside of their network coverage areas
through roaming arrangements with other providers.659 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.660 Smaller providers that rely on roaming arrangements to offer nationwide
coverage to their customers may 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, 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.
208.
Service providers may use roaming services to enhance their coverage for a variety of
reasons, including temporary arrangements while their networks are being deployed, and as permanent
arrangements due to the economics of the market or their business models. No mobile wireless provider –
including the four nationwide providers – has built out its entire licensed service area, and consequently
all providers employ roaming to some extent to fill gaps in their coverage.661 In addition, as discussed in
section III.B.1, Facilities-Based Providers, there are non-nationwide providers whose business plans do
not employ nationwide networks. Many of these non-nationwide providers are able to offer voice
coverage and service plans that are national in scope through roaming agreements with other mobile
wireless providers.662 For example, Leap offers voice plans that already come with a certain number of

656 Id; “Mobility Fund Phase I Auction Scheduled for September 27, 2012, Notice and Filing Requirements and
Other Procedures for Auction 901,” AU Docket No. 12-25, Public Notice, DA 12-641 (WTB rel. May 2, 2012).
657 “Mobility Fund Phase I Auction Closes, Winning Bidders Announced For Auction 901.” Public Notice, DA 12-
1566 (WTB rel. Oct. 3, 2012).
658 Id.
659Fourteenth Report, 25 FCC Rcd at 11489 ¶ 124; see also Reexamination of Roaming Obligations of Commercial
Mobile Radio Service Providers, Order on Reconsideration and Second Further Notice of Proposed Rulemaking, 25
FCC Rcd 4181, 4192 ¶ 23 (2010) (“Roaming Order on Reconsideration” and “Second Further Notice of Proposed
Rulemaking”
respectively) (finding that in some areas of the country, low population densities, along with
insufficient demand, make it uneconomic for several carriers to build out).
660 All mobile calling plans specify a calling area – such as a particular metropolitan area, a state, a region, the
provider’s entire network, or the entire United States – within which the subscriber can make a call without
incurring additional charges. Outside of this calling area, roaming services are obtained by a carrier for its
customers through a roaming agreement with another carrier.
661Fourteenth Report, 25 FCC Rcd at 11489-90 ¶ 125; Roaming Order on Reconsideration, 25 FCC Rcd at 4192 ¶
23. One potential measure of the significance of roaming in the wireless industry is roaming revenues, which are
discussed in detail below. See also AT&T Reply Comments at 18-19.
662 See, e.g., Cricket, Best Cell Phone Coverage Areas, Cellular Mapshttp://www.mycricket.com/coverage/cell-phone-coverage">, http://www.mycricket.com/coverage/cell-
phone-coverage (visited June 5, 2012) (stating that Cricket Wireless offers a wide variety of cell phone plans to
choose from “with coverage available all over the U.S.”); Cricket, Wireless Coverage Maps,
http://www.mycricket.com/coverage/maps/wireless">http://www.mycricket.com/coverage/maps/wireless (visited June 5, 2012) (providing an interactive U.S. map
showing Cricket’s roaming coverage and stating that they have expanded their coverage all across the U.S.);
MetroPCS, Unlimited Cell Phone Planshttp://www.metropcs.com/plans/">, http://www.metropcs.com/plans/ (visited June 5, 2012) (showing
MetroPCS plans that include nationwide coverage); MetroPCS, Coverage Map,
http://www.metropcs.com/metro/whymetro/ourcoverage.jsp">http://www.metropcs.com/metro/whymetro/ourcoverage.jsp (visited June 5, 2012) (providing an interactive U.S.
(continued….)

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nationwide roaming minutes included in the plan.663 Accordingly, roaming remains particularly
important for small and regional providers with limited network population coverage to remain
competitive by meeting their customers’ needs for nationwide service.664 Similarly, roaming provides
important assistance to new entrants who wish to begin offering service before they have fully deployed
their networks.665 In section V.E.3, Intercarrier Roaming Rates and Revenue, recent data on intercarrier
roaming revenues and voice minutes are presented.
209.
As noted in the Fifteenth Report, in recent years, the Commission has taken actions to
facilitate roaming arrangements.666 In 2007, for instance, it clarified that automatic voice roaming is a
common carrier obligation for CMRS providers.667 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.668 In April 2011, the Commission issued the Data Roaming Order.669
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.670 The
Commission found that its actions to promote commercial data roaming would facilitate investment in
and deployment of mobile broadband networks.671
210.
Several providers have stated that, although the Commission adopted the Data Roaming
(Continued from previous page)
map showing the various types of coverage provided by MetroPCS in different geographic areas); US Cellular, Cell
Phone Plans
http://www.uscellular.com/uscellular/plans/showPlans.jsp?type=plans&plan-selector-type=individual">, http://www.uscellular.com/uscellular/plans/showPlans.jsp?type=plans&plan-selector-type=individual
(visited June 5, 2012) (after entering a valid zip code, shows US Cellular national plans); US Cellular, Voice and
Data Maps
http://www.uscellular.com/coverage-map/index.html">, http://www.uscellular.com/coverage-map/index.html (visited June 5, 2012) (providing interactive U.S.
maps depicting US Cellular national voice and data coverage).
663 See e.g., Leap, Cricket Best Cell Phone Coverage Areas, Cellular Maps
http://www.mycricket.com/coverage/glossary">http://www.mycricket.com/coverage/glossary (visited June 5, 2012) (Subscribers to these plans can also add
roaming minutes to their plan each month as an add-on or pay-as-you-go using Flex Bucket.) ; see also AT&T
Comments at 10 (stating that “almost all major providers that market services only in some geographic regions –
such as U.S. Cellular, MetroPCS, Cincinnati Bell, and Cellular South (now C Spire) – now offer nationwide
coverage, generally without retail roaming fess in areas covering most of the U.S. population.”)
664See FifteenthReport, 26 FCC Rcd at 9746 ¶ 126; see also RCA Comments at 15; NTCA Comments at 3-4
(arguing that regional and local carriers offer a small footprint and need to partner with other carriers through
roaming agreement to offer their subscribers competitive expanded coverage).
665See Fifteenth Report, 26 FCC Rcd at 9746 ¶ 126; see also Roaming Order on Reconsideration, 25 FCC Rcd at
4191-92 ¶ 21 (recognizing that without the ability to offer roaming in markets where they hold spectrum, new
entrants would in effect be required “to build out their networks extensively throughout the newly obtained license
area before they can provide a competitive service to consumers, all without the benefit of financing the construction
of new networks over time with revenues from existing services and reliance on roaming to fill in gaps during build
out”); see also MetroPCS Comments at 22; NTCA Comments at 3.
666 Fifteenth Report, 26 FCC Rcd at 9747 ¶128.
667See 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.”).
668Roaming Order on Reconsideration, 25 FCC Rcd at 4182 ¶ 2.
669Data Roaming Order, 26 FCC Rcd 5411. Aff’d sub nom. Cellco Partnership v. FCC, 700 F.3d 534, (DC Cir.
2012).
670Id. at 5418-5428 ¶¶ 13-31.
671Id.

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Order in 2011, the ability to negotiate data roaming agreements on non-discriminatory terms and at
reasonable rates remains a concern.672 According to a recent survey by NTCA of its membership, which
consists exclusively of small, rural providers, 55 percent of the survey respondents indicated that
“negotiating roaming agreements” remains a major area of concern.673 When asked about their
experience in negotiating data roaming and in-market roaming agreements with other carriers, 68 percent
of the NTCA survey respondents categorized it as “moderately to extremely difficult.”674 AT&T and
Verizon Wireless state that, to the extent parties believe that the terms they have been offered are
commercially unreasonable, they have every opportunity to raise those claims in the case-by-case
complaint proceedings authorized by the Data Roaming Order.675 AT&T also states that it is a net
purchaser of roaming services overall because, although AT&T has a larger network than its roaming
partners, it also has more customers who roam on its partners’ networks and generate more minutes and
megabytes on those networks than vice versa.676
2.

Investment

211.
Capital expenditure, or “CAPEX,” measures the amount of money invested in capital
assets in the mobile wireless service industry. CAPEX in system/network assets provides a financial
measure of network deployment that is an alternative to the engineering-oriented metrics such as network
coverage, capacity, and throughput that are the results of CAPEX.
212.
CAPEX includes expenditures on system/network assets and non-system assets such as
buildings and vehicles. The data sources for capital investment in this Report include CTIA, the Census
Bureau, and provider financial reports. Disaggregated data on system/network CAPEX and non-system
CAPEX are not consistently available from all data sources. Spectrum licenses and expenditures,
normally treated as intangible assets,677 are not accounted for in capital assets.678
213.
CTIA reports that incremental capital investment by wireless operators rose to $24.9
billion in 2010, a 22 percent increase from the $20.4 billion spent in 2009, and then increased another 1.7
percent to $25.3 billion in 2011.679 The increases in 2010 and 2011 follow a one percent increase in
capital investment by mobile wireless service providers in 2009, reversing the trend of declining
investment in 2006 through 2008. Estimates by the U.S. Census Bureau likewise show an 11 percent
increase in total wireless industry capital expenditures to $23 billion in 2010 following an 18 percent

672 See Free Press Comments at 8; Leap Reply Comments at 5 (intending to defend the Commission’s Data Roaming
Orde
r in the court.); MetroPCS Comments at 25; RCA Comments at 2-3, 15; NTCA Comments at 3. The National
Broadband Plan
recognizes the importance of data roaming to entry and competition for mobile broadband services.
National Broadband Plan, at 49. Accordingly, it encourages the industry to adopt voluntary data-roaming
arrangements and recommends that the Commission move forward promptly on its data roaming proceeding. Id.
673 NTCA 2011 Wireless Survey Report, August 2011, at 3, 13.
674 NTCA 2011 Wireless Survey Report at 13.
675 AT&T Reply Comments at 18-19; Verizon Wireless Comments at 15.
676 AT&T Reply Comments at 18-19.
677 See, e.g. Sprint Nextel, Form 10-K.
678 CTIA Year-End 2010 Wireless Indices Report, at 137-138. The CTIA figures also exclude capital investment in
systems that have not yet initiated commercial service.
679 CTIA Year-End 2010 Wireless Indices Report, at 137, 139; CTIA Year-End 2011 Wireless Indices Report, at 139,
141. CTIA’s figure includes incremental investment in currently operational systems, including expenditures for
building operating systems, land and capital leases, and all tangible non-system capital investment, but does not
include the cost of spectrum licenses purchased at auctions or other acquisition processes or greenfield builds. CTIA
Year-End 2010 Wireless Indices Report
, at 137-138.

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decline to $20.7 billion in 2009.680

Table 33

Annual Capital Expenditures by Wireless Service Providers, 2006-2011

681

2006
2007
2008
2009
2010
2011
Census Bureau: Total Annual
Capital Expenditures (in
$27.9
$22.2
$25.3
$20.7
$23.0
NA
billions)
Census Bureau: Percent
Change in Capital
2.2%
(20.4%) 14.0% (18.2%)
11.1%
NA
Expenditures from Previous
Year
CTIA: Total Annual
Incremental Capital
$24.4
$21.1
$20.2
$20.4
$24.9
$25.3
Investment (in billions)
CTIA: Percent Change in
Incremental Capital
(3.2%) (13.5%) (4.3%)
1.0%
22.3%
1.7%
Investment from Previous
Year


























680 See U.S. Census Bureau, Annual Capital Expenditures Survey,http://www.census.gov/econ/aces/index.html"> http://www.census.gov/econ/aces/index.html,
(visited Feb. 9, 2011).
681 U.S. Census Bureau, Annual Capital Expenditures Surveys (NAICS code 5172), 2006-2010,
http://www.census.gov/econ/aces/xls/2010/full_report.html">http://www.census.gov/econ/aces/xls/2010/full_report.html, (visited June 14, 2012); CTIA Year-End 2011 Wireless
Indices Report
. Year-end 2011 Census Bureau ACES data not available as of June 2012.

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Chart 8

CTIA: Total Annual Incremental Capital Investment (in billions)




214.
Averages and ratios of industry CAPEX also show a pattern of fluctuation during this
period. Data from CTIA show that incremental investment per subscriber increased from $73.24 in 2009
to $85.55 in 2010 and then declined to $82.70 in 2011 but still remained well above the 2009 level. Data
from CTIA likewise show that investment as a percentage of revenue increased from 13 percent in 2009
to 16 percent in 2010 and then declined to 15 percent in 2011, but Census Bureau data show that this
metric remained flat at 14 percent from 2009 through 2010.









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Chart 9

Annual Incremental Capital Investment per Customer, 2006- Mid Year 2012

682

Chart 10

Annual Capital Investment as a Percentage of Industry Revenue, 2006-2011

683

25%
19%
CTIA
Census Bureau
20%
18%
15%
16%
15%
14%
13%
15%
13%
14%
14%
14%
10%
5%
0%
2006
2007
2008
2009
2010
2011


682 CTIA Year-End 2011 Wireless Indices Report (reported incremental capital investment, estimated total
connections). Incremental Capital Investment for the years 2006-2011 is the investment that occurred in the
reporting periods of the calendar year. For mid-year 2012, it is the investment that occurred since mid-year 2011.

683 U.S. Census Bureau, Annual Capital Expenditures Surveys (NAICS code 5172), 2006-2010,
http://www.census.gov/econ/aces/xls/2010/full_report.html">http://www.census.gov/econ/aces/xls/2010/full_report.html, (visited June 14, 2012); CTIA Year-End 2011 Wireless
Indices Report
. Year-end 2011 Census Bureau ACES data not available as of June 2012.

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215.
The foregoing estimates of CAPEX reveal a cyclical pattern in which a period of
declining investment is followed by a period of rising investment. Increases in CAPEX are closely
correlated with periods in which there are mobile wireless network deployments and upgrades, described
in detail in Section IV.B.1 of this Report.684 CAPEX in system/network assets may be cyclical or
“lumpy” because technological change in the mobile wireless service industry is commercially
implemented in successive generations of technologies. As detailed in Section IV.B.1 of this Report, the
mobile wireless service industry has progressively transitioned from first-generation analog to second-
generation digital wireless network technologies to third-generation technologies, and now is in the
process of transitioning to fourth-generation technologies. In addition to these inter-generational
transitions, there have been overlay upgrades within both the second- and third-generation technologies.
Consequently, CAPEX may vary between periods when a provider stays with the current technology and
periods when the provider replaces the current technology with the next technology. Thus, fluctuations in
measures of CAPEX are consistent with the cyclical nature of technological adoption in the mobile
wireless service industry, with the upswing in capital investment since 2009 possibly reflecting the
transition from third- to fourth-generation wireless network technologies.
216.
As shown in Chart 11, capital expenditures have continued to vary significantly from
operator to operator. AT&T and Verizon Wireless continued to invest more than Sprint or T-Mobile by
wide margins. In December 2012, Deutsche Telekom announced that the CAPEX for T-Mobile USA
would be approximately $4.7 billion in 2013 and $3 billion annually in 2014 and 2015.685
















684 For example, CTIA notes that the pattern of peaks in its estimates of incremental capital investment, and in
derived figures such as incremental capital investment per subscriber, “correlate with …the build-out of PCS and
ESMR systems in 1996-97, as well as on-going investment in network upgrades by cellular companies during the
same periods, and the subsequent competitive build-outs and overlay upgrading of all carriers’ networks.” CTIA
Year-End 2010 Wireless Indices Report
, at 159.
685 Deutsche Telekom Capital Markets Day 2012, Press Conference, p. 20, available at
http://www.telekom.com/media/company/164844">http://www.telekom.com/media/company/164844 (visited Dec. 10, 2012).

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Chart 11

Capital Expenditures by Service Provider, 2007-2012 (In millions)

686


217.
Variations in CAPEX may not be synchronized across providers for several reasons.
First, providers follow different technological migration paths on different timeframes. Recently, the
industry has followed two distinct technological migration paths, GSM and CDMA, each with its own
sequence of upgrades. As a result, CAPEX can vary from one service provider to the next because each
is following a different technological migration path.
218.
Second, providers often base their investment decisions on an assessment of how network
deployments and upgrades affect future earnings. For instance, applying a net present value (“NPV”)
analysis to investment decisions would result in service providers approving network deployments and
upgrades when the present value of future sales of wireless services and other cash flows exceeds the
initial cost of the investment.687 To undertake a NPV analysis, a service provider must forecast the future
stream of cash flows based on estimates of the service revenues and costs associated with a new network

686 Verizon Communications, Inc., SEC Forms 10-K, filed Feb. 14, 2012, filed Feb. 28, 2011, filed Feb. 26, 2010,
and Feb. 24, 2009; AT&T Inc., SEC Forms 10-K, filed Feb. 24, 2012, filed Mar. 1, 2011, filed Feb. 25, 2010, filed
Feb. 25, 2009, filed Feb. 27, 2008; Sprint Nextel, SEC Forms 10-K, filed Feb. 27, 2012; filed Feb. 24, 2011; filed
Feb. 26, 2010; US Wireless 411 4Q11, at 37.
687 Zvi Bodie and Robert C. Merton, Finance, Prentice-Hall, Inc., 2000, pp. 112-118, 168-173. More precisely, the
NPV is calculated by taking the present value of all future cash inflows (service revenues) and subtracting the
present value of all current and future cash outflows. The NPV rule holds that a firm should accept a project if its
NPV is positive, and reject a project if its NPV is negative. Id., p. 112.

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deployment or upgrade. Variations in CAPEX may not be synchronized across providers because these
forecasts are influenced by provider-specific factors as well as current market conditions.
219.
Finally, the timing of network investments often has a strategic component vis-à-vis
rivals. Some providers strategically make CAPEX decisions to differentiate their service offerings from
those of rivals by becoming the first to deploy a particular upgrade or new network technology. Other
providers wait for rivals to make the first move and then respond with a lag by upgrading their own
networks. Section IV.B.1 of this Report describes in detail how the CAPEX of individual providers in
network deployments and upgrades are a measure of non-price rivalry.
3.

Differentiation in Mobile Wireless Handsets/Devices and Applications

220.
In addition to competing on price and network quality, mobile wireless providers
continue to compete by offering consumers a variety of different mobile wireless devices with innovative
features.688 In particular, providers are offering a range of data-centric smartphones689 and tablets made
by different manufacturers and running different operating systems, in order to respond to growing
consumer demand for mobile data products. As evidence of this demand for smartphones, comScore
estimates that the number of smartphone users grew from 67 million to 104 million during 2011.690
However, while smartphone adoption is growing, the ability of the major mobile wireless service
providers to distinguish their device offerings from those of their rivals by offering exclusive devices
diminished during 2011 as a result of several major developments: the end of iPhone exclusivity, the
availability of innovative smartphones that are not subject to exclusive arrangements,691 and the
emergence of two leading mobile operating systems, Apple’s iOS and Google’s Android, which generally
define the user interfaces of the devices.692
221.
During 2011, AT&T’s iPhone exclusivity ended, and other providers began selling the
iPhone for use on their networks. With the loss of iPhone exclusivity, AT&T was no longer able to
differentiate itself as the only provider carrying the iPhone, and consumers began purchasing iPhone

688 AT&T Comments at 4, 24, 27; Verizon Comments at 77.
689 While there is no industry standard definition of a smartphone, for purposes of this Report, we consider the
distinguishing features of a smartphone to be an HTML browser that allows easy access to the full, open Internet; an
operating system that provides a standardized interface and platform for application developers; and a larger screen
size than a traditional, voice-centric handset. Many smartphones also have touch screens and/or a QWERTY
keypad, and, as discussed below, run an operating system that offers a standard platform for application developers
to create and sell device software through an application store. See Fifteenth Report, 26 FCC Rcd at 9751 n. 426. In
addition to smartphones and basic handsets, a third category of devices is data-centric devices, which includes
devices with no inherent voice capability, such as USB wireless modem laptop cards, mobile Wi-Fi devices, e-
readers, and laptops and netbooks with embedded mobile wireless modems. The basic handset category includes
voice-centric handsets that do not allow or are not designed for easy web browsing.
690 comScore, MobiLens Trend (May 2, 2012). comScore MobilLens U.S. data are derived from a monthly survey
of over 13,000 respondents ages 13 and older who are recruited to represent U.S. Census demographics. The total
universe size is estimated from data provided by CTIA and comScore’s monthly subscriber studies.See Section
IV.B.3, Differentiation in Mobile Wireless Handsets/Devices and Applications, supra, for a detailed discussion of
the mobile device sector.
691 Service providers may offer a particular device model exclusively and highlight the distinguishing features of that
model separate from its operating system.
692 Verizon Comments at 78-79 (“the two most prevalent operating systems for smartphones and other high-end
devices are Google’s Android OS, which is used in numerous manufacturers’ handsets, tablets, e-readers, and other
devices, and Apple’s iOS, which is used in Apple iPhones and iPads”); Tamara Rutter, Who’s Winning the
Smartphone Platform Wars?
, The Motley Fool, Mar. 10, 2012, athttp://www.dailyfinance.com/2012/03/10/whos-winning-the-smartphone-platform-wars/"> http://www.dailyfinance.com/2012/03/10/whos-
winning-the-smartphone-platform-wars/. (visited Oct. 16, 2012).

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devices for use on other providers’ networks.693 As mentioned in previous Reports, AT&T had been the
only mobile wireless provider to offer the Apple iPhone – the first three models – since 2007.694
However, AT&T’s exclusivity arrangement with Apple ended in 2011, when Verizon Wireless began
selling the iPhone 4 for use on its CDMA EV-DO network in February 2011.695 Sprint began doing the
same in October 2011. In June 2012, Leap Wireless became the first U.S. prepaid provider to offer the
iPhone.696 In addition, as of March 2012, more than 30 smaller, regional providers and resellers were also
offering the iPhone, including C-Spire, Appalachian Wireless, and Cellcom.697
222.
With the increased availability of the iPhone from multiple mobile wireless providers, its
decreasing price, and its continued popularity among consumers, adoption of the iPhone and its bundled
iOS mobile operating system by customers on different networks grew significantly during 2011. During
the fourth quarter of 2011, 13.7 million iPhones were activated by AT&T, Verizon and Sprint, compared
to 4.1 million on AT&T’s network during the fourth quarter of 2010.698 iPhones also accounted for a
significant portion of smartphone sales – 81 percent at AT&T, 62 percent at Verizon Wireless, and 44
percent at Sprint – during the fourth quarter of 2011.699 For a complementary discussion of the
handset/device market see section VII.B.1, Mobile Wireless Handsets/Devices and Operating Systems.
223.
Google’s Android also increased its market share, though via a different approach than
Apple. While Apple bundles its iOS with Apple devices, Google offers Android on a free, open source
basis to device manufacturers. Android also integrates Google’s other products – including its search
engine, web browser, Gmail, and mapping software – into the mobile device, provides a popular
navigation service, and offers an increasing number of applications through the Google Play application
store. As of December 2011, 48 equipment manufacturers had released more than 550 device models
worldwide running the Android operating system, and all of the top seven mobile wireless providers
currently offer Android smartphones.
224.
The increasing number of smartphone users and the growing prevalence of the Apple and
Android smartphone operating systems contributed to the growth in the number of mobile apps developed
for the Apple App Store and Google Play application store (formerly Android Market). 700 The number

693 Simon Flannery, et al., 4Q11 Tracker: Margins Squeezed as iPhones Ramp, Better Enterprise Trends, Morgan
Stanley, Mar. 19, 2012, at 1.
694 See Fourteenth Report, 25 FCC Rcd at 11496 ¶ 138.
695 Verizon Wireless & Apple Team Up to Deliver iPhone 4 on Verizon, Press Release, Verizon Wireless, Jan. 11,
2011, available ahttp://news.vzw.com/news/2011/01/pr2011-01-11a.html">t http://news.vzw.com/news/2011/01/pr2011-01-11a.html (visited Oct.16, 2012)
696 Phil Goldstein, Leap Launches Prepaid iPhone to Little Fanfare, But Says Sales Were ‘Brisk’, FIERCEWIRELESS,
June 25, 2012.http://www.fiercewireless.com/story/leap-launches-prepaid-iphone-little-fanfare-says-sales-were-brisk/2012-06-25"> http://www.fiercewireless.com/story/leap-launches-prepaid-iphone-little-fanfare-says-sales-were-
brisk/2012-06-25 (visited Oct. 16, 2012)
697 The Hearing Aid Compatibility status reports filed by service providers in January 2012 include a list of service
providers that offered iPhones in December 2011. This list is available at
http://wireless.fcc.gov/hac/index.htm?job=reports_dm">http://wireless.fcc.gov/hac/index.htm?job=reports_dm (visited Oct. 16, 2012) (“View Information by Handset”
table); see also C-Spirehttp://www.cspire.com/shop_and_learn/iphone/"> (http://www.cspire.com/shop_and_learn/iphone/(visited Oct. 16, 2012)) , Appalachian
http://www.appalachianwireless.com/?page=phones&sort=6">(http://www.appalachianwireless.com/?page=phones&sort=6 (visited Oct. 16, 2012) ), and Cellcom
http://www.cellcom.com/deviceCategory.html?categoryid=1&navtype=personal">(http://www.cellcom.com/deviceCategory.html?categoryid=1&navtype=personal (visited Oct. 16, 2012) ) for their
iPhone offerings.
698 Simon Flannery, et al., 4Q11 Tracker: Margins Squeezed as iPhones Ramp, Better Enterprise Trends, Morgan
Stanley, Mar. 19, 2012, at 1.
699 Simon Flannery, et al., 4Q11 Tracker: Margins Squeezed as iPhones Ramp, Better Enterprise Trends, Morgan
Stanley, Mar. 19, 2012, at 29.
700 See Olga Kharif, Apple Tops Android in App Wars, Bloomberg News, Feb. 14, 2012, at
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2012/02/13/BUDC1N708B.DTL">http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2012/02/13/BUDC1N708B.DTL (visited Oct. 16, 2012) ; Tamara
(continued….)

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of applications available in the Apple App store exceeded 700,000 in September 2012, up from 425,000
in June 2011, while the number of apps in the Google Play store increased from 200,000 to 675,000
between May 2011 and September 2012. The growing number of applications offered for these two
operating systems increases the demand for the devices that run these operating systems. In turn, this
increases the incentives for third parties to create applications for these operating systems. With devices
running these operating systems being available from multiple service providers, consumers are able to
choose a service provider based on other elements, including network quality, coverage, and price.
Hence, while service providers do differentiate their device portfolios to attract customers, providers are
competing for the growing number of customers seeking the Apple and Android platforms on many
factors besides devices.
225.
Data-Only Devices. In addition to offering a variety of smartphones and traditional
handsets, mobile wireless providers also sell or provide connectivity for – other, data-only devices such as
tablets, e-readers, wireless data cards, mobile Wi-Fi hotspots,701 and netbook computers with embedded
modems.702 The use of data-only devices with mobile network connectivity has grown in recent years,703
and providers compete with one another by offering such devices and on the speed, coverage, and price of
the mobile data connections on which these devices rely.
226.
Mobile wireless providers offer wireless data cards and mobile Wi-Fi hotspots to
consumers seeking mobile Internet connections for laptop computers and other Wi-Fi enabled devices.
Because such devices tend to have similar characteristics and functionality across equipment
manufacturers, providers generally differentiate their offerings of these products based on the speed and
coverage of their mobile data networks to which such devices connect, rather than the uniqueness of the
devices themselves.704
227.
In addition, several mobile wireless providers sell or offer mobile Internet connections
for iPads and other tablet devices, although many tablet users connect to the Internet only through Wi-Fi.
Certain tablets, such as the Amazon.com Kindle Fire and Google Nexus 7, are offered with Wi-Fi only
and do not include 3G or 4G modems for mobile network connectivity. With other devices, including the
most popular tablet, the iPad,705 mobile network connectivity is offered as an option, though only around
10 percent of iPads were sold with such functionality as of March 2012.706 While at least two mobile
wireless providers offer mobile data service plans for iPad consumers who want such connectivity,
providers do not subsidize iPads and offer mobile data access for iPads without a long term service
(Continued from previous page)
Rutter, Who’s Winning the Smartphone Platform Wars?, The Motley Fool, Mar. 10, 2012, at
http://www.dailyfinance.com/2012/03/10/whos-winning-the-smartphone-platform-wars/">http://www.dailyfinance.com/2012/03/10/whos-winning-the-smartphone-platform-wars/ (visited Oct. 16, 2012).
701 Mobile Wi-Fi, or “Mi-Fi,” devices are credit card-sized, mobile Wi-Fi routers with mobile broadband wide-area
connections that allow a certain number of Wi-Fi-enabled devices in short range to connect to the Internet via a Wi-
Fi connection. Many smartphones are now sold with built-in Wi-Fi hotspot capabilities, allowing them to serve as
mobile Wi-Fi hotspots for an additional charge.
702 See Section V.A, Numbers of Mobile Wireless Connections , infra, for data on the number of mobile wireless
subscribers by device type.
703 Mobile Hotspot Router Growth Explodes as Huawei and ZTE Dominate 2011 Cellular Modem Market, Press
Release, Strategy Analytics, June 14, 2012.
http://www.strategyanalytics.com/default.aspx?mod=pressreleaseviewer&a0=5239">http://www.strategyanalytics.com/default.aspx?mod=pressreleaseviewer&a0=5239 (visited Oct. 16, 2012); Kathryn
Huberty, et al., Tablet Landscape Evolution – Window(s) of Opportunity, Morgan Stanley, May 31, 2012.
704 See Mark Sullivan and Ken Biba, Mobile Hotspots: Which Are Fastest, Most Reliable?, PC World, Oct. 19, 2010,
ahttp://www.pcworld.com/article/208154/mobile_hotspots_which_are_fastest_most_reliable.html">t http://www.pcworld.com/article/208154/mobile_hotspots_which_are_fastest_most_reliable.html (visited Oct. 16,
2012).
705 Kathryn Huberty, et al., Tablet Landscape Evolution – Window(s) of Opportunity, Morgan Stanley, May 31,
2012, at 10 (Apple iPads account for 54 percent of installed base of tablet owners as of May 2012).
706See Section VIII.C, Small Area Wireless Coverage Technologies, infra.

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contract.707 With other tablets, such as the Samsung Galaxy Tab, mobile network connectivity is included
in all models. Certain mobile wireless providers offer such devices at a discounted price if the user
purchases a long term service contract708 or at an unsubsidized price with a month-to-month plan.709 In
June 2012, Verizon Wireless announced that tablets would be subject to the company’s new Shared
Everything data plans and would no longer be offered at a discounted or subsidized price.710
228.
In addition to offering tablets and mobile Internet connection devices for computers
directly, mobile wireless operators also provide data connections on a wholesale basis for data-only
devices sold by other companies that act as resellers of data connectivity to consumers. These devices
include electronic reading devices, such as the Amazon Kindle or the Barnes & Noble Nook,711 machine-
to-machine communication devices, and vehicle and alarm/security monitoring systems.
229.
Mobile Applications. Each of the major smartphone operating system/platform
developers has created an application store in which consumers can download applications, some free and
some paid, that have been designed to work on that specific operating system.712 While mobile wireless
service providers allow their customers with data plans to generally use whatever mobile data services
and applications they want, many service providers have maintained certain restrictions on this usage,
largely in an effort to manage network traffic. For example, AT&T prohibits, as part of its wireless terms
and conditions, certain uses of data plans “that cause extreme network capacity issues and interference
with the network.”713 These include, for example, downloading movies using peer-to-peer file sharing

707 Arnold Kim, iPad 4G LTE Data Plan Prices for AT&T and Verizon, MacRumors, Mar. 7, 2012, at
http://www.macrumors.com/2012/03/07/ipad-4g-lte-data-plan-prices-for-att-and-verizon/">http://www.macrumors.com/2012/03/07/ipad-4g-lte-data-plan-prices-for-att-and-verizon/ (visited Oct. 16, 2012);
Danile Eran Dilger, Inside AT&T vs Verizon iPad 2 Data Service Plans, Apple Insider, Mar. 8, 2011, at
http://www.appleinsider.com/articles/11/03/08/inside_att_vs_verizon_ipad_2_data_service_plans.html">http://www.appleinsider.com/articles/11/03/08/inside_att_vs_verizon_ipad_2_data_service_plans.html (visited Oct.
16, 2012).
708 See T-Mobile, Internet Devices,http://www.t-mobile.com/shop/phones/?shape=tab"> http://www.t-mobile.com/shop/phones/?shape=tab (last visited June 28, 2012)
(T-Mobile selling three tablet devices with discounts/rebates ranging from $100 to $150); Sprint, ZTE Optik,
http://shop.sprint.com/mysprint/shop/phone_details.jsp?prodId=dvc6290005prd&deviceSKUId=62900028&flow=AAL&planSKUId=&firstSelection=PHONES&ptn=&tabId=dvcTab1820005">http://shop.sprint.com/mysprint/shop/phone_details.jsp?prodId=dvc6290005prd&deviceSKUId=62900028&flow=A
AL&planSKUId=&firstSelection=PHONES&ptn=&tabId=dvcTab1820005 (last visited June 29, 2012); AT&T,
Tablets,http://www.att.com/shop/wireless/devices/tablets.html"> http://www.att.com/shop/wireless/devices/tablets.html (last visited June 29, 2012); Brad Reed, Sorry, T-
Mobile: Your Shared Data Plans Are Just As Lame As Verizon’s
, BGR, June 13, 2012,
http://www.bgr.com/2012/06/13/t-mobile-verizon-family-plan-comparison-criticism/">http://www.bgr.com/2012/06/13/t-mobile-verizon-family-plan-comparison-criticism/ (visited Oct. 16, 2012).
709 See, e.g., Sprint, Samsung Galaxy Tab 10.1,
http://shop.sprint.com/mysprint/shop/phone_details.jsp?deviceSKUId=55000038">http://shop.sprint.com/mysprint/shop/phone_details.jsp?deviceSKUId=55000038 (last visited June 29, 2012);
Verizon Wireless, DROID XYBOARD 10.1 by Motorola 64GB,
http://www.verizonwireless.com/b2c/store/controller?item=phoneFirst&action=viewPhoneDetail&selectedPhoneId=5824&cmp=EXL-EGUIDE-ENGLISH-DEVICES-DROID-XYBOARD-10.1-BY-MOTOROLA-64-GB1">http://www.verizonwireless.com/b2c/store/controller?item=phoneFirst&action=viewPhoneDetail&selectedPhoneId=
5824&cmp=EXL-EGUIDE-ENGLISH-DEVICES-DROID-XYBOARD-10.1-BY-MOTOROLA-64-GB1 (last
visited June 29, 2012).
710 Verizon Share Everything Data Plans: Applying Corporate Discounts, Tablets No Longer Subsidized or
Discounted
, DroidLife, June 12, 2012, athttp://www.droid-life.com/2012/06/12/verizon-share-everything-data-plans-applying-corporate-discounts-tablets-no-longer-subsidized-or-discounted/"> http://www.droid-life.com/2012/06/12/verizon-share-everything-data-
plans-applying-corporate-discounts-tablets-no-longer-subsidized-or-discounted/ (visited Oct. 16, 2012); Verizon
Wireless, Tablets,
http://www.verizonwireless.com/b2c/store/controller?&item=phoneFirst&action=viewPhoneOverviewByDevice&deviceCategoryId=12">http://www.verizonwireless.com/b2c/store/controller?&item=phoneFirst&action=viewPhoneOverviewByDevice&d
eviceCategoryId=12 (last visited June 29, 2012).
711 With e-readers, users typically do not pay a separate fee for data access but instead pay the e-book retailer a fee
for purchasing and downloading books or other reading materials. See Fifteenth Report, 26 FCC Rcd at 9755 ¶ 146.
712 See Fifteenth Report, 26 FCC Rcd at 9757 ¶ 154.
713 AT&T, Wireless Customer Agreement,
http://www.att.com/shop/legalterms.html?toskey=wirelessCustomerAgreement&">http://www.att.com/shop/legalterms.html?toskey=wirelessCustomerAgreement&; (visited June 29, 2012).

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services, web broadcasting, and operating servers.714 In addition, Verizon Wireless prohibits the use of
data services for purposes that interfere “with the network’s ability to fairly allocate capacity among users
or that otherwise degrades service quality for other users.”715 As discussed above under Developments in
Mobile Service Pricing Plans, recent data plan pricing changes reflect that providers are managing
capacity and traffic issues on their data networks primarily through pricing mechanisms, as well as with
reductions of data throughput speed,716 rather than through restricting access to certain applications or
content.717
230.
In December 2010, the Commission adopted rules on Internet openness. The rules
require all broadband providers to publicly disclose network management practices, restrict broadband
providers from blocking Internet content and applications, and bar fixed broadband providers from
engaging in unreasonable discrimination in transmitting lawful network traffic.718
4.

Advertising, Marketing, Sales Expenditures, and Retailing

231.
Mobile wireless providers also compete for customers through advertising and marketing,
including by establishing retail and distribution networks that reach the people they target. Mobile
wireless providers market their services through many channels. Through their retail and distribution
networks they market their services in their pricing plans, through sales representatives, in the design and
location of their retail outlets, and on the internet in their on-line stores. They also market their services
in the media, in internet and mobile applications, in sponsorships and co-branding, and at events. 719
Several providers state that the goal of these advertising and marketing efforts is to increase and maintain
brand awareness and to support distribution.720 Providers may also engage in advertising and marketing
either to inform consumers about available products or services or to try to increase sales by influencing
consumer preferences.721

714 AT&T, Wireless Customer Agreement,
http://www.att.com/shop/legalterms.html?toskey=wirelessCustomerAgreement&">http://www.att.com/shop/legalterms.html?toskey=wirelessCustomerAgreement&; (visited June 29, 2012).
715 Verizon Wireless, Customer Agreement & Important Informationhttp://youreguide.vzw.com/legal-customer-agreement">, http://youreguide.vzw.com/legal-customer-
agreement (visited June 29, 2012).
716 Some mobile wireless providers significantly reduce the data connection speeds of customers who exceed a
certain amount of data usage in a month. See Section IVA, Price Rivalry Development in Mobile Service Pricing
Plans; see also Jeffrey Glueck, Don’t Throttle Me: Other Ways to Manage Wireless Traffic, Forbes, April 19, 2012,
ahttp://www.forbes.com/sites/ciocentral/2012/04/19/dont-throttle-me-other-ways-to-manage-wireless-traffic/">t http://www.forbes.com/sites/ciocentral/2012/04/19/dont-throttle-me-other-ways-to-manage-wireless-traffic/
(visited Oct. 16, 2012) .
717 See Section IV.A, Price Rivalry Development in Mobile Service Pricing Plans, supra.
718 Preserving the Open Internet, Broadband Industry Practices, GN Docket No. 09-191, WC Docket No. 07-52,
Report and Order, FCC 10-201 (rel. Dec. 23, 2010) (Open Internet Order).
719 See, for example, SEC Form 10-K for Clearwire, Leap Wireless, MetroPCS, Sprint Nextel, and US Cellular; Sue
Marek, T-Mobile Launches Mobile Ad Initiative with Android App, FIERCEWIRELESS, June 14, 2011, available at
http://www.fiercemobilecontent.com/story/t-mobile-launches-mobile-ad-initiative-android-app/2011-06-14">http://www.fiercemobilecontent.com/story/t-mobile-launches-mobile-ad-initiative-android-app/2011-06-14 (visited
Oct. 16, 2012); Mike Shields, Zynga Links Up With T-Mobile for Treasure Isle Ad Play, ADWEEK, February 16,
2011, available athttp://www.adweek.com/news/advertising-branding/zynga-links-t-mobile-treasure-isle-ad-play-126322#1"> http://www.adweek.com/news/advertising-branding/zynga-links-t-mobile-treasure-isle-ad-play-
126322#1(visited Oct. 16, 2012); Kunur Patel, Warner Bros., Verizon Link for ‘Inception’ Marketing Stunt,
ADVERTISING AGE, July 12, 2010, available athttp://adage.com/article/news/warner-bros-verizon-link-inception-marketing-stunt/144876/"> http://adage.com/article/news/warner-bros-verizon-link-inception-
marketing-stunt/144876/(visited Oct. 16, 2012).
720 See SEC Form 10-K for Leap Wireless, MetroPCS, Sprint Nextel, and US Cellular; Judann Pollack, AT&T’s
Esther Lee on Marketing Out of the Telecom Box
, ADVERTISING AGE, October 21, 2011, available at
http://adage.com/article/special-report-ana-annual-meeting/esther-lee-marketing-telecom-box/230581/">http://adage.com/article/special-report-ana-annual-meeting/esther-lee-marketing-telecom-box/230581/(visited Oct.
16, 2012).
721 See AT&T Comments at 8; Verizon Wireless Comments at 39, 44; Kyle Bagwell, “The Economic Analysis of
Advertising,” in Handbook of Industrial Organization, Volume 3, ed. M. Armstrong and R. Porter, (Elsevier B.V.,
(continued….)

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a.

Advertising Expenditures

232.
Advertising expenditures by wireless service providers continued to decline for the fourth
straight year during 2011.722 According to Advertising Age, measured advertising expenditures for
mobile wireless service dropped almost two percent from $5.5 billion in 2009 to $5.4 billion in 2010, and
more than seven percent to $5 billion in 2011.723 In contrast, total U.S. advertising expenditures
increased during the same period, rising 0.8 percent, to $144 billion in 2011.724 Despite the drop in
measured advertising spending, wireless service providers continued to spend more on advertising
agencies than firms in many other industries. In Advertising Age’s 2010 rankings of advertising
spending, AT&T and Verizon Communications were the second and fourth largest U.S. advertisers,
respectively, followed by Sprint Nextel in twentieth place and Deutsche Telekom (T-Mobile) in forty-
fifth.725 In 2011, Verizon Communications became the third largest advertiser, surpassing AT&T, which
dropped to fifth. Sprint Nextel and Deutsche Telekom dropped to twenty-second and fifty-fourth,
respectively.726 Moreover, AT&T and Verizon were respectively, the first and second most advertised
brands by media spending in both 2010 and 2011.727
233.
At the level of individual firms, measured advertising expenditures for the top four
service providers generally declined from 2009 to 2011. According to Advertising Age, measured
advertising expenditures for Verizon Wireless and Sprint Nextel dropped steadily from 2009 to 2011.
(Continued from previous page)
2007), at 1705-1706. Mobile wireless service is an “experience good” – a product or service that the customer must
consume before determining its quality. See Lynne Pepall, Dan Richards, and George Norman. Industrial
Organization (4th ed.), Blackwell Publishing, 2008, at 524. Consequently, information contained in wireless
advertising tends to be indirect information. By advertising, a firm may signal that it is efficient, implying that it
offers good deals. Advertising may also remind repeat consumers of the quality of an experience good. Finally,
since a firm has an incentive to direct its advertising toward the consumers who may value its product the most, a
seemingly uninformative advertisement can better match products with buyers. See Kyle Bagwell, “The Economic
Analysis of Advertising,” in Handbook of Industrial Organization, Volume 3, ed. M. Armstrong and R. Porter,
(Elsevier B.V., 2007), at 1718-1720, 1774-1791; Phillip Nelson, “Advertising as Information,” in Journal of
Political Economy
, v. 82 (1974) at 729-754.
722 See Fifteenth Report, 26 FCC Rcd at 9748 ¶ 130; Fourteenth Report, 25 FCC Rcd at 11491-92 ¶ 128; Thirteenth
Report
, 24 FCC Rcd at 6261 ¶ 158.
723 “U.S. Market Share for Wireless-Service Providers,” in Advertising Age: 100 Leading National Advertisers 2010,
June 20, 2011; U.S. Market Share for Wireless-Service Providers,” in Advertising Age: 100 Leading National
Advertisers 2011
, June 25, 2012. According to Advertising Age, while advertising in measured media declined
from 2010 to 2011, U.S. ad spending has increased because of an increase in spending on unmeasured media such as
search marketing, online video, and certain forms of social media. Measured media expenditures consists of
spending on magazine, newspaper, outdoor, TV, radio, and Internet advertising.
724 See Kantar Media Reports U.S. Advertising Expenditures Increased 0.8 Percent in 2011, News Release, Kantar
Media, Mar. 12, 2012, available athttp://kantarmediana.com/intelligence/press/us-advertising-expenditures-increased-08-percent-2011?destination=node%2F24%2Fpress"> http://kantarmediana.com/intelligence/press/us-advertising-expenditures-
increased-08-percent-2011?destination=node%2F24%2Fpress (visited August 16, 2012); See Kantar Media Reports
U.S. Advertising Expenditures Increased 6.5 Percent in 2010
, News Release, Kantar Media, Mar. 12, 2012,
available athttp://kantarmediana.com/intelligence/press/us-advertising-expenditures-increased-65-percent-2010?destination=node%2F24%2Fpress%3Fpage%3D1"> http://kantarmediana.com/intelligence/press/us-advertising-expenditures-increased-65-percent-
2010?destination=node%2F24%2Fpress%3Fpage%3D1 (visited August 16, 2012). Due to revisions in Kantar
Media data, we are unable to provide an accurate absolute total expenditures figure for 2010 or 2009.
725 “Advertisers by Total U.S. Advertising Spending in 2010,” in Advertising Age: 100 Leading National
Advertisers 2010
, June 20, 2011.
726 “Advertisers by Total U.S. Advertising Spending in 2011,” in Advertising Age: 100 Leading National
Advertisers 2011
, June 25, 2012.
727 “Top 50 Megabrands, Most-Advertised Brands by Media Spending,” in Advertising Age: 100 Leading National
Advertisers 2010
, June 20, 2011; “Top 50 Megabrands, Most-Advertised Brands by Media Spending,” in
Advertising Age: 100 Leading National Advertisers 2011, June 25, 2012.

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Verizon Wireless’ measured advertising expenditures fell from $1.8 billion in 2009 to $1.5 billion in 2010
and to $1.3 billion in 2011 while Sprint Nextel’s expenditures dropped from $1.2 billion in 2009 to $1.0
billion in 2010 and to $881 million in 2011.728 AT&T’s measured advertising expenditures increased
from $1.6 billion in 2009 to $1.7 billion in 2010, but then declined to $1.4 billion in 2011. T-Mobile was
the only service provider among the top four to spend more on measured advertising in 2011 than in
2009. T-Mobile’s expenditures increased from $510 million in 2009 to $582 million in 2010, dropping to
$517 million in 2011. Advertising campaigns may bundle advertisements for wireless services with
products offered by other subsidiaries. According to Kantar Media, in 2010, AT&T spent $2.2 billion on
advertising while Verizon Communications spent $1.9 billion.729 These figures fell to $1.9 billion and
$1.6 billion respectively in 2011.730
b.

Marketing Campaigns

234.
From mid 2010 to early 2012, mobile wireless service providers’ marketing campaigns
continued to focus on the quality and size of their mobile broadband networks.731 Many providers sought
to highlight their network speed, coverage and the data capabilities of devices available on these
networks. Some providers also promoted the advantages of their particular service plans relative to those
of rivals.
235.
Providers continued to make claims about who has the “best” network. Toward the end
of 2010, Sprint Nextel, which had previously designated itself as the first to offer 4G service with the
launch of its EVO phone, contested T-Mobile advertisements claiming its HSPA+ network is “America’s
Largest 4G Network.”732 By 2012, T-Mobile, AT&T, and Verizon Wireless, each claimed to have the
largest 4G network.733 In April 2012, in a video posted on its website, Verizon Wireless challenged the
other top four providers to a ‘4G Throw Down,’ arguing that “its LTE network is faster than the other 4G
networks.”734
236.
Some providers’ advertisements highlighted the particular qualities and capabilities of
their networks and handsets/devices. AT&T ran advertisements showcasing the myriad features of their

728 “U.S. Market Share for Wireless-Service Providers,” in Advertising Age: 100 Leading National Advertisers 2010,
June 20, 2011; U.S. Market Share for Wireless-Service Providers,” in Advertising Age: 100 Leading National
Advertisers 2011
, June 25, 2012.
729 See Kantar Media Reports U.S. Advertising Expenditures Increased 6.5 Percent in 2010, News Release, Kantar
Media, Mar. 12, 2012, available athttp://kantarmediana.com/intelligence/press/us-advertising-expenditures-increased-65-percent-2010?destination=node%2F24%2Fpress%3Fpage%3D1"> http://kantarmediana.com/intelligence/press/us-advertising-expenditures-
increased-65-percent-2010?destination=node%2F24%2Fpress%3Fpage%3D1 (visited August 16, 2012).
730 See Kantar Media Reports U.S. Advertising Expenditures Increased 0.8 Percent in 2011, News Release, Kantar
Media, Mar. 12, 2012, available athttp://kantarmediana.com/intelligence/press/us-advertising-expenditures-increased-08-percent-2011?destination=node%2F24%2Fpress"> http://kantarmediana.com/intelligence/press/us-advertising-expenditures-
increased-08-percent-2011?destination=node%2F24%2Fpress (visited August 16, 2012).
731 See Fourteenth Report, 25 FCC at 11493 ¶ 132.
732 See Kunur Patel, Sprint Claims 'First' Title With Launch of 4G Phone, ADVERTISING AGE, June 02, 2010,
available athttp://adage.com/article/digital/sprint-claims-title-launch-4g-phone/144194/"> http://adage.com/article/digital/sprint-claims-title-launch-4g-phone/144194/ (visited Oct. 16, 2012);
Sue Marek, Battle Erupts Over T-Mobile’s ‘Largest 4G Network’ Claims, FIERCEWIRELESS, November 02, 2010,
available athttp://www.fiercewireless.com/story/battle-erupts-over-t-mobiles-largest-4g-network-claims/2010-11-02"> http://www.fiercewireless.com/story/battle-erupts-over-t-mobiles-largest-4g-network-claims/2010-11-
02 (visited Oct. 16, 2012).
733 See Mike Dano, AT&T, T-Mobile Wrangling Over Who Has the Largest 4G Network, FIERCEWIRELESS, April 18,
2012, available athttp://www.fiercewireless.com/story/att-t-mobile-wrangling-over-who-has-largest-4g-network/2012-04-18"> http://www.fiercewireless.com/story/att-t-mobile-wrangling-over-who-has-largest-4g-
network/2012-04-18 (visited Oct. 16, 2012).
734 Phil Goldstein, Verizon Challenges Other Carriers’ Network Speeds in ‘4G Throw Down,’ FIERCEWIRELESS,
Apr. 5, 2012, availablehttp://www.fiercewireless.com/story/verizon-challenges-other-carriers-network-speeds-4g-throw-down/2012-04-05"> at http://www.fiercewireless.com/story/verizon-challenges-other-carriers-network-speeds-
4g-throw-down/2012-04-05 (visited Oct. 16, 2012).

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devices, showing people multitasking at rapid speeds in different social settings.735 These advertisements,
along with several others, showed off the different lines of AT&T handsets, including the iPhone, the
BlackBerry Torch, the Samsung Infuse, and most recently, the Lumia.736 Verizon Wireless advertised the
benefits of their devices for small business with a series of “Susie’s Lemonade” commercials, featuring
children successfully running a business with the aid of Verizon Wireless technology.737 Verizon
Wireless continued to advertise DROID handsets, but without focusing on comparisons to the iPhone.738
At the start of 2011, Verizon Wireless began running commercials for its iPhones, bringing back its “Test
Man” spokesman to point out the advantage of using the iPhone on its network.739 Sprint Nextel ran ads
showing customers using their devices for unlimited Web, e-mail and text services.740 Sprint also ran a
commercial specifically featuring unlimited data for its iPhone, which was released in October 2011.741
237.
Providers also advertised the advantages of their pricing plans. Sprint continued
advertising its unlimited data plans throughout 2011 and going into 2012, often pointing out the dilemmas
of customers with limited data plans from other providers.742 BoostMobile, a subsidiary of Sprint Nextel,

735 David Gianatasio, Surprise! Diaper Dad Is a Hapless Moron in AT&T's New Ad, ADWEEK, Sept. 9 2011,
available athttp://www.adweek.com/adfreak/surprise-diaper-dad-hapless-moron-atts-new-ad-134702"> http://www.adweek.com/adfreak/surprise-diaper-dad-hapless-moron-atts-new-ad-134702 (visited Oct.
16, 2012); David Kiefaber, Single Grunt From Random Actor Makes AT&T Spot Explode, ADWEEK, Nov. 10,
2011, available ahttp://www.adweek.com/adfreak/single-grunt-random-actor-makes-att-spot-explode-136465">t http://www.adweek.com/adfreak/single-grunt-random-actor-makes-att-spot-explode-136465
(visited Oct. 16, 2012); David Kiefaber, For AT&T, Romantic Dinners Are About Love of the Game, ADWEEK, Nov.
21, 2011, available athttp://www.adweek.com/adfreak/att-romantic-dinners-are-about-love-game-136652"> http://www.adweek.com/adfreak/att-romantic-dinners-are-about-love-game-136652 (visited
Oct. 16, 2012).
736 See Rebecca Cullers, AT&T Fools Cute and Gullible Animals With the Samsung Infuse, ADWEEK, June 15, 2011,
available athttp://www.adweek.com/adfreak/att-fools-cute-and-gullible-animals-samsung-infuse-132579"> http://www.adweek.com/adfreak/att-fools-cute-and-gullible-animals-samsung-infuse-132579 (visited
Oct. 16, 2012); Kunur Patel, Why AT&T Is Spending More on Lumia Launch Than It Did on iPhone, ADVERTISING
AGE, Apr. 9, 2012, availablehttp://adage.com/article/digital/t-spending-lumia-launch-iphone/234010/"> at http://adage.com/article/digital/t-spending-lumia-launch-iphone/234010/ (visited
Oct. 16, 2012).
737 See Mike Chapman, Ad of the Day: Verizon Wireless, ‘Lemonade,’ AdWeek, April 13, 2011, available at
http://www.adweek.com/news/advertising-branding/ad-day-verizon-wireless-lemonade-129362">http://www.adweek.com/news/advertising-branding/ad-day-verizon-wireless-lemonade-129362 (visited Oct. 16,
2012).
738 See Fifteenth Report, 26 FCC Rcd at 9750 ¶ 135; Gabriel Beltrone, Ad of the Day: Verizon A Foxy Space
Warrior Builds Motorola’s Droid Bionic From the Innards of a Rampaging Killer Cyborg
, AdWeek, September 13,
2011, available athttp://www.adweek.com/news/advertising-branding/ad-day-verizon-134822"> http://www.adweek.com/news/advertising-branding/ad-day-verizon-134822 (visited Oct. 16,
2012).
739 See iPhone 4 Arrives On the Nation’s Most Reliable Network on Thursday, News Release, Verizon Wireless
News Center, February 7, 2011, availablehttp://news.verizonwireless.com/news/2011/02/pr2011-02-06.html"> at http://news.verizonwireless.com/news/2011/02/pr2011-02-06.html
(visited Oct. 16, 2012); Eleftheria Parpis; Verizon “It Begins,” AdWeek, January 21, 2011, available at
http://www.adweek.com/news/advertising-branding/verizon-it-begins-130455">http://www.adweek.com/news/advertising-branding/verizon-it-begins-130455 (visited Oct. 16, 2012); Kunur Patel,
Reports of Verizon Guy's Demise (Slightly) Exaggerated, AdvertisingAge, April 14, 2011, available at
http://adage.com/article/news/reports-verizon-guy-s-demise-slightly-exaggerated/227001/">http://adage.com/article/news/reports-verizon-guy-s-demise-slightly-exaggerated/227001/(visited Oct. 16,
2012).
740 See David Gianatasio, Sprint Users Always On, Always Out of Touch, AdWeek, February 03, 2011, available at
http://www.adweek.com/adfreak/sprint-users-always-always-out-touch-11613">http://www.adweek.com/adfreak/sprint-users-always-always-out-touch-11613 (visited Oct. 16, 2012).
741 See Sprint Statement on Launch Day Sales of iPhone 4S and iPhone 4, News Release, Sprint Newsroom, October
14, 2011, available athttp://newsroom.sprint.com/article_display.cfm?article_id=2073"> http://newsroom.sprint.com/article_display.cfm?article_id=2073 (visited May 16, 2012);
Unlimited iPhone, YouTube, Nov 29, 2011, available at
http://www.youtube.com/watch?v=sOLm23MBWXI&feature=plcp">http://www.youtube.com/watch?v=sOLm23MBWXI&feature=plcp (visited Oct. 16, 2012).
742 See Gabriel Beltrone, Sprint Nextel, “Dictionary,” AdWeek, March 18, 2011, available at
http://www.adweek.com/news/advertising-branding/sprint-dictionary-130495">http://www.adweek.com/news/advertising-branding/sprint-dictionary-130495 (visited Oct. 16, 2012); Gabriel
Beltrone, Team Sprint’s First TV Spot Stars Durant, AdWeek, March 01, 2012, available at
http://www.adweek.com/news/advertising-branding/team-sprints-first-tv-spot-stars-durant-138697">http://www.adweek.com/news/advertising-branding/team-sprints-first-tv-spot-stars-durant-138697 (visited Oct. 16,
2012); Sprint Nextel, YouTube Page, available athttp://www.youtube.com/user/sprintnow"> http://www.youtube.com/user/sprintnow (visited May 16, 2012).

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advertised its “shrinking payment” plan, in contrast to flat-rate plans of other providers.743 MetroPCS’s
“Tech & Talk” commercials promised “Nationwide 3G Coverage, No Contract, $40 a month. Period.”744
US Cellular ran a campaign to draw attention to its Belief Project, a rewards program with points, faster
upgrades, and other features.745
238.
Nationwide and other providers’ advertisements seemed aimed at refreshing their images.
AT&T, refined its “Rethink Possible,” campaign, supplementing it with “It’s What You Do With What
We Do,” in a series of commercials intended to focus on human experiences.746 Sprint tweaked its “Now
Network” tagline to “All. Together. Now,” characterizing the new campaign as an evolution of the “Now
Network” campaign designed to highlight Sprint’s unlimited plans.747 In the aftermath of its abandoned
acquisition by AT&T, T-Mobile’s spokeswoman Carly Foulkes traded in her magenta dress for the black
leather of a biker in an aggressive ad blitz promoting T-Mobile’s HSPA+ network.748 MetroPCS
launched the “Everybody’s Moving to Metro” campaign to focus on factors other than brand
awareness.749
239.
In addition to marketing with traditional media, service providers have also advertised
their products on the internet, social media, and mobile applications. In 2011, AT&T ran a Valentine’s
Day campaign on Facebook.750 It also advertised the HTC Status handset, which comes with a
“Facebook share button.”751 During the 2010 holiday season, Sprint teamed up with the blog Awkward

743 Gabriel Beltrone, Ad of the Day: BoostMobile The Carrier Tries to Calm Your Nerves in this Horror Parody
from 180LA, AdWeek, February 07, 2012, availablehttp://www.adweek.com/news/advertising-branding/ad-day-boost-mobile-138101"> at http://www.adweek.com/news/advertising-branding/ad-day-
boost-mobile-138101 (visited Oct. 16, 2012).
744 See Bill Imada, MetroPCS: Bad Advertising, Plain and Simple, AdvertisingAge, April 28, 2011, available at
http://adage.com/article/the-big-tent/metropcs-bad-advertising-plain-simple/143548/">http://adage.com/article/the-big-tent/metropcs-bad-advertising-plain-simple/143548/ (visited Oct. 16, 2012).
745 Mark Dolliver, U.S. Cellular “Fireworks,” AdWeek, October 06, 2010, available at
http://www.adweek.com/news/advertising-branding/us-cellular-fireworks-130478">http://www.adweek.com/news/advertising-branding/us-cellular-fireworks-130478 (visited Oct. 16, 2012).
746 See Phil Goldstein, AT&T Refreshes 'Rethink Possible' Ad Campaign for Mobile, FierceWireless, April 9, 2012,
available athttp://www.fiercewireless.com/story/att-refreshes-rethink-possible-ad-campaign-mobile/2012-04-09"> http://www.fiercewireless.com/story/att-refreshes-rethink-possible-ad-campaign-mobile/2012-04-09
(visited Oct. 16, 2012); Kunur Patel, AT&T's Strategy to Win Consumer Love: Be Human, AdvertisingAge, April
18, 2012, available athttp://adage.com/article/special-report-digital-conference/strategy-win-consumer-love-human/234204/"> http://adage.com/article/special-report-digital-conference/strategy-win-consumer-love-
human/234204/ (visited Oct. 16, 2012).
747 Kunur Patel, Sprint Drops 'Now Network' Tagline for Beatles' Ditty, AdvertisingAge, April 11, 2011,
available athttp://adage.com/article/news/sprint-drops-network-tagline-beatles-ditty/226924/"> http://adage.com/article/news/sprint-drops-network-tagline-beatles-ditty/226924/(visited Oct. 16,
2012).
748 See Phil Goldstein, T-Mobile Ads Get Aggressive with ‘No More Mr. Nice Girl.’ Fierce Wireless, April 16, 2012,
available athttp://www.fiercewireless.com/story/t-mobile-gets-tough-new-advertising-campaign/2012-04-16"> http://www.fiercewireless.com/story/t-mobile-gets-tough-new-advertising-campaign/2012-04-16
(visited Oct. 16, 2012); Kunur Patel, T-Mobile Doubles Down on 'Carly' Web Videos, AdvertisingAge, May
03, 2012, available athttp://adage.com/article/the-viral-video-chart/t-mobile-doubles-carly-web-videos/234519/"> http://adage.com/article/the-viral-video-chart/t-mobile-doubles-carly-web-
videos/234519/(visited Oct. 16, 2012).
749 Shira Ovide, TV Ad Takes Potshot at AT&T/T-Mobile Merger, The Wall Street Journal, October 27, 2011,
available athttp://blogs.wsj.com/deals/2011/10/27/tv-ad-takes-potshot-at-attt-mobile-merger/"> http://blogs.wsj.com/deals/2011/10/27/tv-ad-takes-potshot-at-attt-mobile-merger/ (visited Oct. 16,
2012); MetroPCS, Wireless for All, available at
http://www.metropcs.com/metro/category/Why+MetroPCS/cat290017">http://www.metropcs.com/metro/category/Why+MetroPCS/cat290017 (visited on May 16, 2012); MetroPCS,
YouTube Page, availablehttp://www.youtube.com/user/metropcs"> at http://www.youtube.com/user/metropcs (visited on May 16, 2012).
750 Tim Nudd, AT&T shouting your love from mountaintop!, AdWeek, February 14, 2011, available at
http://www.adweek.com/adfreak/att-shouting-your-love-mountaintop-11560">http://www.adweek.com/adfreak/att-shouting-your-love-mountaintop-11560 (visited Oct. 16, 2012).
751 David Kiefaber, Blink-182 Feeling Blue in New Partnership With AT&T, AdWeek, August 03 2011, available at
http://www.adweek.com/adfreak/blink-182-feeling-blue-new-partnership-att-133846">http://www.adweek.com/adfreak/blink-182-feeling-blue-new-partnership-att-133846 (visited Oct. 16, 2012).

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Family Photos to give customers a chance to make awkward portraits of themselves.752 In addition to
marketing using mobile apps, T-Mobile advertised using various YouTube posts.753 Verizon Wireless,
which started its iPhone marketing campaign on YouTube, also used mobile apps in order to target
customers.754 Each of the top four providers, along with smaller providers such as MetroPCS and C Spire
have YouTube pages where users can view their marketing campaigns and additional videos about these
firms.755
c.

Retailing

240.
Mobile wireless service providers sell their products and services through their
distribution and retail networks. Providers may try to design their distribution and retail networks to
increase customer growth, reduce customer acquisition costs, and attract customers from competitors.756
Distribution channels include: 1) direct sales representatives who target businesses and government
agencies 2) direct retail outlets, such as provider-owned stores and kiosks; 3) indirect retail outlets,
including mass-market electronics retailers such as Best Buy, Wal-Mart, Target, Costco, Radio Shack,
and Amazon; 4) provider websites; and 5) telemarketers.757 The reliance on direct versus indirect
channels varies by provider. For instance, among providers outside the top four, the number of third-
party agent locations is typically greater than the number of company-operated retail stores.758
241.
In a study of full-service wireless purchase experience released in February, 2012, J.D.
Power and Associates found that customer satisfaction with the wireless purchase experience has declined
from 2011, mainly due to changing customer expectations and the level of service provided to customers

752 Rebecca Cullers, Sprint Continues its Mockery of the Holidays, AdWeek, December 02, 2010, available at
http://www.adweek.com/adfreak/sprint-continues-its-mockery-holidays-11876">http://www.adweek.com/adfreak/sprint-continues-its-mockery-holidays-11876 (visited Oct. 16, 2012).
753 See Tim Nudd, William & Kate Boogie Down the Aisle for T-Mobile, AdWeek, April 17, 2011, available at
http://www.adweek.com/adfreak/william-kate-boogie-down-aisle-t-mobile-130675">http://www.adweek.com/adfreak/william-kate-boogie-down-aisle-t-mobile-130675 (visited Oct. 16, 2012); Cotton
Delo, Another T-Mobile Flash Mob Video Strikes Viral Gold, Advertising Age, December 22, 2011,
available athttp://adage.com/article/the-viral-video-chart/t-mobile-flash-mob-video-strikes-viral-gold/231720/"> http://adage.com/article/the-viral-video-chart/t-mobile-flash-mob-video-strikes-viral-
gold/231720/(visited Oct. 16, 2012).
754 Michael Learmonth, Verizon's iPhone Marketing Blitz Begins on YouTube, AdvertisingAge, January 21,
2011, available athttp://adage.com/article/digitalnext/verizon-s-iphone-ad-debuts-youtube/148364/"> http://adage.com/article/digitalnext/verizon-s-iphone-ad-debuts-youtube/148364/(visited
Oct. 16, 2012); Kunur Patel, Verizon Exec Tries to Structure Media Around People, Not Content,
AdvertisingAge, April 17, 2012, available athttp://adage.com/article/special-report-digital-conference/verizon-data-structure-media-people-content/234179/"> http://adage.com/article/special-report-digital-
conference/verizon-data-structure-media-people-content/234179/ (visited Oct. 16, 2012).
755 These YouTube pages can be found at http://www.youtube.com/user/### with the company name or tagline in
place of the ### placeholder (i.e., replace ### with VerizonWireless, SprintNow, ShareATT, TMobile, MetroPCS,
or CSpire).
756 See SEC Form 10-K for AT&T, Cincinnati Bell, Leap Wireless, MetroPCS, NTELOS Holding Corp, Sprint
Nextel, US Cellular, and Verizon Wireless.
757 Id.; See in particular, Leap Wireless, SEC Form 10-K, filed Feb. 21, 2012, at 6-7; MetroPCS, SEC Form 10-K,
filed Feb. 29, 2012, at 9; Sprint Nextel, SEC Form 10-K, filed Feb. 21, 2012, at 3; US Cellular, SEC Form 10-K,
filed Feb. 27, 2012, at 6; Verizon Communications, SEC Form 10-K, filed Feb. 24, 2012, at 6; Phil Goldstein, Leap
Expands Cricket Brand Nationwide with Best Buy Retail Deal
, FierceWireless, September 22, 2011, available at
http://www.fiercewireless.com/story/leap-expands-cricket-brand-nationwide-best-buy-retail-deal/2011-09-22">http://www.fiercewireless.com/story/leap-expands-cricket-brand-nationwide-best-buy-retail-deal/2011-09-22
(visited Oct. 16, 2012); Phil Goldstein, Leap’s Cricket Expands National Retail Presence to Target Stores,
FierceWireless, April 20, 2012, availablehttp://www.fiercewireless.com/story/leaps-cricket-expands-national-retail-presence-target-stores/2012-04-20"> at http://www.fiercewireless.com/story/leaps-cricket-expands-national-
retail-presence-target-stores/2012-04-20 (visited Oct. 16, 2012).
758 As of December 31, 2011, for every 10 company operated retail locations, US Cellular had 25 indirectly operated
locations, NTELOS had approximately 63, Cincinnati Bell had approximately 119, and Leap Wireless had
approximately 191. US Cellular, SEC Form 10-K, filed Feb. 27, 2012, at 6; Cincinnati Bell, SEC Form 10-K, filed
Feb. 28, 2012, at 9-10; NTELOS, SEC Form 10-K, filed Feb. 29, 2012, at 5; Leap Wireless, SEC Form 10-K, filed
Feb. 21, 2012, at 6-7.

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in sales made by phone.759 J.D. Power’s semi-annual survey evaluates the wireless purchase experience
of customers using any of three channels of contact: phone calls with sales representatives; visits to a
retail wireless store; and on the Web. The survey also ranks wireless providers on customer purchase
satisfaction. Among the top four providers, Sprint Nextel ranked first, followed by Verizon Wireless, and
then by AT&T and T-Mobile, both of which ranked below the full-service average. In the previous six
month period study, Sprint tied for first with T-Mobile, which was followed by Verizon Wireless and
AT&T.760 The 2011 study pointed out that overall satisfaction with the wireless purchase experience
differs widely across the three channels of contact.

V.

MOBILE WIRELESS SERVICES: PERFORMANCE AND OUTCOMES

242.
Competitive rivalry among providers is desirable not as an end in itself, but rather as a
means of bringing tangible benefits to consumers, such as lower prices, higher quality, and greater choice
of services. To determine if the market is producing outcomes that bring benefits to consumers, in this
section we analyze various metrics, including subscriber/connection growth and penetration, usage,
pricing levels and trends, and network performance.
243.
As in previous reports, the performance and outcomes section of this Report tracks the
pricing of mobile wireless services using available measures of prices or proxies based on average
revenue. In addition, this section supplements the analysis of price data with an analysis of measures of
industry output, including subscribership and connection levels, net adds, and output and usage. Churn
data are an indicator of how often customers are switching between providers and pricing plans. A
decomposition of industry service revenues between voice and data shows that mobile wireless services
continue to become increasingly data centric. The analysis of profitability incorporates cost data that are
not reflected in the pricing and revenue data.

A.

Numbers of Mobile Wireless Connections and Customers

1.

Industry-Wide Connections

244.
Based on estimates from two sources, the total number of mobile wireless connections
now exceeds the total U.S. population.761 According to data from NRUF, there were an estimated 317.3
million total mobile wireless connections at the end of 2011, up five percent from 301.8 million at the end
of 2010, and up nine percent from 290.7 million at the end of 2009 (see Table 34).762 According to data
from CTIA, the total number of mobile wireless connections grew four percent from the end of 2009 to
the end of 2010 to 296.3 million and an additional seven percent during 2011 to 316.0 million at year-end

759 J.D. Power and Associates Reports: Satisfaction with the Wireless Purchase Experience Has Declined Among
Customers Who Make Sales Transactions by Phone
, Press Release, J.D. Power and Associates, February 16, 2012,
available athttp://www.jdpower.com/content/press-release/ytOQWTp/2012-u-s-wireless-purchase-experience-studies--volume-1.htm"> http://www.jdpower.com/content/press-release/ytOQWTp/2012-u-s-wireless-purchase-experience-
studies--volume-1.htm (visited May 25, 2012).
760 J.D. Power and Associates Reports: Satisfaction with the Wireless Purchase Experience Differs Considerably
Among Sales Channels
, Press Release, J.D. Power and Associates, August 11, 2011, available at
http://www.jdpower.com/content/press-release/rYyXr7H/wireless-purchase-experience.htm">http://www.jdpower.com/content/press-release/rYyXr7H/wireless-purchase-experience.htm (visited May 25, 2012).
761 According to the Bureau of the Census, the combined population of the 50 states, the District of Columbia, and
Puerto Rico, as of July 1, 2011, was estimated to be 311.6 million. See U.S. Census Bureau,
http://www.census.gov/popest/data/national/totals/2011/index.html">http://www.census.gov/popest/data/national/totals/2011/index.html (visited June 17, 2011). As noted in the
Fifteenth Report, if NRUF is used to calculate a mobile wireless penetration rate (of a population), that penetration
rate is overstated in terms of the number of individuals who have more than one mobile wireless device. The
penetration rate now exceeds 100 percent on a nationwide basis and in many EAs, as discussed below.
762 Commission estimate, based on year-end 2010 and year-end 2011 NRUF filings, adjusted for porting.

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2011.763

Table 34

Estimated Total Mobile Wireless Connections, Year-end 2001-2011

764

NRUF

CTIA

Year


Connected Increase from Connections


Estimated


Devices


previous year

Per 100


Connections


(millions)
(millions)

People


(millions)
2001
128.5
n/a
45
128.4
2002
141.8
13.3
49
140.8
2003
160.6
18.8
54
158.7
2004
184.7
24.1
62
182.1
2005
213.0
28.3
71
207.9
2006
241.8
28.8
80
233.0
2007
263.0
21.2
86
255.4
2008
279.6
16.6
91
270.3
2009
290.7
11.1
94
285.6
2010
301.8
11.1
97
296.3
2011
317.3
15.5
102
316.0

245.
The Report uses different data sources to estimate the number of mobile wireless
subscribers and connections. One source, Numbering Resource Utilization Forecast (NRUF), tracks the
number of telephone numbers (TNs) that have been assigned to devices connected to mobile wireless
networks.765 However, NRUF data have certain limitations that are becoming increasingly significant.
First, an increasing number of consumers now use more than one mobile wireless device with an assigned
TN, and because many devices without circuit-switched voice connections – such as e-readers, tablets,
Internet access cards for laptops, and telematics systems – are assigned TNs, estimates of the number of
individual subscribers are less accurate. An additional limitation of the NRUF data arises due to
providers following different practices for how and whether to assign TNs to non-voice devices. Some
providers assign TNs to all non-voice devices, while others assign TNs to some or no data-only devices.
For instance, Clearwire’s WiMAX mobile and fixed Internet access devices do not have TNs assigned to

763 CTIA Year-End 2011 Wireless Indices Report. See also Appendix B, Table B-1, infra. A detailed explanation
of the differences between the NRUF data and CTIA’s survey can be found in the Seventh Report, 17 FCC Rcd at
13004.
764 Commission estimates based on NRUF data. CTIA Year-End 2011 Wireless Indices Report. In the second half
of 2012, CTIA revised estimated connections for the years 2009-2011. See CTIA’s Wireless Industry Indices, Semi-
Annual Data Survey Results, A Comprehensive Report From CTIA Analyzing the U.S. Wireless Industry, Mid-Year
2012 Results
(stating “Nor do we make an M2M adjustment for participating companies that do not include their
M2M numbers in their reported subscriber counts. Indeed, the mid-year 2012 estimate – and the revised subscriber
connection figures for five previous periods – reflects the exclusion of some M2M and other units not currently
treated as “subscriber connections” which previously had been treated as such connections.”)
765 In filing their NRUF data, carriers do not report TNs that have been ported to them. Therefore, in order to
develop an estimate of mobile wireless connections, it is necessary to adjust the raw NRUF data to account for
mobile wireless subscribers who have transferred their wireline TNs to wireless accounts. Porting adjustments are
developed from the TN porting databases managed by Neustar, acting as the administrator of the regional Number
Portability Administration Centers (NPACs). The databases contain all ported TNs currently in service. They also
contain information about when the TN was most recently ported (to a provider other than the provider to which the
number originally was assigned) or, in some cases, when the database was updated to reflect a new area code.
Trends in Telephone Service, FCC, Apr. 2005, at 8-2 – 8-3.

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them and are not accounted for in the NRUF data. Therefore, NRUF is becoming increasingly less useful
in measuring the number of individual subscribers. Instead, it is providing more of an estimate of the
number of mobile wireless connections or connected devices, and will become a less accurate measure of
connected devices to the extent that more devices are sold that do not use telephone numbers.
Furthermore, we note that devices represented as mobile connections in the NRUF data – because they
are assigned TNs by mobile wireless providers and connect to mobile wireless networks – are actually
offered on a fixed basis, although it is not clear whether the number of these connections is significant at
this point.766 Another limitation of NRUF data relates to its use in sub-national analyses. When a
subscriber moves to a new location but does not change his/her mobile telephone number, the TN is still
assigned to the rate center in the previous location, and the subscriber is therefore counted as living in an
area in which he/she does not reside.
2.

Connections by Type of Service and Device

246.
Mobile Wireless Voice Connections. The Form 477 mobile telephone data report
nationally and by state the number of mobile wireless connections to devices with circuit-switched voice
connections.767 Providers reported on Form 477 that there were 298.3 million mobile telephone
connections as of December 2011, an increase of 4.6 percent from 285.1 million at the end of 2010, and
an increase of 8.8 percent from 274.3 million at the end of 2009 (see Chart 12).768 The number of
connections overestimates the number of individuals with a mobile voice device to the extent that some
individuals own or use more than one mobile voice device. Another source, comScore, estimates the
number of individuals who are over the age of 13 and own a mobile wireless voice handset to be 234
million.769
247.
Mobile Wireless Internet Access Connections. In this Report, Form 477 provides data on
the number of mobile wireless Internet access connections exceeding 200 kbps, and therefore using 3G or
4G technologies.770 Approximately 142.1 million terrestrial mobile wireless Internet access subscriber

766 Such devices would include, for example, home alarm systems that rely on a wireless rather than landline
connection for communication and monitoring, as well as fixed LTE broadband connections offered under Verizon
Wireless’s recently announced Home Fusion program.
767 In contrast, NRUF data do not distinguish among the various types of mobile wireless services.
768 See Appendix B, Table B-2, infra. These Form 477 data do not distinguish those mobile voice subscribers who
also have a mobile data or Internet access plan from those who do not.
769 ComScore MobiLens, Dec. 2011. comScore MobilLens U.S. data are derived from a monthly survey of over
13,000 respondents ages 13 and older who are recruited to represent U.S. Census demographics. The total universe
size is estimated from data provided by CTIA and comScore’s monthly subscriber studies.
770 See Table B-6, Appendix B, infra. Under the Commission’s current Form 477 data collection rules, terrestrial
mobile wireless providers are required to report, on a state-by-state basis and by speed tier, their number of mobile
wireless connections with a device and subscription that permits the user to access the lawful Internet content of his
or her choice at data rates exceeding 200 kbps in at least one direction. Development of Nationwide Broadband
Data to Evaluate Reasonable and Timely Deployment of Advanced Services to All Americans, Improvement of
Wireless Broadband Subscribership Data, and Development of Data on Interconnected Voice over Internet Protocol
(VoIP) Subscribership, WC Docket No. 07-38, Report and Order and Further Notice of Proposed Rulemaking, 23
FCC Rcd 9691, 9700 ¶ 20 (2008) (Broadband Data Order). In addition, such providers report, on a state-by-state
basis, their number of devices in service that are capable of sending or receiving information at speeds greater than
200 kbps in at least one direction, regardless of whether the user subscribes to a mobile Internet access plan.
Broadband Data Order, 23 FCC Rcd at 9703 ¶ 23. Terrestrial mobile wireless providers are not required to submit
their number of Internet access subscribers broken down on a Census Tract basis, as other providers are required to
do. Broadband Data Order, 23 FCC Rcd at 9698 ¶ 16. We note that the Form 477 mobile wireless Internet access
subscriber data do not capture those mobile data users who access the mobile Internet on a casual or à la carte basis
but do not have a monthly or longer-term subscription to a mobile wireless Internet access service. Other
Commission reports use alternative speed categories in presenting data on mobile broadband services. The Eighth
Broadband Progress Report
presents data on Americans without access to mobile broadband services between June
(continued….)

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connections were reported to the Commission on Form 477 for the end of 2011, and 97.5 million were
reported for the end of 2010, a significant increase from the 56.3 million (restated) reported for year-end
2009.
248.
Mobile Wireless Devices In Use. Alternative measures of mobile wireless adoption are
provided by the numbers of different types of devices in use (irrespective of the service plans mobile
wireless consumers). The adoption of data-capable mobile devices has significantly increased in recent
years. According to Form 477 data, an estimated 183.7 million mobile wireless devices in use were
reported to be capable of transmitting data at over 200 kbps in at least one direction as of year-end 2011,
up 21 percent from the 151.6 million reported for year-end 2010, and up 59 percent from the 115.7
million reported for year-end 2009 (see Chart 12).771 Alternatively, CTIA estimated a total of 295.1
million data-capable handsets and devices were in use by the end of 2011, up from 270.5 million at the
end of 2010, and 257 million at the end of 2009 (see Chart 12).772 Additionally, CTIA estimated that the
number of wireless-enabled laptops, netbooks, and aircards in use increased 49 percent during 2011 from
13.6 million to 20.2 million.773

Chart 12

Mobile Wireless Connections by Type of Service and Device, 2009-2011 (In Millions)

274.3

Mobile Voice Subscriber Connections (Form

285.1
477)
298.3

Individuals with Mobile Wireless Voice

Handsets (comScore)

234
257
270.5

Data-Capabale Handsets/Devices (CTIA)

295.1
115.7

Mobile Devices Capable of +200 kbps (Form

151.6
477)
183.7
56.3

Mobile Internet Access Connections +200 kbps

97.5
(Form 477)
142.1
49.8 78.2

Smartphones (CTIA)

111.5
11.9
2009
2010
2011

Wireless Laptops, Aircards, Modems (CTIA)

13.5
20.2
0
100
200
300

Millions



249.
The adoption of smartphones, a sub-category of data-capable mobile devices, has
(Continued from previous page)
30, 2010 and June 30, 2011 for three speed categories, at least 768 kbps/200 kbps, at least 3 Mbps/768 kbps and at
least 6 Mbps/ 1.5 Mbps. 2012 Eighth Broadband Progress Report, GN Docket No. 11-121, (rel. Aug. 21, 2012) ¶
86.
771 Form 477. Because reporting practices previously varied among providers to a largely unknown degree, the
year-end 2008 and 2009 figures are not directly comparable to figures reported on Form 477 for earlier dates. See
Fifteenth Report
, 26 FCC Rcd at 9761 n. 493.
772 CTIA Year-End 2011 Wireless Indices Report, at 10; Fifteenth Report, 26 FCC Rcd at 9761 ¶ 162.
773 CTIA Year-End 2011 Wireless Indices Report, at 10-11.

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increased dramatically over the past two years. ComScore estimates that the number of individuals
owning a smartphone increased 55 percent during 2011 from 61.5 million to 98 million, and the
smartphone penetration rate had reached 42 percent as of December 2011.774 ComScore also estimated
that nearly 60 percent of all recently-acquired mobile devices were smartphones in December 2011, with
the Apple iPhone 4 being the smartphone with highest adoption rate during that month. CTIA reported
that, as of the end of 2011, there were 111.5 million smartphones in service, up from 78.2 million at the
end of 2010 and 49.8 million at the end of 2009.775 Finally, the Pew Internet & American Life Project
(Pew) reported that, as of February 2012, an estimated 46 percent of American adults had smartphones,
an increase of 11 percentage points over the 35 percent who owned a smartphone in May 2011.776
3.

Connections by Service Segment


250.
While the substantial majority of mobile wireless connections in the United States today
are on a postpaid subscription plan, the prepaid, wholesale, and connected device segments are growing at
a much faster pace than postpaid. According to the UBS data shown in Chart 13 below, the number of
prepaid subscriptions grew 29 percent from the end of 2009 to the end of 2011, the number of connected
devices grew 82 percent, and the number of wholesale connections nearly tripled.777 During the same
period, the number of postpaid subscriptions grew just under three percent.778

Chart 13

Mobile Wireless Customers by Pricing Plan, 2009-2011

779
350.0
300.0
)

s

250.0
n
200.0
illio
M
(

150.0
rs
e

100.0
rib
c

50.0
s
b
u

0.0

S

Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
2009
2009
2009
2009
2010
2010
2010
2010
2011
2011
2011
2011
Connected Devices
10.9
11.7
11.8
13.2
14.2
15.9
17.5
19.3
21.0
22.5
23.9
24.0
Wholesale
2.8
2.8
2.9
3.2
3.9
4.4
5.0
5.0
5.9
6.6
7.6
9.1
Prepaid
49.2
50.8
51.8
55.0
57.1
58.0
59.6
62.5
65.6
67.0
68.8
70.8
Postpaid
200.6 208.8 210.0 212.3 211.3 213.4 214.4 215.3 215.5 216.3 217.0 218.2

774 ComScore, 2012 Mobile Future in Focus Report, February 2012, at 7-11.
775 CTIA Year-End 2011 Wireless Indices Report, at 10-11.
776 Aaron Smith, Nearly Half of American Adults Are Smartphone Owners, Pew, Mar. 1, 2012, available at
http://pewinternet.org/Reports/2012/Smartphone-Update-2012/Findings.aspx">http://pewinternet.org/Reports/2012/Smartphone-Update-2012/Findings.aspx. (visited Nov. 30, 2012).
777 US Wireless 411 4Q11, at 10.
Source: UBS
778 US Wireless 411 4Q11, at 10.
779 US Wireless 411 4Q11, at 10. UBS modified the categories it uses to track mobile connections by type of
subscription in 2010 and 2011. The previous four categories were Postpaid, Traditional Prepaid, Unlimited Prepaid,
and Wholesale. See Fifteenth Report, 26 FCC Rcd at 9766 Chart 11. In 2010, UBS began reporting the Connected
Devices category, to reflect and account for changes made by the major providers in the way the report subscriber
counts. See US Wireless 411 3Q10, at 3-4. In November 2011, UBS combined the two types of prepaid
subscriptions into a single category. See US Wireless 411 3Q11, at 3-4. When UBS made these changes, it also
retroactively modified the data for previous quarters, going back to the first quarter of 2009.

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4.

Connections by Age

251.
ComScore has estimated the age distribution of mobile wireless subscribers and of
smartphone subscribers, as shown in Chart 14 below. While the adoption of all mobile wireless devices is
fairly evenly distributed among various age groups, smartphone adoption is more concentrated in younger
age groups. Chart 14 shows that adults age 18-44 comprise 47 percent of all mobile wireless subscribers,
but make up 62 percent of smartphone users.780 On the other hand, adults over age 55 comprise 28
percent of all mobile wireless subscribers but only 16 percent of smartphone subscribers.781 Additionally,
Pew has estimated that about one in four teens reports owning a smartphone.782 Of teens ages 12-17, 23
percent said they have a smartphone, with ownership highest amongst older teens ages 14-17, at 31
percent.783

Chart 14

Age Breakdown of Mobile Wireless Subscribers, Q4 2011 (Percent)

784



780 ComScore MobiLens, Dec. 2011. comScore MobilLens U.S. data are derived from a monthly survey of over
13,000 respondents ages 13 and older who are recruited to represent U.S. Census demographics. The total universe
size is estimated from data provided by CTIA and comScore’s monthly subscriber studies.
781 ComScore MobiLens, Dec. 2011. comScore MobilLens U.S. data are derived from a monthly survey of over
13,000 respondents ages 13 and older who are recruited to represent U.S. Census demographics. The total universe
size is estimated from data provided by CTIA and comScore’s monthly subscriber studies.
782 Amanda Lenhart, Teens, Smartphones & Texting, Pew, Mar. 19, 2012, available at
http://pewinternet.org/Reports/2012/Teens-and-smartphones/Summary-of-findings.aspx">http://pewinternet.org/Reports/2012/Teens-and-smartphones/Summary-of-findings.aspx (visited Oct. 16, 2012).
783 Amanda Lenhart, Teens, Smartphones & Texting, Pew, Mar. 19, 2012, available at
http://pewinternet.org/Reports/2012/Teens-and-smartphones/Summary-of-findings.aspx">http://pewinternet.org/Reports/2012/Teens-and-smartphones/Summary-of-findings.aspx (visited Oct. 16, 2012).
784 Estimated by ComScore MobiLens, Dec. 2011. comScore MobilLens U.S. data are derived from a monthly
survey of over 13,000 respondents ages 13 and older who are recruited to represent U.S. Census demographics. The
total universe size is estimated from data provided by CTIA and comScore’s monthly subscriber studies.

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5.

Connections by Economic Area (EA)

252.
To analyze mobile wireless connections across geographic areas, we have estimated
mobile wireless connections per 100 people (penetration rates) in the EAs of the United States using
NRUF data.785 As discussed above, we use EAs as the geographic unit for measuring the level of
concentration in the mobile wireless services industry in order to maintain continuity with past Reports786
and ensure that we do not compromise the confidential information contained in the NRUF data.787
Regional penetration rates for the 172 EAs range from 79.5 percent in Hobbs, NM to 135 percent in
Monroe, LA.788 As discussed above, the nationwide penetration rate based on NRUF data now exceeds
100 percent, and the penetration rate in 60 of the 172 EAs was at least 100 percent at the end of 2011.
This is up from 18 EAs at the end of 2009 and 30 EAs at the end of 2010.

B.

Mobile Wireless Net Additions of Customers


785 NRUF data are collected on a small area basis and thus allows the Commission to compare the spread of mobile
wireless subscribership across different areas within the United States. NRUF data are collected by the area code
and prefix (NXX) level for each provider, which enables the Commission to approximate the number of subscribers
that each provider has in each of the approximately 18,000 rate centers in the country. Rate center boundaries
generally do not coincide with county boundaries. However, for purposes of geographical analysis, rate centers
(including those that cross county boundaries) can be associated with the county that contains the (usually)
centralized geographic point for that rate center. Counties, for which population and other data exist, can be
aggregated together and associated with several larger geographic areas based on counties, such as EAs and Cellular
Market Areas (CMAs). Aggregation to larger geographic areas reduces the level of inaccuracy inherent in
combining non-coterminous areas such as rate center areas and counties.
786 There are 172 EAs, each of which is an aggregation of counties. Each EA is made up of one or more economic
nodes and the surrounding areas that are economically related to the node. The main factor used in determining the
economic relationship between the two areas is commuting patterns, so that each EA includes, as far as possible, the
place of work and the place of residence of its labor force. See Kenneth P. Johnson, Redefinition of the EA
Economic Areas
, Survey of Current Business, Feb. 1995, at 75 (Redefinition of the EA). For its spectrum auctions,
the Commission has defined four additional EAs: Guam and the Northern Mariana Islands (173); Puerto Rico and
the U.S. Virgin Islands (174); American Samoa (175); and Gulf of Mexico (176). See FCC, FCC Auctions: Maps,
available athttp://wireless.fcc.gov/auctions/data/maps.html">
http://wireless.fcc.gov/auctions/data/maps.html (visited Dec. 15, 2008). In November 2004, the Bureau
of Economic Analysis released updated definitions of EAs; however, for consistency, we use the previous release of
definitions. See New BEA Economic Areas For 2004, Bureau of Economic Analysis, Nov. 17, 2004. As noted
above, 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.
787 Wireless providers have considerable discretion in how they assign telephone numbers across the rate centers in
their operating areas and, according to one analyst, assign numbers so as to minimize the access charges paid to
local wireline companies. See Linda Mutschler et al., Wireless Number Portability, Merrill Lynch, Equity Research,
Jan 9, 2003, at 8 (“For wireless operators, the standard practice is to aggregate phone numbers within the same area
code onto the same or several rate centers, whose physical locations would result in the least amount of access
charges paid to ILECs. Therefore, in each market, wireless operators are present in only a small number of rate
centers. According to our industry sources, this percentage is probably below 20%, and could be meaningfully
lower than 20%”). Therefore, a mobile wireless subscriber can be assigned a phone number associated with a rate
center that is a significant distance away from the subscriber’s place of residence or usage, but generally still in the
same EA. See Linda Mutschler, et al., US Wireless Services: Wireless Number Portability – Breaking Rules, Merrill
Lynch, Equity Research, Feb. 28, 2003, at 3 (“Once the NPA-NXX (i.e., 212-449) is assigned to the wireless carrier,
the carrier may select any one of its NPA-NXXs when allocating that number to a particular subscriber. Therefore,
with regard to wireless, the subscriber’s physical location is not necessarily a requirement in determining the phone
number assignment – which is very different from how wireline numbers are assigned”).
788 EA connection levels and penetration rates as of December 2010 and December 2011 can be seen in Appendix C,
Table C-3. In addition, a map showing regional penetration rates by EAs can be found in Appendix C. See Map C-
30, Appendix C, infra. In seven EAs, the penetration rate could not be reported for confidentiality reasons because
the number of competing providers in the EA is less than four.

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1.

Industry-Wide Net Additions

253.
Data on the net additional connections during a period of time (“net adds”) provide
information about the sources and level of growth in mobile wireless connections. According to data
from CTIA, after declining from 2006 through 2008, net adds increased significantly in 2009 to 20.6
million (revised data) and remained at just over 20 million in 2010 and 2011 (Chart 15). According to
NRUF data, net adds were flat in 2010 at 11.1 million and increased in 2011 to 15.5 million.789 Data
from Form 477, which reports data on both mobile voice connections and mobile Internet access
connections, suggest that data-only connections are driving a large portion of net adds. While the number
of mobile connections continued to grow in 2010 and 2011, particularly as people in younger age groups
purchase mobile wireless services for the first time,790 the growth rate has been declining as mobile voice
adoption reaches increasingly larger percentages of the population. At the same time, the number of
devices with data-only mobile wireless connectivity has increased, reflecting the increased demand for
mobile wireless data services.

Chart 15

Total Mobile Wireless Connection Annual Net Additions, 2005-2011 (In millions)

791
35
NRUF
30
28.8
28.3
CTIA
25.8
25.9
25.1
Form 477
25
22.4
21.2
19.7
19.7
20
16.6
15.5
14.9
15.3
15
13
13.2
12
11.1
11.1 10.7 10.8
10
5
0
2005
2006
2007
2008
2009
2010
2011



789 As discussed above, the NRUF data used to generate an estimate of mobile wireless connections are based on the
number of phone numbers assigned to mobile wireless devices. Therefore, any device with a mobile wireless phone
number is counted as a connection, and many data-only devices with mobile wireless network connections, such as
laptop cards and e-readers, have phone numbers assigned to them.
790 See Section V.A.4, Connections by Age, supra.
791 See Table 34, supra.

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2.

Net Additions by Service Segment

254.
Data on net adds by service segment provide information on which segments contributed
to the growth in mobile wireless connections. As shown in Chart 16, there has been significant variation
in net adds across service segments in recent years. The number of postpaid subscriptions in 2010 and
2011 declined from their 2009 levels. According to UBS, there were 2.5 million postpaid net adds in
2010 (14 percent of total net adds), and 3 million in 2011 (15 percent of the total), down from 3.7 million
(25 percent of total net adds) in 2009. The number of prepaid net adds, both unlimited and traditional,
still constituted a large portion of total net adds – 41 percent – in both 2010 and 2011, but declined from
54 percent of total net adds in 2009.
255.
The number of wholesale and connected device net adds grew significantly in 2010 and
2011 compared to their 2009 levels. UBS estimates that wholesale subscribers as a percentage of total net
adds grew five percent in 2009, 10 percent in 2010, and 20 percent in 2011.792 In addition, connected
device net adds constituted 34 percent of total net adds in 2010 and 23 percent in 2011, up from 17
percent in 2009.793 The increases in the numbers of wholesale connections and connected devices since
2009 may reflect the growing adoption of data-only mobile devices, such as tablets and e-readers, which
are sold on both a retail basis by mobile wireless providers and a wholesale basis by resellers and other
retailers. For instance, Comcast, Bright House Networks, and Best Buy were all reselling Clearwire’s
WiMAX service in 2010 and 2011.794




















792 US Wireless 411 4Q11, at 10. Wholesale subscribers exclude TracFone.
793 US Wireless 411 4Q11, at 10.
794 See Sections III.D.3.a, Entry; Section IV.B.1.a, Service Provider Technology Deployments, supra.

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Chart 16

Quarterly Net Additions by Service Segment, 2009-2011 (In thousands)

795

3.

Net Adds by Service Provider

256.
As shown in Chart 17 below, net additions vary significantly across service providers. In
each year since 2008, AT&T and Verizon Wireless have each gained more net adds than has any other
service provider. During 2010 and 2011, AT&T had 8.9 million and 7.7 million net adds, respectively,
and Verizon Wireless had 2.9 million and 14.5 million net adds during the same two years. After
experiencing steep negative net adds in 2008, Sprint’s net adds have increased each year since 2009, up to
4.8 million in 2011. T-Mobile incurred annual customer losses in both 2010 and 2011 of 56,000 and
549,000, respectively. MetroPCS and Leap, following multi-metro business models, continued to
increase their subscriber bases in 2010 and 2011. MetroPCS had 1.5 million net adds in 2010 and 1.2
million in 2011, figures that are comparable to its 1.3 million net adds in 2009. Leap’s net adds in 2010
and 2011 of around a half a million were about half the size of its net adds of around 1 million in 2008
and 2009.






795 US Wireless 411 4Q11, at 10. UBS categorizes Tracfone customers in prepaid, not wholesale.

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Chart 17

Annual Net Additions by Service Provider, 2008-2011 (In thousands)

796


C.

Connection Churn

257.
Churn is a measure of the number of connections that are disconnected from mobile
wireless service during a given period of time.797 Churn is usually expressed as a percentage of the
estimated number of connections during the period. For example, if a service provider has an average
monthly churn rate of two percent in each month of a year, the service provider would lose approximately
24 percent of its customers over the course of the year. Current average monthly churn rates of individual
service providers range from about 1.5 percent for AT&T and Verizon Wireless up to 3.5 percent for T-
Mobile (Chart 18). The average industry monthly churn rates have been between 2.0 percent and 2.5
percent since at least 2005. Churn rates for prepaid connections are typically significantly higher than
churn rates for postpaid connections, because prepaid customers, unconstrained by a multi-month or
multi-year service contract, are more likely than postpaid customers to terminate a relationship with a
wireless service provider (
258.

259.


796 See Table 13, supra; Fifteenth Report, 26 FCC Rcd at 9697 Table 3, 9775 Chart 18; Fourteenth Report, 25 FCC
Rcd at 11521, Chart 20, 11648, Table C-4. These calculations include wholesale subscribers. Pro-forma
calculations were made to account for mergers and show only “organic” net adds generated independent of mergers.
For instance, Verizon Wireless’s reported net additions for 2009, including the subscribers acquired from Alltel,
totaled 19,193,000. See Fifteenth Report, 26 FCC Rcd at 9775 n. 544.
797 CTIA Year-End 2011 Wireless Indices Report, at 75.

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260.
Chart 19).798 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
service provider, service provider switching costs, and competition. The inverse of the churn rate gives
an estimate of the number of months an average customer is expected to remain a customer of a particular
service provider.799 These customer lifetimes are presented in Table 35.

Chart 18

Average Monthly Churn Rates of the Nationwide Service Providers, 2005-2011

800


798 Leap Wireless & Metro PCS: Low Cost Prepaid Wireless…A Survival Story; Initiating Coverage at Outperform,
Bernstein Research, Dec 14, 2009.
799 For instance, AT&T’s 2011 average monthly churn rate is estimated to be 1.37 percent. Then the expected
lifetime of an AT&T customer in 2011 is calculated as 1/0.0137, which is 73 months or 6.1 years.
800 Data provided by Bernstein Research. The churn rate for each year is an average of the monthly churn rates. The
calculation includes postpaid, prepaid, and reseller connections. Verizon Wireless is combined with Alltel.

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Chart 19

Average Monthly Churn Rates by Segment, 2005-2011

801

Table 35

Average Customer Lifetime, 2005-2011 (In Years)

802






Provider

2005
2006 2007 2008 2009 2010 2011

AT&T

3.8
4.6
5.0
5.0
5.7
6.4
6.1

Verizon
Wireless

5.9
6.4
6.4
6.1
5.8
5.7
5.5

Sprint Nextel

3.4
3.0
2.9
2.7
2.8
2.8
3.1

801 Data provided by Bernstein Research. Annual churn is an average for each of the four quarters. Verizon
Wireless is combined with Alltel.
802 Data provided by Bernstein Research.

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T-Mobile

2.9
2.9
3.0
2.9
2.6
2.5
2.3

Industry Wtd.
Average


3.9
4.0
4.0
3.9
3.8
3.7
3.7

D.

Output and Usage Levels

1.

Mobile Voice

261.
Billable minutes of use (MOUs), a measure of mobile voice usage, are reported by
CTIA.803 As shown in Chart 20 below, MOUs continued to decline over each six-month reporting period
in 2010 and 2011, from 686 in the first half of 2010 to 615 in the second half of 2011. There is evidence
indicating that the declining trend of voice minutes is due to substitution from mobile voice to mobile
messaging and other mobile data services.804 Reflecting the trend in the aggregate data, MOU data
disaggregated across providers (Chart 21) shows that the average MOUs of all four nationwide service
providers has declined steadily since 2009.

Chart 20

Average MOUs Per Subscriber Per Month, 2005-2011

805

803 CTIA aggregates all of the service providers’ MOUs from January 1 through June 30, or from July 1 through
December 31, then divides by the average number of subscribers for the period, and then divides by six. See
Thirteenth Report
, 24 FCC Rcd at 6284 n. 582.
804 See, e.g., Pew Internet, Teens, Smartphones, and Texting, March 19, 2012, summary available at
http://www.pewinternet.org/Reports/2012/Teens-and-smartphones/Summary-of-findings.aspx">http://www.pewinternet.org/Reports/2012/Teens-and-smartphones/Summary-of-findings.aspx (visited Oct. 16,
2012).

805 CTIA Year-End 2011 Wireless Indices Report, at 215. (This CTIA calculation uses its originally Reported
Subscribers numbers for 2009-2011, and not the estimated subscribers for 2009-2011, as revised by CTIA during the
second half of 2012.)

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Chart 21

MOUs Per Subscriber: Four Nationwide Service Providers, 2006-2011

806

806 US Wireless 411 4Q11.

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2.

Mobile Messaging

262.
Mobile text messaging traffic continued to grow in 2011, though at a slower rate than in
2010. According to data reported by CTIA, text messaging volumes grew from a total of 1.14 trillion in
the first half of 2011 to 1.17 trillion in the second half of 2011 (Chart 22).807 Mobile wireless subscribers
sent fewer photo, video, and other multimedia messages (MMS) with their devices during 2011 than in
2010 (Chart 23). CTIA reports that a total of 52.8 billion MMS messages were sent during 2011, a 6.7
percent decrease from the 56.6 billion sent during 2010.808 Data on mobile messaging do not include
other types of data usage such as Internet browsing sessions, downloads or uploads.809








Chart 22

Six-Month Text Messaging Traffic Volumes, 2005-2011 (In billions)

810

807 CTIA Year-End 2011 Wireless Indices Report, at 224.
808 CTIA Year-End 2011 Wireless Indices Report, at 227.
809 CTIA Year-End 2011 Wireless Indices Report, at 229.
810 CTIA Year-End 2011 Wireless Indices Report, at 224.

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Chart 23

Six-Month MMS Traffic Volumes, 2005-2011 (In billions)

811

811 CTIA Year-End 2011 Wireless Indices Report, at 227.

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263.
The average number of text and MMS messages per subscriber per month can be
estimated by dividing the total number of messages by the average number of mobile wireless
connections, while recognizing that not all mobile wireless customers use messaging services. As shown
in Table 36, the average mobile wireless customers sent 594 text messages and 12.5 MMS messages per
month during the second half of 2011. While the growth rates for SMS and MMS usage per customer
show steady or declining trends, the usage of other data services, discussed below, has steadily increased
during the same period. With consumers substituting among applications that are categorized under
different data services, a comprehensive picture of data usage currently requires aggregation of the
various measures of mobile messaging and mobile data. For instance, the Apple iPhone’s iMessage
service routes messages (to other iOS5 devices) through the customer’s mobile broadband data service
instead of through an SMS or MMS service. The messaging traffic of a customer who substitutes
traditional messaging with iMessage would be accounted for under mobile data instead of under text and
MMS messages.




Table 36

Average Text and MMS Messages Per Subscriber Per Month, 2005-2011

812

812 CTIA’s Wireless Industry Indices, Year-End 2011 Results, released May 2012. These calculations were derived
from data on reported subscribers, six-month text/SMS message volumes, and six-month MMS message volumes.
(continued….)

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Six-Month

Average Text Average MMS

Period Ending

Messages

Messages

Per User

Per User

Per Month

Per Month

Jun-05
29
0.3
Dec-05
40
0.7
Jun-06
51
0.9
Dec-06
69
1.2
Jun-07
103
1.8
Dec-07
144
2.3
Jun-08
248
3.6
Dec-08
388
5.8
Jun-09
451
6.3
Dec-09
488
14.4
Jun-10
566
18.5
Dec-10
598
13.7
Jun-11
606
15.0
Dec-11
594
12.5

3.

Mobile Data Traffic (Non-Messaging)

264.
Mobile data traffic is growing significantly,813 reflecting the continuing evolution of
mobile wireless services from voice-centric mobile services to data-centric mobile services. Data traffic
is increasing with: (1) the growth in mobile device connections, including multiple connections held by
the same subscriber; (2) the growing use of data-only mobile devices, such as laptop cards, e-readers, and
tablets; (3) the increased popularity of higher-bandwidth mobile applications; and (4) the deployment of
faster networks.814 It is estimated that U.S. mobile data traffic increased 62 percent from 2011 to 2012,
and that mobile data traffic in 2012 was approximately 73 times the volume of U.S. mobile traffic in
2007.815 The average U.S. mobile connection consumed an estimated 568 MB of data per month in 2012,
and an estimated 11 percent of U.S. mobile users consumed over 2 GB of data per month.816 The largest
amount of mobile data traffic during the second half of 2011 was generated by streaming video (42
percent), followed by file sharing (26 percent), web browsing (24 percent), VoIP and IM applications
(five percent), and other applications (three percent).817 It is projected that the volume of mobile video
traffic in 2017 will be nine times the volume in 2012.818
(Continued from previous page)
CTIA did not revise its number of reported subscribers for 2009-2011, when it issued its revised estimated
subscribers during the second half of 2012.
813 See Fourteenth Report, 25 FCC Rcd at 11526-27 ¶ 181; Torch Passes from Voice to Data.
814 Simon Flannery, et al., 3Q Trend Tracker – Signs of Life for Telecom, Morgan Stanley, Morgan Stanley Research
– North America, Dec. 4, 2009, at 59. See Section VII.B.2, Mobile Applications, infra. Cisco Visual Networking
Index U.S. Mobile Data Traffic Forecast Update, February 2012.
815 Cisco Visual Networking Index,
http://www.cisco.com/en/US/netsol/ns827/networking_solutions_sub_solution.html">http://www.cisco.com/en/US/netsol/ns827/networking_solutions_sub_solution.html.
816 Cisco Visual Networking Index,
http://www.cisco.com/en/US/netsol/ns827/networking_solutions_sub_solution.html">http://www.cisco.com/en/US/netsol/ns827/networking_solutions_sub_solution.html.
817 Allot MobileTrends - Global Mobile Broadband Traffic Report, H2/2011, at 5, 7.
818 Cisco Visual Networking Index,
http://www.cisco.com/en/US/netsol/ns827/networking_solutions_sub_solution.html">http://www.cisco.com/en/US/netsol/ns827/networking_solutions_sub_solution.html.

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Chart 24

U.S. Average Data Traffic per Device Type, Cisco, 2012819














Chart 25

Average Monthly Data Consumption Per Device, CTIA, 2010-2011

820

819 Cisco Visual Neworking Index (VNI) Global Mobile Data Traffic Forecast Update, United States Highlights,
February 2013.
820 CTIA Year-End 2011 Wireless Indices Report, at 233.

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Chart 26

Average Monthly Data Consumption per User: Nationwide Providers, Validas, 2009-2011

821

Chart 27

Average Monthly Data Consumption Per User, Validas, 2009-2011

822

821 Validas, 3 Year View of US Wireless Data Consumption: 2009-2011, Prepared for the FCC by Validas. The
Validas estimates are averages calculated from data from a sample of approximately 20,000 customer bills obtained
from customers of the four nationwide providers.
822 Validas, 3 Year View of US Wireless Data Consumption: 2009-2011, Prepared for the FCC by Validas.

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E.

Pricing Levels, Changes, and Trends

1.

Price Metrics

265.
Variations in the non-price terms and features of mobile wireless service plans make it
difficult to compare or aggregate the prices of mobile wireless service. Consequently, it is difficult to
identify sources of information that track actual mobile wireless service prices in a comprehensive and
consistent manner.823 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. In 2010 and 2011, the
Wireless Telephone Services CPI declined for two consecutive years, while the per-minute price of voice
service remained roughly stable in 2010 and then declined in 2011.824
266.
Wireless Telephone Services CPI. 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.825 As shown in Table 37 below, from 2009 to 2010, the annual

823 See Fourth Report, 14 FCC Rcd at 10164-10165.
824 Only indicators of the price of mobile wireless services are discussed in this section. See Section VII.B.1, Mobile
Wireless Handsets/Devices and Operating Systems, infra, for information on handset and device pricing.
825 See Table 29, infra. The 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
including items 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. 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 ahttp://www.bls.gov/">t 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">, http://www.bls.gov/cpi/cpifaq.htm (visited Nov. 12, 2010). The Cellular 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,
(continued….)

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Wireless Telephone Services CPI decreased by nearly three percent while the overall CPI increased by
1.6 percent and the Telephone Services CPI was unchanged. From 2010 to 2011, the annual Wireless
Telephone Services CPI decreased by another 3.6 percent while the overall CPI increased by 3.2 percent
and the Telephone Services CPI decreased by 1.1 percent. The Wireless Telephone Services CPI’s back-
to-back declines in 2010 and 2011 followed 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 40 percent while the overall CPI has increased by 40 percent.

Table 37

Change in CPI, 1997-2011

826

Year

CPI

Wireless

Telephone

Land-line

Telephone

Services CPI


Telephone

Services CPI


Services CPI



Index

Annual Index

Annual Index

Annual Index

Annual

Value

Change Value

Change Value

Change Value

Change

Dec
1997
100

100

100

-
-
1998
101.6

95.1

100.7

-
-
1999
103.8
2.2%
84.9
-10.7%
100.1
-0.6%
-
-
2000
107.3
3.4%
76.0
-10.5%
98.5
-1.6%
-
-
2001
110.3
2.8%
68.1
-10.4%
99.3
0.8%
-
-
2002
112.1
1.6%
67.4
-1.0%
99.7
0.4%
-
-
2003
114.6
2.3%
66.8
-0.9%
98.3
-1.4%
-
-
2004
117.7
2.7%
66.2
-0.9%
95.8
-2.5%
-
-
2005
121.7
3.4%
65.0
-1.8%
94.9
-0.9%
-
-
2006
125.6
3.2%
64.6
-0.6%
95.8
0.9%
-
-
2007
129.2
2.8%
64.4
-0.3%
98.2
2.6%
-
-
2008
134.1
3.8%
64.2
-0.2%
100.5
2.2%
-
-
2009
133.7
-0.4%
64.3
0.0%
102.4
1.9%
-
-
2010
135.9
1.6%
62.4
-2.9%
102.4
0.0%
101.6
-
2011
140.1
3.2%
60.1
-3.6%
101.2
-1.1%
103.3
1.7%









1997 to
2011


40.1%
-39.9%
1.2%



267.
Voice Revenue per Minute. In addition to the Wireless Telephone Services CPI, Voice
Revenue per Minute (RPM) offers a proxy for mobile voice prices.827 Voice RPM is calculated by
dividing an estimate of average monthly revenue per subscriber (often referred to as average revenue per
unit, or “ARPU”) for voice services by average monthly minutes of use (MOU) per subscriber for the
(Continued from previous page)
and pagers. Id. While the CPI-U is urban-oriented, it does include expenditure patterns of some of the rural
population. See Fourteenth Report, 25 FCC Rcd at 11529, n. 561. Information submitted by companies for the CPI
is provided on a voluntary basis. Id.
826 Bureau of Labor Statistics. All CPI figures were taken from BLS databases found on the BLS Internet site
available athttp://www.bls.gov/"> http://www.bls.gov. Beginning in January 2010, the CPIs for local telephone service and long-distance
telephone service were discontinued and replaced by a new CPI for land-line telephone services.
827 See US Wireless Matrix 1Q07, at 52.

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equivalent period, obtaining an estimate of revenue per minute.828 Using estimates of industry-wide voice
ARPU829 and MOUs from CTIA, we estimate that Voice RPM in December of 2010 and 2011, rounded
to the nearest cent, remained at $0.05 for the fourth and fifth straight years, while the unrounded estimate
of Voice RPM increased approximately one percent in December of 2010 from its value in the previous
year, and then decreased about 5 percent in December of 2011 (see Table 30). Voice RPM has declined
over the past 18 years, from more than $0.40 to the current $0.05, with the rate of decline decreasing as
Voice RPM has reached the low single digits.

Table 38

Average Voice Revenue Per Minute, 1993-2011

830

Year Average

MOU

Blended

Annual

Data

Average

Average

Annual

Local

Per

Average Percentage

Revenue

Local

Voice

Percentage

Monthly Subscriber RPM832


Change

as Percent Monthly RPM833

Change

Bill

Per

in Blended
of Total

Bill

in Voice

Month831


Average

Service
(ex. Data

RPM


RPM

Revenues Revenues)

1993
$61.49
140
$0.44

n/a
$61.49
$0.439

1994
$56.21
119
$0.47
8%
n/a
$56.21
$0.472
8%
1995
$51.00
119
$0.43
-9%
n/a
$51.00
$0.429
-9%
1996
$47.70
125
$0.38
-11%
n/a
$47.70
$0.382
-11%
1997
$42.78
117
$0.37
-4%
n/a
$42.78
$0.366
-4%
1998
$39.43
136
$0.29
-21%
n/a
$39.43
$0.290
-21%
1999
$41.24
185
$0.22
-23%
0.2%
$41.16
$0.222
-23%
2000
$45.27
255
$0.18
-20%
0.4%
$45.09
$0.177
-21%
2001
$47.37
380
$0.12
-30%
0.9% $46.94
$0.124
-30%
2002
$48.40
427
$0.11
-9%
1.2%
$47.82
$0.112
-9%
2003
$49.91
507
$0.10
-13%
2.5%
$48.66
$0.096
-14%
2004
$50.64
584
$0.09
-12%
4.8%
$48.21
$0.083
-14%
2005
$49.98
708
$0.07
-19%
8.3%
$45.83
$0.065
-22%
2006
$50.56
714
$0.07
0%
13.5%
$43.73
$0.061
-5%
2007
$49.79
769
$0.06
-9%
17.9%
$40.88
$0.053
-13%
2008
$50.07
708
$0.07
9%
23.3%
$38.40
$0.054
2%
2009
$48.16
696
$0.07
-2%
28.7%
$34.34
$0.049
-9%
2010
$47.21
647
$0.07
5%
31.4%
$32.39
$0.050
1%
2011
$47.00
615
$0.08
5%
38.0%
$29.14
$0.047
-5%


828 To generate Voice RPM, we subtracted wireless data revenues, derived from CTIA’s survey, from ALMB (we
assumed this was the same percentage of wireless data revenues in CTIA’s measure of total service revenues), then
we divided that number by CTIA’s average MOUs per month. See also Twelfth Report, 23 FCC Rcd at 2323-24 ¶
200. The average monthly minutes of use figure reflects voice minutes used and captured as network traffic, rather
than minutes paid for as part of a monthly service package.
829 Note that this version of ARPU is CTIA’s “Average Local Monthly Bill” (“ALMB”), which does not include toll
or roaming revenues where they are not priced into a calling plan.
830 CTIA Year-End 2011 Wireless Indices Report, at 199, 214. For purposes of this presentation in this table, RPM
is rounded to two decimal places, but RPM change is based on absolute RPM.
831 See Table 87, CTIA Year-End 2011 Wireless Indices Report, at 214.
832 Blended Average Revenue per Minute = (Average Local Monthly Bill)/(MOU per Subscriber per Month).
833 Average Voice Revenue per Minute = (Average Local Monthly Bill ex. Data Revenues)/(MOU per Subscriber
per Month).

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Chart 28

Mobile Wireless Voice Revenue per Minute, 1993-2011


268.
The above voice RPM estimates are calculated with MOU data that include non-voice-
oriented and some non-voice capable devices, which can cause MOU per reported subscriber per month
to be underestimated and voice RPM to be overestimated.834 Since the second half of 2008, the CTIA
survey has requested data on the number of laptops, netbooks and wireless broadband modems.835 As
shown in Table 39, when these CTIA estimates of the number of laptops, netbooks and wireless
broadband modems are excluded, the adjusted subscriber estimates result in higher estimates of MOU per
subscriber per month, and hence lower voice RPM estimates. With the revised estimates, voice RPM still
increased by one percent in December of 2010, but it declined by seven percent in December of 2011.
The revised estimates of average monthly MOUs also yield an 11 percent decrease in voice RPM in
December of 2009, as compared with a nine percent decrease with the unrevised estimates. These revised
estimates still understate average monthly MOUs per subscriber and overstate voice RPM to some degree
because the adjusted subscriber data continue to include in the denominator of the MOU calculation the
number of “other non-voice-oriented devices” for which CTIA does not collect data.836



Table 39



834 CTIA Year-End 2011 Wireless Indices Report, at 217-218. MOU per reported subscriber would be
underestimated because the metric is calculated by dividing total MOU by average subscribers.
835 CTIA Year-End 2011 Wireless Indices Report, at 218.
836 Quotation from CTIA Year-End 2011 Wireless Indices Report, at 218.

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Average Revenue Per Minute Excluding Non-Voice Devices, 2008-2011837


Year

Average

MOU

Blended

Annual

Data

Average

Average

Annual

Local

Per

Average Percentage

Revenue

Local

Voice

Percentage

Monthly Subscriber

RPM

Change

as Percent
Monthly

RPM

Change

Bill

Per Month


in Blended
of Total

Bill

in Voice

Average

Service
(ex. Data

RPM

RPM

Revenues

Revenues)

2008
$50.07
724
$0.07

23.3%
$38.40
$0.053

2009
$48.16
729
$0.07
-4%
28.7%
$34.34
$0.047
-11%
2010
$47.21
679
$0.07
5%
31.4%
$32.39
$0.048
1%
2011
$47.00
658
$0.07
3%
38.0%
$29.14
$0.044
-7%

269.
Revenue per Text Message. In previous Reports, we derived a proxy for the pricing of
text messages based on CTIA data by dividing an estimate of text messaging revenues by an estimate of
the number of text messages sent during a specified period.838 The results showed that the average price
for text messages steadily declined from between three and four cents per message in 2005 to
approximately one cent per message in 2008. In 2009, however, the industry stopped reporting a
breakout of text messaging revenues from overall wireless data service revenues. As a consequence, it is
no longer possible to calculate unit prices for text messaging based on industry data collected by CTIA,
and therefore we discontinue reporting this particular pricing indicator in this Report.
270.
Although we are no longer able to derive an estimate of average revenue per text message
based on CTIA data, an estimate based on Nielsen data suggests that the unit price for text messages has
continued to fall since 2008. Using Nielsen Customer Value Metrics, Recon Analytics estimates that the
effective price of a mobile text message has declined from 1.4 cents to 0.9 cents, or by about 33 percent,
from the fourth quarter of 2008 to the fourth quarter of 2010.839 Recon Analytics attributes the decline in
the unit price of text messages to consumers taking advantage of messaging bundles, and notes that the
largest decline in the effective price per message occurred between 2005 and 2008, when large text
messaging bundles were introduced.840








Table 40


837 CTIA. (This CTIA calculation uses Reported Subscribers which were not revised in the second half of 2012
when CTIA revised estimated subscribers for 2009-2011.)
838 See Fourteenth Report, 25 FCC Rcd at 11532 ¶¶ 191-92.
839 Roger Entner, What is the Price of a Megabyte of Wireless Data?, FIERCEWIRELESS, Apr. 13, 2011.
http://www.fiercewireless.com/story/entner-what-price-megabyte-wireless-data/2011-04-13">http://www.fiercewireless.com/story/entner-what-price-megabyte-wireless-data/2011-04-13 (visited Oct. 16, 2012)
840 Roger Entner, What is the Price of a Megabyte of Wireless Data?, FIERCEWIRELESS, Apr. 13, 2011.
http://www.fiercewireless.com/story/entner-what-price-megabyte-wireless-data/2011-04-13">http://www.fiercewireless.com/story/entner-what-price-megabyte-wireless-data/2011-04-13 (visited Oct. 16, 2012)

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Average Revenue Per Text Message, 2005-2008

841

Year

Text Traffic

Average

Text Messaging

Average Revenue

Volume

Messages

Revenues

Per Text Message

Per User Per

Year

2005
81,208,225,767
476
$2,991,666,181
$0.037
2006
158,648,546,798
779
$5,672,984,205
$0.036
2007
362,549,531,172
1,572
$8,976,574,961
$0.025
2008
1,005,144,143,136
4,183
$11,355,095,991
$0.011


271.
Price Metrics for Broadband Data. It is not possible to calculate unit prices for non-
messaging mobile data services (price per MB) using CTIA data because CTIA’s estimate of wireless
data revenues includes revenues from messaging services. However, based on data from Nielsen
Customer Value Metrics, Recon Analytics estimates that the effective price per megabyte of data declined
from $0.47 per megabyte in the third quarter of 2008 to about $0.05 per megabyte in the fourth quarter of
2010, which is roughly an 89 percent decrease.842 Likewise, as shown in Chart 29, Validas estimates that
the price per megabyte of data declined from about $0.11 in 2009 to $0.06 in 2010, and to $0.03 in 2011.

Chart 29

Average Price per Megabyte: Nationwide Providers, Validas, 2009-2011

843


Chart 30


841 CTIA Year-End 2009 Wireless Indices Report, at 115, 198-200; Commission estimates. (A CTIA calculation
uses Reported Subscribers which were not revised in the second half of 2012 when CTIA revised estimated
subscribers for 2009-2011.)
842 Roger Entner, What is the Price of a Megabyte of Wireless Data?, FIERCEWIRELESS, Apr. 13, 2011.
http://www.fiercewireless.com/story/entner-what-price-megabyte-wireless-data/2011-04-13">http://www.fiercewireless.com/story/entner-what-price-megabyte-wireless-data/2011-04-13 (visited Oct. 16, 2012)
843 Validas, 3 Year View of US Wireless Data Consumption: 2009-2011, Prepared for the FCC by Validas.

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Average Price Per Megabyte, Validas, 2009-2011

844

2.

Wholesale Pricing

272.
Resellers and MVNOs purchase minutes at wholesale prices from facilities-based mobile
service providers. Contractual agreements, and therefore wholesale prices, between MVNOs and
resellers depend upon the rates that each MVNO or reseller negotiates with facilities-based providers.
These negotiated rates are generally not publicly available, so it is not possible to track wholesale pricing
in the mobile wireless sector in a comprehensive manner. Many MVNOs that purchase capacity
wholesale operate on prepaid basis. For instance, ARPU data show that the average monthly prepaid
ARPU of the nationwide providers was $3 higher than the monthly ARPU of Tracfone, an MVNO that
uses the networks of the four nationwide providers.845
3.

Intercarrier Roaming Rates and Revenue

273.
Intercarrier roaming rates are set by contractual agreements that are confidential, and
particular rates vary across agreements depending on the terms negotiated by service providers.
However, CTIA data on roaming revenues and roaming minutes of use (MOUs) can be used to derive a
metric for average voice roaming revenue per minute. CTIA reports “outcollect” roaming revenues,
which are the revenues generated by roamers inside the providers’ home coverage areas. 846 We note that

844 Validas, 3 Year View of US Wireless Data Consumption: 2009-2011, Prepared for the FCC by Validas.
845 See Chart 34, which indicates that the average monthly prepaid ARPU is near $20 in the first half of 2012 and the
monthly prepaid ARPU of Tracfone is $16 during the same period. Removing MetroPCS and Leap from the
average yields an average monthly prepaid ARPU near $19 in the first half of 2012.
846CTIA Year-End 2011 Wireless Indices Report, at 101.

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CTIA’s roaming revenue estimates include revenue from both voice and data roaming services, while the
roaming MOU data include traffic from only voice roaming services. As shown in Table 41 below, the
contribution of roaming revenues to total service revenues has declined over time, as has the contribution
of voice roaming traffic to total voice traffic.
274.
We derive an average roaming RPM by dividing reported annual roaming revenues by
reported annual roaming MOUs. This aggregate proxy for intercarrier roaming rates is likely to
somewhat overstate average revenue per minute of voice roaming service because the numerator includes
revenue from both voice and data services, while the denominator includes only voice roaming MOUs.
Without separate data for voice and data roaming revenue and traffic, we do not know the degree to
which this estimate of average voice roaming RPM is overstated.
275.
As shown in Table 41 below, average voice roaming RPM has declined from just over 30
cents per minute in 1999 to less than three cents per minute in 2010 and 2011, and has been roughly
stable for the past seven years. Total annual intercarrier roaming revenues and voice minutes have
generally declined as a percentage of total service revenues and total minutes, respectively, over the past
ten years, except in 2011. In 2011, total annual roaming revenue rose to $3.31 billion from $3.03 billion
in 2010, and total roaming minutes rose from 112.0 billion in 2010 to 138.4 billion in 2011. The growth
over the last decade of networks with near-nationwide coverage has been accompanied by service plans
with larger geographic calling areas, which may have contributed to the general decrease in roaming over
the last decade.

Table 41

Roaming Revenues and Rates, 1999-2011

847

Outcollect Percent Percent of

Voice

Percent of

Average

Roaming

Change

Total

Roaming

Total

Roaming

Revenues

Service

MOUs

MOUs

Revenue

(in $000s)

Revenues

Per Minute

(Blended)
1999 $4,085,417
16.71%
10.2%
13,038,555,635
8.8%
$0.31
2000 $3,882,981
-4.96%
7.4%
20,852,266,390
8.1%
$0.19
2001 $3,752,826
-3.35%
5.7%
27,811,907,410
6.1%
$0.13
2002 $3,895,511
3.80%
5.1%
43,846,470,833
7.1%
$0.09
2003 $3,766,267
-3.32%
4.3%
56,828,973,359
6.8%
$0.07
2004 $4,210,330
11.79%
4.1%
71,440,711,110
6.5%
$0.06
2005 $3,786,332 -10.07%
3.3% 115,008,338,841
7.7%
$0.03
2006 $3,494,294
-7.71%
2.8%
91,991,570,460
5.1%
$0.04
2007 $3,742,015
7.09%
2.7% 107,615,715,912
5.1%
$0.03
2008 $3,739,274
-0.07%
2.5% 121,438,208,469
5.5%
$0.03
2009 $3,061,344
-18.1%
2.3% 121,092,013,905
5.3%
$0.025
2010 $3,026,009
-1.15%
1.9% 111,965,766,175
5.0%
$0.027
2011 $3,314,895
9.55%
1.9% 138,389,805,762
6.0%
$0.024

F.

Revenue and ARPU

276.
Average monthly revenue per user (ARPU) metrics are financial metrics derived by
dividing a revenue figure by an estimate of the number of subscribers that generated that revenue. ARPU
metrics are widely used by Wall Street analysts to evaluate and compare the performance of service
providers. ARPU can be influenced by multiple factors including changes in the number of connections,
changes in the quantity of services purchased, customers switching between services or adding additional

847 CTIA Year-End 2011 Wireless Indices Report at 104.

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services, and changes in the prices of the various services. A given change in ARPU could be caused by
various individual or combined changes in the underlying factors (prices, quantities, and number of
connections) that determine ARPU. Hence, changes in revenue and ARPU are not necessarily reliable
indicators of changes in prices, nor are revenue or ARPU indicators of the degree of competition or
market power.
277.
While both total service revenues and wireless data revenues have been rising
continuously in recent years, voice revenues began to decline in 2009 and continued to decline in 2010
and 2011 (Chart 31, Chart 32 ).848 In addition, while total service revenues have been rising, blended
ARPU has declined continuously since 2008 (Chart 32, Chart 33), with voice ARPU decreasing by more
than data ARPU has increased since 2006.849

Chart 31

Wireless Industry Service Revenues, 2006-2011 (In billions)

850



848 We estimate voice revenues as the residual that remains after subtracting CTIA’s estimate of wireless data
revenues from its estimate of total service revenues.
849 Estimates of blended ARPU, voice ARPU and data ARPU are derived by dividing the respective revenue figures
by CTIA’s estimates of the number of wireless connections. In 2009, CTIA discontinued the practice of reporting a
breakout data series for text messaging service revenues. The estimates of both wireless data revenues and data
ARPU therefore include text messaging service revenues as well as other mobile data service revenues, even though
service providers transmit text messages using a special channel on their voice networks.
850 CTIA Year-End 2011 Wireless Indices Report.

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Chart 32

Total Mobile Wireless Industry Revenues, 2006-2011 (In billions)

851














851 CTIA Year-End 2011 Wireless Indices Report. In 2009, CTIA discontinued the practice of reporting a breakout
data series for text messaging service revenues. The estimates of both wireless data revenues and data ARPU
therefore include text messaging service revenues as well as other mobile data service revenues.

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Chart 33

Monthly ARPU by Type of Service, 2006-2011

852


278.
The trends of declining voice ARPU and rising data ARPU may be the result of several
factors. As discussed in the preceding section, the unit prices for voice, text messaging and wireless data
services have all declined since 2006. Consumers generally respond to lower prices by increasing the
quantity of services they purchase. The net effect of a decrease in price on revenue depends on the size of
the quantity increase relative to the price decrease.853 Changes in ARPU are not necessarily reliable
indicators of pricing changes, because a decrease in the price of wireless services can be accompanied by
a decrease or increase in ARPU depending on how consumer demand changes in response to the price
change and how the other factors changed.
279.
Substitution from voice service to messaging and data services may have contributed to
the decrease in voice revenue and ARPU and the increase in data revenue and ARPU. Many consumers
may consider voice calls and various messaging services to be close substitutes in certain circumstances.

852 CTIA Year-End 2011 Wireless Indices Report; Commission analysis. Total and voice ARPU include roaming
and toll revenues. The ARPU calculations are based on CTIA’s total estimated subscriber connection numbers, as
revised in the second half of 2012. See CTIA Year-End 2011 Wireless Indices Report.
853 This effect is referred to by economists as the price elasticity of demand. If there is an increase in total revenue
when a decrease in price results in a proportionately larger increase in quantity demanded, then demand is
considered to be price elastic. Conversely, if there is a decrease in total revenues when there is a decrease in price
then demand is considered to be price inelastic.

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For instance, since 2005, the price per text message has fallen sharply due to consumers purchasing
messaging bundles, while the per-minute price of voice service has declined at a relatively slow rate.854
As a result, text messaging has become relatively less expensive compared to talking on a mobile phone,
potentially creating an incentive for mobile subscribers to substitute text messaging for voice calls.855
280.
The existence of Internet-based messaging services may also be encouraging consumers
to substitute Internet applications for mobile voice calls and traditional text messaging. These Internet
applications allow subscribers to use their data plans to send and receive messages over the internet
without subscribing to their service provider’s messaging bundles or incurring the per-message fees
charged by service providers for pay-as-you-go text messaging services.856 These include device-specific
services like BlackBerry Messenger (“BBM”) for Blackberry smartphone users, and a number of
downloadable third-party applications such as GroupMe, TextPlus, WhatsApp, Kik and Pinger.857
Analysts predict that these new services will cut into service providers’ text messaging revenues and
profits by encouraging subscribers to bypass their providers’ text messaging offerings.858 In combination
with the recent declines in the price per megabyte of mobile data services, these texting services may be
encouraging subscribers to substitute data services for mobile voice service.
281.
Factors other than pricing changes and the substitution of messaging services for mobile
voice calling may be contributing to the trends of declining voice ARPU and rising data revenue and
ARPU. In particular, data revenue and data ARPU may, in part, be growing due to the growth of
innovative smartphones and application stores that encourage subscribers to increase their use of data
services.859 The increased availability and popularity of new data-only mobile devices, such as laptop
cards, e-readers, and tablets, likewise stimulates demand for wireless data services.
282.
Average monthly ARPU for the postpaid and prepaid customers of the nationwide

854 Twelfth Report, 23 FCC Rcd at 2323-2324 ¶ 202 (noting that the average price per text message declined for the
first time in 2006 after rising continuously since 2002); Roger Entner, What is the Price of a Megabyte of Wireless
Data?
, FIERCEWIRELESS, Apr. 13, 2http://www.fiercewireless.com/story/entner-what-price-megabyte-wireless-data/2011-04-13">011 http://www.fiercewireless.com/story/entner-what-price-megabyte-wireless-
data/2011-04-13 (visited Oct. 16, 2012). As shown in Chart 20, CTIA estimates of minutes of use for voice calls
have been declining annually since 2008. In contrast, it is estimated that the number of text messages that the
average U.S. mobile subscriber sends or receives each month rose to approximately 600 in 2011, up from about 40
in 2005.
855 See Thomas W. Hazlett, The Federal Communication Commission’s Excellent Mobile Competition Adventure,
Working Paper No. 11-46, Mercatus Center, George Mason University, Nov. 2011, at 4. See also Morgan Stanley:
Big Debate ’12 - Will Wireless ARPUs Start Declining? Dec 8, 2011 (stating, “Some of what would be voice
minutes are being replaced by text messages in our view. However, substitution by alternative web-based
communication (Facebook) or communication applications (WhatsApp) may pressure growth of text messaging as
well.”)
856 Jenna Wortham, Free Texts Pose Threat to Carriers, NEW YORK TIMES, Oct. 9, 2011.
http://www.nytimes.com/2011/10/10/technology/paying-to-text-is-becoming-passe-companies-fret.html?pagewanted=all">http://www.nytimes.com/2011/10/10/technology/paying-to-text-is-becoming-passe-companies-
fret.html?pagewanted=all (visited Oct. 16, 2012).
857 Jenna Wortham, Free Texts Pose Threat to Carriers, NEW YORK TIMES, Oct. 9, 2011.
http://www.nytimes.com/2011/10/10/technology/paying-to-text-is-becoming-passe-companies-fret.html?pagewanted=all">http://www.nytimes.com/2011/10/10/technology/paying-to-text-is-becoming-passe-companies-
fret.html?pagewanted=all (visited Oct. 16, 2012).
858 Jenna Wortham, Free Texts Pose Threat to Carriers, NEW YORK TIMES, Oct. 9, 2011.
http://www.nytimes.com/2011/10/10/technology/paying-to-text-is-becoming-passe-companies-fret.html?pagewanted=all">http://www.nytimes.com/2011/10/10/technology/paying-to-text-is-becoming-passe-companies-
fret.html?pagewanted=all (visited Oct. 16, 2012).
859 Jenna Wortham, Free Texts Pose Threat to Carriers, NEW YORK TIMES, Oct. 9, 2011.
http://www.nytimes.com/2011/10/10/technology/paying-to-text-is-becoming-passe-companies-fret.html?pagewanted=all">http://www.nytimes.com/2011/10/10/technology/paying-to-text-is-becoming-passe-companies-
fret.html?pagewanted=all (visited Oct. 16, 2012) (quoting a Verizon spokesperson as indicating that “the company
views social messaging as being complementary to other features on the phone,” and further that “from a business
perspective, customers still need a data plan to connect to a device.”).

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providers, Leap, and MetroPCS are displayed in Chart 34. The chart also displays the monthly ARPU of
Tracfone, which operates entirely on a prepaid basis. While the average monthly postpaid ARPU is near
$60 in the first half of 2012, the average monthly prepaid ARPU is near $20. The monthly prepaid ARPU
of Tracfone is $16 during the same period.

Chart 34

Monthly ARPU, Postpaid and Prepaid, 2010-2012

860

283.
The growth in data revenue as a percentage of total revenue for the individual four
nationwide service providers is shown in Chart 35. While data revenues have been growing at all four
providers, data continues to account for a larger percentage of total revenue at Verizon Wireless and
AT&T. According to one analyst, this difference reflects the higher smartphone penetration at AT&T and
Verizon Wireless.861







860 Data comes from company reports and Bank of America Merrill Lynch. Postpaid ARPU is an average of the
postpaid ARPU of the nationwide providers. Prepaid ARPU is an average of the prepaid ARPU of the nationwide
providers plus Leap and MetroPCS.
861 Torch Passes from Voice to Data, at 24.

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Chart 35

Wireless Data Revenue as a Percentage of Total Revenue, 2006-2011

862
Source: Bernstein Research

G.

Accounting-Based Measures of Profitability

284.
Profitability indicators differ from the pricing indicators and revenue data (for example,
ARPU) discussed in preceding sections of this Report in that they account for certain elements of firms’
costs. These accounting-based indicators of profitability are not estimates of economic profit,863 and
neither accounting nor economic profits are considered reliable estimators of market power.864
Accounting-based measures of mobile wireless industry profitability are mainly used by Wall Street
financial analysts to compare the market value and financial performance of different service providers
for investors.865 The differences across providers in the various measures of accounting profits discussed
below may reflect many underlying factors including product differentiation across providers, differences
in profitability across product segments, different network designs and capabilities, merger and
acquisition costs, different cost structures, efficiencies of size, and the degree of competitive rivalry.

862 Sanford Bernstein Research.
863 Economic profit is defined as revenue minus opportunity costs. A main distinction between economic and
accounting profits is the former accounts for opportunity costs. See Modern Industrial Organization, at 247.
864 See Jonathan B. Baker and Timothy Bresnahan, “Economic Evidence in Antitrust: Defining Markets and
Measuring Market Power” in Handbook of Antitrust Economics, ed. Paolo Buccirossi, MIT Press, 2008.
865 See, e.g., Bank of America Merrill Lynch, Wireless pricing: Verizon and Swisscom shake it up, June 18, 2012;
Bernstein Research, U.S. Telecommunications: If This Is a Duopoly, Why Aren’t the Duopolists Making More
Money?
, March 7, 2012; UBS Investment Research, US Wireless 411 4Q11, March 7, 2012.

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285.
Earnings Before Interest and Taxes (EBIT). EBIT is the accounting profit of a company
before interest expenses and corporate taxes are deducted.866 EBIT deducts from revenue the cost of
equipment sold to users (e.g. the price paid by a provider for the handsets that it sells to consumers),
service costs (e.g. network interconnection, roaming, and long-distance costs), selling, general, and
administrative costs, but it does not deduct costs such as interest payments on debt and corporate income
taxes. EBIT has the advantages of being a general indicator of the profits of mobile wireless segments
and it deducts operating costs that would also be deducted in more detailed profitability estimates.
However, as interest payments on debt and corporate income taxes are generally recurrent cash flow
obligations, some experts argue that these measures may not always be good estimates of operating cash
flow.867 Federal and State corporate income taxes can be over one-third of pre-tax income and they are
deducted in most profit formulas.868 Further, EBIT data are sensitive to accounting practices for
depreciation and mergers.
286.
Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA). EBITDA
equals accounting profits before deducting interest expenses, corporate income taxes, depreciation, and
amortization.869 Like EBIT, EBITDA does not account for cash flow expenses such as interest and taxes.
EBITDA differs from EBIT in that EBITDA does not account for depreciation and amortization.
However, EBITDA also does not account for capital expenditures which can be substantial and vary
significantly across service providers.870 Hence, differences in EBITDA across providers will be partly
explained by differences in capital expenditures across service providers.
287.
EBITDA minus Capital Expenditures (EBITDA minus CAPEX). EBITDA minus CAPEX
equals EBITDA, discussed above, less capital expenditures. EBITDA minus CAPEX incorporates capital
expenditures into the profitability measure, providing a rough approximation of free cash flow. 871
Although it is a better approximation of cash flow than EBITDA because it deducts capital expenditures,

866 See A Dictionary of Finance and Banking (2nd ed.), Oxford University Press, 1997, at 112 (defining EBIT as
“The profit of a company as shown on the profit and loss account, before deducting the variables of interest and tax.
This figure, which is used in calculating many ratios, enables better comparisons to be made with other
companies”).
867 See, e.g., B. Tunick, In the GAAP/EBITDA World Nothing’s Easy, Investment Dealer’s Digest, Sept. 16, 2002,
Vol. 68, Issue 35, at 30; M. Fridson, EBITDA Is Not King, Journal of Financial Statement Analysis, Spring 1998,
Vol. 3, Issue 3, at 59; Let’s Agree to Agree on What EBITDA Means, Bank Loan Report, Vol. 23, No. 26, June 30,
2008. See D. Shook, EBITDA’s Foggy Bottom Line, BusinessWeek Online, Jan. 14, 2003.
http://www.businessweek.com/stories/2003-01-13/ebitdas-foggy-bottom-line">http://www.businessweek.com/stories/2003-01-13/ebitdas-foggy-bottom-line (visited Oct. 16, 2012) available from
the database Business Source Premier, (stating that if a firm has interest payments equal to 20 percent of EBITDA
then EBITDA will ignore one of the firm’s largest expenses).
868 The statutory federal corporation income tax is 35 percent for corporate income over $18,333,333. See IRS,
Publication 542, Corporations, at 17, Rev. Feb. 2006, available athttp://www.irs.gov/pub/irs-pdf/p542.pdf"> http://www.irs.gov/pub/irs-pdf/p542.pdf (visited
Oct. 16, 2012).
869 The definition of EBITDA is an extension of EBIT, also excluding Depreciation and Amortization. EBITDA is
readily calculated from a provider’s SEC 10-K form even if the provider does not report EBITDA.
870 See Chart 11, Section IV.B.2, Investment, infra.
871 See Donald E. Kieso, et al., Intermediate Accounting (11th ed.), John Wiley & Sons, Inc., 2004, at 197 (Defining
free cash flow as net cash provided by operating activities less capital expenditures less dividends. Some companies
do not subtract dividends because they believe these expenditures to be discretionary. Net cash provided by
operating activities adjusts net income for depreciation and amortization, but not for interest expenses and tax
expenses. Free cash flow is interpreted as the amount of discretionary cash flow a company has for purchasing
additional investments, retiring its debt, purchasing treasury stock, or adding to its liquidity.) See, also, Tom
Copeland, et al., Valuation: Measuring and Managing the Value of Companies (2nd ed.), John Wiley & Sons, 1995,
at 167 (stating that free cash flow is the total after-tax cash flow generated by the company and available to all
providers of the company’s capital, both creditors and shareholders).

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we note that capital expenditures may differ from estimates of annual capital costs that are used in
estimates of economic profits.872 Also, EBITDA minus CAPEX does not account for purchases of
spectrum licenses, a significant expense of mobile wireless providers. Although EBITDA minus CAPEX
accounts for capital expenditures, standard capital accounting practices normally depreciate capital
expenditures over time to represent their current market value and earning life.873 Furthermore, as
discussed in Section IV.B.2, in the context of capital expenditures, deducting capital expenditures from
EBITDA may hinder comparisons across providers due to the lack of synchronization in the timing of
capital expenditures of different service providers.
288.
Earnings per Subscriber. EBITDA per subscriber data for selected service providers are
presented in Chart 36. As shown in Chart 36, in 2011, EBITDA per subscriber ranged from a low of
$4.11 (Sprint Nextel) to a high of $19.66 (Verizon Wireless). The EBITDA per subscriber of Sprint
Nextel has declined significantly over the past several years. EBITDA minus CAPEX per subscriber data
for selected service providers are presented in Table 42. Between 2006 and 2011, the EBITDA minus
CAPEX per subscriber for Sprint Nextel declined each year. The EBITDA minus CAPEX per subscriber
of AT&T and Verizon Wireless have decreased relative to 2009, but are above the levels of Sprint Nextel
and T-Mobile. ARPU, EBITDA, and EBITDA minus CAPEX are presented together in Chart 37.
EBITDA minus CAPEX per subscriber data for selected service providers are presented in Table 42.
Between 2006 and 2011, the EBITDA minus CAPEX per subscriber for Sprint Nextel declined each year.
The EBITDA minus CAPEX per subscriber of AT&T and Verizon Wireless have decreased relative to
2009, but are above the levels of Sprint Nextel and T-Mobile. ARPU, EBITDA, and EBITDA minus
CAPEX are presented together in Chart 37.

Chart 36

EBITDA per Customer (Selected Providers), 2006-2011

874


872 See also Modern Industrial Organization, at 247.
873 The New Palgrave: A Dictionary of Economics, Second Edition, 2008, edited by S. Durlauf and L. Blume.
874 UBS, US Wireless 411 Reports, 2006 – 2011.

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Table 42

EBITDA minus CAPEX per Customer per Month (Selected Providers), 2006-2011

875
Provider
2006
2007
2008
2009
2010
2011
Verizon Wireless
$11.77
$13.83
$16.52
$16.34
$14.77
$13.79
AT&T
$5.91
$14.00
$12.38
$14.47
$11.67
$9.98
Sprint Nextel
$9.67
$7.84
$8.52
$7.03
$5.30
$2.95
T-Mobile
$7.37
$8.15
$6.61
$5.55
$6.57
$6.40

Chart 37

ARPU, EBITDA, and EBITDA minus CAPEX of Nationwide Providers, 2011

876


289.
EBITDA Margin. EBITDA as a percentage of service revenue, also called EBITDA
margin, appears in Chart 38. In 2011, the difference between the provider with the highest EBITDA
margin (Verizon Wireless) and the provider with the lowest (Sprint Nextel) was 32.7 percent. Verizon
Wireless has remained above 40 percent since 2006. AT&T’s EBITDA margin has decreased after 2009,
dropping to 28.7 percent in 2011, while T-Mobile’s EBITDA margin increased to 30.2 percent in 2011.
The graph of EBITDA per subscriber versus net adds of the four nationwide service providers (Chart 39),
shows that the EBITDA per subscriber and net adds of T-Mobile have been decreasing in recent years,
and the EBITDA per subscriber of Sprint has been decreasing while its net adds have been increasing.

875 UBS, US Wireless 411 Reports, 2006 – 2011.
876 Id.

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Chart 38

Reported EBITDA Margins (Selected Providers), 2002-2011

877
Source: UBS














877 UBS, US Wireless 411 Reports, 2006 – 2011.

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Chart 39

Subscriber Additions vs. EBITDA Per Subscriber, 2008-2011



H.

Network Performance

290.
The Commission has recognized the importance of accurate and timely data on mobile
network performance and coverage in informing consumer decisions, Commission policy, and service
provider network investment decisions. The National Broadband Plan recommends that the Commission
develop broadband performance testing standards for mobile services, expand on current initiatives to
collect user-generated data on network performance and coverage, and continue to work with
measurement companies, application designers, device manufactures, and service providers to create an
online database to inform the decisions consumers make for their mobile broadband services.878 To this
end, in March 2010, the Commission released an iPhone and Android consumer broadband test
application that collects and reports data rates, latency, and user location when initiated on the handset.879
In June 2010, the Commission released a Public Notice seeking comment on the measurement of mobile
broadband network performance and coverage, including the best metrics and data collection methods to

878 Connecting America: The National Broadband Plan, at 47.
879 The mobile application is available for download from the iPhone or Android App store. As of May 19, 2010,
about 50,000 unique users had installed the Commission’s mobile application, and many unique users have taken the
test multiple times. The Commission also released a fixed consumer broadband test that collects street address and
broadband performance data. The fixed application is accessible athttp://www.broadband.gov/qualitytest"> www.broadband.gov/qualitytest (visited Oct. 16,
2012).

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measure the performance of mobile broadband network.880 Additionally, in October 2010, the
Commission released a Request for Information soliciting information from entities that can provide
mobile broadband performance measurement and mapping services, or data that represent the
performance of mobile broadband networks across the United States.881
291.
In December 2010, as part of its rules on Internet openness, the Commission adopted a
transparency rule for both fixed and mobile broadband Internet providers under which they are required to
“publicly disclose accurate information regarding the network management practices, performance, and
commercial terms of its broadband Internet access services sufficient for consumers to make informed
choices regarding use of such services.”882 In providing guidance regarding effective disclosure models,
the order lists types of information, some or all of which the Commission expects would be included in an
effective disclosure.883 Included in this list are “[a] general description of the service, including the
service technology, expected and actual access speed and latency, and the suitability of the service for
real-time applications.”884 In February 2011, the Commission adopted the Modernizing the FCC Form
477 Data Program NPRM to modernize and streamline the data collection and utilization to better support
informed policymaking, promoting competition and protecting consumers.885 Also as part of our
Consumer Empowerment Agenda, the Commission released the second Measuring Broadband America
report in July 2012, a comprehensive nationwide study of actual home broadband network performance
provided by fixed broadband service providers cable, DSL, and fiber in the United States.886
292.
On September 21, 2012, Commission staff held a public meeting to discuss the initiation
of a new program to develop consistent information on industry wide mobile broadband service
performance in the United States.887 In particular, Commission staff discussed with industry
representatives and other interested parties the technical methods for performance testing of mobile
broadband Internet service, methodological approaches to remotely acquiring and analyzing such data,
and other methodological considerations for the testing of mobile broadband performance.888Currently,
obtaining accurately measured data on the overall quality of a mobile wireless service provider’s network
presents certain challenges. For instance, there is neither a standardized industry-wide definition of

880 See “Comment Sought on Measurement of Mobile Broadband Network Performance and Coverage,” CG Docket
No. 09-158, CC Docket No. 98-170, WC Docket No. 04-36, Public Notice, DA 10-988 (rel. June 1, 2010).
881 See “Request for Information: Measurement and Reporting of Mobile Broadband Performance and Coverage,”
RFI 10082010BROADBAND, Request for Information (rel. Oct. 8, 2010).
882 Open Internet Order at ¶ 54.
883 See Open Internet Order at ¶ 56.
884 Id.
885 See “Modernizing the FCC Form 477 Data Program” Notice of Proposed Rulemaking,
http://www.fcc.gov/document/modernizing-fcc-form-477-data-program-et-al">http://www.fcc.gov/document/modernizing-fcc-form-477-data-program-et-al (visited Oct. 16, 2012)
886 See “Measuring Broadband America - A Report on Consumer Wireline Broadband Performance in the U.S
(released July 2012).,http://www.fcc.gov/document/measuring-broadband-america-report-consumer-broadband-performance-us">” http://www.fcc.gov/document/measuring-broadband-america-report-consumer-broadband-
performance-us (visited Oct. 26, 2012).
887 See Mobile Broadband Services Testing and Measurement Program,http://www.fcc.gov/events/mobile-broadband-services-testing-and-measurement-program;%20%20(visited"> http://www.fcc.gov/events/mobile-
broadband-services-testing-and-measurement-program; (visited Nov. 30, 2012); “FCC Announces ‘Measuring
Mobile America’ Program to Test Mobile Broaedband Performance” News Release, Sept. 5, 2012,
http://transition.fcc.gov/Daily_Releases/Daily_Business/2012/db0905/DOC-316109A1.pdf">http://transition.fcc.gov/Daily_Releases/Daily_Business/2012/db0905/DOC-316109A1.pdf (visited Nov. 30,
2012);“FCC to Launch Mobile Broadband Services Testing and Measurement Program” CG Docket No. 09-158,
Public Noticehttp://transition.fcc.gov/Daily_Releases/Daily_Business/2012/db0904/DA-12-1442A1.pdf%20%20(visited">, http://transition.fcc.gov/Daily_Releases/Daily_Business/2012/db0904/DA-12-1442A1.pdf (visited
Nov. 2012).
888 See “FCC to Launch Mobile Broadband Services Testing and Measurement Program” CG Docket No. 09-158,
Public Noticehttp://transition.fcc.gov/Daily_Releases/Daily_Business/2012/db0904/DA-12-1442A1.pdf">, http://transition.fcc.gov/Daily_Releases/Daily_Business/2012/db0904/DA-12-1442A1.pdf. (visited
Nov. 30, 2012).

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network quality nor a definitive method to measure it. For voice services, network quality metrics include
the strength and coverage of the signal, voice call quality,889 and metrics that measure the reliability of the
connection such as dropped or blocked calls. For broadband data services, network quality metrics
include downlink and uplink data speeds and latencies as well as metrics that measure the reliability of
the data connection such as the connectivity and maintainability of successful data sessions.
293.
In addition, the overall mobile broadband network service quality experienced by
consumers may vary greatly with a number of real world factors such as the service provider’s received
signal quality, cell traffic loading, and network capacity in different locations as well as the capability of
consumers’ devices.890 Moreover, from the customer’s perspective, overall network performance is the
product of more than network quality alone and often reflects differences in device capability as well.891
For data services, network quality as perceived by the customer may also be use-case or application-
dependent (e.g., a consumer who solely uses e-mail may view the quality of the network differently than
one who streams video regularly). Furthermore, consumers may place more weight on one particular
aspect of network quality than another – such as coverage or peak data speeds – when choosing their
mobile wireless services.892
294.
Despite these challenges, a variety of organizations have conducted mobile wireless
broadband network performance studies that make cross-provider comparisons. The results of these tests
are informative, as described below, though these results usually are limited in their scope.893 The

889 Voice call quality is commonly measured using a subjective metric known as the Mean Opinion Score (MOS).
MOS testing has several variations but generally users rate the clarity and overall quality of the voice call on a scale
from 1 to 5, with 5 being the best. Then scores of several subjects are averaged to give an overall MOS score for a
particular voice call. Since this kind of testing is impossible to do outside a controlled laboratory environment,
various companies have attempted to develop objective algorithms that give scores that correlate well to actual
subjective MOS scores. There are several standardized algorithms for doing this as well as several proprietary ones.
890 For example, the received signal quality is dependent on the service provider’s deployed cell site density,
low/high frequency radio wave propagation losses, user locations, indoor obstructions and outdoor foliage or clutter,
weather, inter-cell interference conditions, and wireless network optimization parameters. The cell traffic loading or
demand is dependent on the overall number of concurrent active mobile broadband users sharing the same cell,
which in turn depends on user locations, the day of the week, and the time of the day. The capacity of a provider’s
wireless network is dependent on the deployed mobile wireless technology, sites and equipment, available
bandwidth, and enhanced backhaul connections.
891 The capability of consumer devices (e.g. smartphones, tablets, USB dongles, and laptops) could result in users
experiencing different data speeds on the same mobile wireless broadband network. Even differing capabilities
within each device category, such as smartphone processing power and memory, could result in better user
experiences on 4G networks.
892 See Section VI.C, Consumer Satisfaction with Service Providers, infra, for a discussion of overall consumer
satisfaction with their mobile wireless services.
893 See RootMetrics Data Network Performance Study; PCMag Mobile 3G/4G Network Performance Study;
PCWorld/Novarum 3G/4G Network Performance Study. These three studies were conducted during different time
periods, in different groups of cities, using different devices and different methodologies to obtain their results. For
example, the PCWorld/Novarum 3G/4G Network Performance Study, conducted laptop and smartphone tests during
January 2011 and February 2011 at 20 locations in the center of each city of 13 U.S. cities. In comparison, the
PCMag Mobile 3G/4G Network Performance Study, published in June 2011, performed its tests using 16
smartphones covering more than 6,000 miles across 21 cities. Finally, the RootMetrics Data Network Performance
Study
provides consumers with its RootScore drive test reports for a large number of cities. All studies tested data
speeds on 4G networks when available, and fall back to 3G networks when 4G signals are insufficient. The studies
also used different payload sizes for their tests, which is another variable that can affect network performance test
results. Data from these studies, along with descriptions of the different parameters and methodologies used, is
presented in Appendix C. Overall, network performance results varied among the studies – likely due in part to the
factors discussed above – with certain providers scoring both better and worse than others in particular markets
according to different metrics from the studies.

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currently available studies also are not intended to provide a comprehensive measure of industry-wide
performance. In addition, studies often utilize different parameters and testing methodologies, making it
difficult to draw conclusions related to network performance across these studies.
295.
Network Performance Data and Studies. Service providers often publish network quality
information, such as coverage maps and data throughput ranges, which are based on sampling
measurements of their network performance. This network quality information is typically based on data
gathered on the actual network performance, which are obtained in several ways, including through
consumer surveys, network drive tests, fixed probes, internal network level assessments, and the use of
crowd-sourcing smartphone applications.
296.
J.D. Power publishes a consumer survey study twice a year that measures wireless call
quality performance in terms of the number of problems per 100 calls (PP100), where a lower score
reflects fewer problems and higher wireless call quality performance.894 The 2011 Wireless Call Quality
Study – Volume 1
, conducted during the second half of 2010, found the fraction of wireless calls in indoor
environments increased to an average of 56 percent which may have contributed to a drop in call quality
from 13 PP100 to 14 PP100 scores. The report found that Verizon Wireless ranked highest in most
regions of the country and U.S. Cellular ranked the highest in the North Central region.895 In the 2011
Wireless Call Quality Study – Volume 2
, conducted during the first half of 2011, J.D. Power changed the
overall network performance study to include voice calling, text messaging and data connections where
the PP100 scores are now based on ten problem areas of network connection problems. The report found
that Verizon Wireless ranked highest in most regions of the country with the new PP100 scores except the
North Central region where U.S. Cellular ranked highest.896
297.
The 2012 Wireless Call Quality Study – Volume 1, conducted during the second half of
2011, found that data-related issues such as mobile Web and email problems had increased overall since
early 2011. Problems of excessively slow mobile Web download speeds and email connection errors had
increased from an average of 19 PP100 in the first half of 2011 to an average of 21 PP100 in the second
half of 2011. However, the latest report also found that other network quality areas such as calling or text
messaging had remained steady.897 The overall average industry network performance quality survey for
the six study regions degraded slightly in the second half of 2011 from the first half of 2011.898
298.
The Nielsen Company’s national service quality benchmark program provides a detailed
snapshot of mobile wireless network performance and reliability using its fleet of 35 test vehicles and
state-of-the-art mobile wireless network testing equipment. It performs extensive drive tests annually in
264 US markets and provides a detailed voice and data network quality test report. An update of
Nielsen’s 2011 national wireless data network performance report, released in March 2012, finds that
mobile wireless broadband coverage is expanding across the top 100 US markets with new deployments
of LTE and HSPA+.899 The small-file (0.2 MB) industry median download data speed increased from
0.398 Mbps with 98.2 percent reliability in 2009 to 0.523 Mbps with 98.3 percent reliability in 2011. The
large-file (4 MB) industry median download data speed increased from 0.632 Mbps with 94.3 percent

894 The study measures wireless call quality based on seven customer-reported problem areas that impact overall
carrier performance: dropped calls; static/interference; failed connection on first try; voice distortion; echoes; no
immediate voicemail notification; and no immediate text message notification.
895 2011 Wireless Call Quality Study – Volume 1, at 1-2.
896 2011 Wireless Call Quality Study – Volume 2, at 1-2.
897 2012 Wireless Call Quality Study – Volume 1, at 1-2.
898 Id. 12, 13, and 14.
899 See Nielson’s 2011 National Wireless Data Network Performance Update, March 2012 at 3-5, 8.

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reliability in 2009 to 1.693 Mbps with 95.2 percent reliability in 2011.900
299.
Nielsen also evaluated the availability of mobile wireless broadband networks that have
at least 2 Mbps and at least 4 Mbps average download data speeds in the top 100 markets. It found that in
nine of the top 100 markets, there is no mobile wireless broadband network capable of 4 Mbps average
download data speed, in 34 markets there is only one network, in 44 markets there are two networks, and
in 13 markets there are three networks. For wireless broadband networks capable of 2 Mbps average
download data speed in the top 100 markets, in six of the top 100 markets there is only one mobile
wireless network available, in 28 markets there are two networks, in 25 markets there are three networks,
in 36 markets there are four networks, and in five markets there are five networks. It also found that there
are at least two mobile wireless broadband networks capable of offering 90 percent reliability and 95
percent large file download reliability in 100 and in 94 of the top 100 markets, respectively. 901

I.

Network Coverage by Income Level

300.
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. The analysis is based on
mobile wireless and mobile broadband coverage data reported by Mosaik 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 2006-2010 (ACS).902 Chart 40 below shows that the average number of
mobile wireless providers increased from 5.38 in census tracts with median household income less than
$25,000 to 5.81 in census tracts with median household income of more than $150,000, an increase of
0.43 service providers. The average number of mobile broadband providers increased from 4.85 in
census tracts with median household income less than $25,000 to 5.47 in census tracts with median
household income of more than $150,000, an increase of 0.62 service providers. Compared to the results
reported in the Fifteenth Report, the average number of mobile broadband providers has increased by
more than 1.3 since August 2010 in all income groups (see Chart 41).903











900 See Nielson’s 2011 National Wireless Data Network Performance Update, March 2012 at 11, 12.
901 See Nielson’s 2011 National Wireless Data Network Performance Update, March 2012 at 16, 21.
902 Data on numbers of mobile wireless providers and mobile broadband providers are based on Mosaik (formerly
American Roamer) database, January 2012. Data on median household income are based on United States Census
Bureau’s American Community Survey 2006-2010 (ACS). The analysis is done on a census tract, rather than
census block, basis because the smallest geographic area for which medium 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.
903 See Fifteenth Report, 26 FCC Rcd at 9745 Chart 5 for the average number of mobile broadband providers by
median household income levels in August 2010.

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Chart 40

Average Numbers of Mobile Wireless Providers and Mobile Broadband Providers in Census Tracts

by Median Household Income in January 2012


Chart 41

Average Numbers of Mobile Broadband Providers in August 2010 and January 2012 in Census

Tracts by Median Household Income






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VI.

MOBILE WIRELESS SERVICES: CONSUMER BEHAVIOR

301.
Consumer responses to changes in prices and service quality are an important aspect of
competition in the mobile wireless services industry. In well-functioning markets firms compete for
customers who are readily able to switch their purchases between competitors. Consumers who are well-
informed about price and non-price factors are better able to choose the service providers that offer the
services and prices that best suit the consumers’ tastes and budgets. There are many purchase decision
factors on which consumers base their choice of a service provider, including price, service plans,
network quality, devices and mobile data services. There are also factors that affect when or if consumers
change providers including how satisfied consumers are with their existing service providers, new
offerings by competing service providers, the launch of innovative devices and services, and switching
costs. As discussed in the Service Provider Conduct section,904 mobile wireless service providers
compete on many dimensions to retain their current customers and to attract customers away from
competitors. In the Industry Performance and Outcomes section, we presented data showing that there
were an estimated 15.5 to 20.6 million total net additions in 2011, and that the annual average industry
churn rate is in excess of 24 percent. 905 Below, we discuss factors in consumers’ decisions to choose a
service provider and to switch between service providers, consumer access to information on mobile
wireless services, and surveys of consumer satisfaction with service providers.

A.

Consumer Decision Factors in Choosing a Service Provider

302.
Purchase Decision Factors. The reasons consumers choose a service provider or switch
between providers vary. According to a quarterly study by Nielsen, price has been the most important
purchase decision factor for consumers choosing a service provider since at least 2007, with 25.7 percent
of customers in the first half of 2011 indicating that they picked their service provider based on price, an
increase from 17.6 percent of consumers in 2008.906 After price, the next most common purchase
decision factor customers give for choosing a service provider is family plans, with just under 15 percent
of customers in the first half 2011 indicating that they chose a service provider based on family plans. In
the first half of 2011, 8.1 percent choose a service provider based on network quality, the third most
important purchase decision factor.907 Following these top-three factors are free/unlimited in-network
calling, billing/payment options/ credit, reputation/recommendation, previous experience with operator,
other, customer service, mobile data services, specific phone, and bundling of mobile phone services with
other services. The availability of specific phone was the second least common purchase decision factor,
at 4.7 percent. The importance of mobile data service as a purchase decision factor has more than
doubled since 2008, with 4.9 percent of customers choosing a service provider based on mobile data
service in the first half of 2011.
303.
The importance of price as a purchase decision factor is reflected in a Consumer Reports
article setting forth five ways consumers can save money on their mobile phone bills, including ways to
save money on data services. Consumer Reports suggests that wireless users not only carefully compare
service plans, but also consider using a low-priced service provider in order to save money on data
services.908 The organization urges wireless consumers to bypass their service provider and use third-

904 See Section IV, Mobile Wireless Services: Provider Conduct, supra.
905 See Section V, Mobile Wireless Services: Performance and Outcomes, supra.
906 Roger Enter, “Price, data services are an increasingly important part of choosing wireless carrier,” Fierce
Wireless, at 1. Aug. 1, 2011.http://www.fiercewireless.com/story/entner-price-data-services-are-increasingly-important-part-choosing-wireles/2011-08-01"> http://www.fiercewireless.com/story/entner-price-data-services-are-increasingly-
important-part-choosing-wireles/2011-08-01 (visited Oct. 16, 2012).
907 Id.
908 Consumer Reports.org, “How to cut your phone bill, Five tips to help you save money,” Mar. 2012.
http://www.consumerreports.org/cro/2012/03/how-to-cut-your-phone-bill/index.htm">http://www.consumerreports.org/cro/2012/03/how-to-cut-your-phone-bill/index.htm (visited Oct. 16, 2012).

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party services, such as Heywire and TigerText, for texting and Skype Mobile for voice calls.909 In
addition, Consumer Reports recommends that consumers use the rising number of Wi-Fi networks as a
way of keeping data costs down.910 Consumer Reports also suggests that consumers consider alternatives
to buying their phones from operator stores and that they investigate employee discounts.
304.
Nielsen’s finding that network quality and mobile data services are important purchase
decision factors is reflected in other studies and is consistent with the rising penetration rate of
smartphones. A 2012 study found that heavy users of advanced mobile services are more likely to switch
service providers than other mobile customers.911 In this study of 16,000 people in 17 countries, more
than 40 percent were considered heavy users of advanced services and more than half of the group of
heavy users had recently switched mobile service. Further, some 40 percent indicated that they were
prepared to switch providers in the following year.912 The study found that most customers rank network
coverage and voice quality as the top criteria for staying with an operator, and that heavy users of
advanced services also rank mobile broadband quality as high as network coverage and voice quality in
determining whether to switch to a different provider. According to the study, customers rated high-
speed mobile broadband as the most important service over the next few years. The study found that the
number of heavy users of advanced services is rapidly increasing, with the category having grown by 34
percent in mature markets during 2011.913 More than half of the users in this group, the study found, are
below the age of 35.914
305.
Another study found that after price, the main reason smartphone owners switch service
providers is to get better data coverage and download speeds. In the sample, 40 percent indicated that
they switched providers in the past year to get better data speed and coverage compared with 26 percent
who said they switched to get better voice coverage.915 The study was composed of more than 900 U.S.
smartphone users and more than 1,000 British smartphone users. Eighty-six percent said that when their
mobile connection is poor, they care more about seeing standard definition video rather than seeing high
definition video.916
306.
Switching Decision Factors. When mobile wireless customers wish to switch service
providers before they had previously expected to upgrade their service, they may incur some switching
costs. In the context of mobile wireless services, switching costs are costs that a consumer who switches
service providers incurs when pasthttp://en.wikipedia.org/wiki/Investment"> investment specific to her current provider must be duplicated for a

909 Id.
910 Id.
911 Tammy Parker, “Nokia Siemens: Study shows mobile broadband quality is key to customer churn,” Fierce
broadband Wireless, at 1 (Feb. 15, 2012), available athttp://www.fiercebroadbandwireless.com/story/nokia-siemens-study-shows-mobile-broadband-quality-key-customer-churn/2012-02-15"> http://www.fiercebroadbandwireless.com/story/nokia-
siemens-study-shows-mobile-broadband-quality-key-customer-churn/2012-02-15 (visited Oct. 16, 2012). The study
classified respondents as "heavy users of advanced services" if they used at least two of the following services once
a week: send/receive emails, chat, browse the Web, download or upload data files, play online games, use
personalized applications, mobile payment, mobile TV, location based services and/or GPS navigation and video
calling.
912 Id.
913 Id.
914 Id.
915 Sue Marek, “Study: Data speed is more critical than voice coverage for smartphone users,” Fierce Wireless, at 1.
July 13, 2012.http://www.fiercewireless.com/story/study-data-speed-more-critical-voice-coverage-smartphone-users/2012-07-13?utm_medium=nl&utm_source=internal"> http://www.fiercewireless.com/story/study-data-speed-more-critical-voice-coverage-smartphone-
users/2012-07-13?utm_medium=nl&utm_source=internal (visited Oct. 16, 2012).
916 Id. at 2.

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new provider.917 There are several potential sources of switching costs in the mobile wireless industry:918
First, there may be costs, such as research time, associated with acquiring information about the offerings
of various service providers. Second, mobile wireless customers that have entered into multi-month
service subscriptions with their service providers may be liable for early termination fees (ETFs) if they
choose to prematurely terminate their contracts. Third, there are the costs associated with potentially
obtaining a new handset when changing service providers. Whether a consumer obtains a new handset
when switching providers may depend on the age of her current handset, the air interface technologies
and spectrum of her current and new service providers,919 and if she is able to unlock her current
handset.920 Finally, there may be non-economic switching costs such as brand loyalty.921
307.
Churn Data on Switching. Churn data measure the percentage of customers who switch
providers in a given time period are presented in Section 0, Connection Churn. The annual average

917 Switching costs generally are defined as “a consumer’s desire for compatibility between his current purchase and
a previous investment.” See Klemperer, P., 1995, “Competition when Consumers have Switching Costs: an
Overview with Applications to Industrial Organization, Macroeconomics and International Trade,” Review of
Economic Studies, 62, 515-539. Switching costs are not unique to the mobile wireless industry, but are also present
in the banking, automobile insurance industry and the retail electric industry among others. Various studies have
been carried out to attempt to estimate switching costs. See, e.g., Shy, O. 2002, “A quick-and-easy-method for
estimating switching costs,” International Journal of Industrial Organization, 20, 71-87; Kim, M., Kliger, D., and
Vale, B., 2003, “Estimating switching costs: the case for banking”; The Journal of Financial Intermediation, 12, 25-
56; Israel, M. A., 2005; “Tenure-dependence in consumer-firm relationships: an empirical analysis of consumer
departures from automobile insurance firms,” RAND Journal of Economics, 36, 165-192; Waterson, M., 2003; “The
role of consumers in competition and competition policy,” International Journal of Industrial Organization, 21, 129-
150. Farrell and Klemperer (2007) provide an extensive review and summary of the literature on switching costs.
See Farrell, J and Klemperer, P., 2007, Coordination and Lock-In: Competition with Switching Costs and Network
Effects,” Handbook of Industrial Organization, Volume 3, Elsevier.
918 As of October 2010, consumers can transfer their telephone numbers when they switch providers. Under the
Commission’s rules and orders, wireless service providers were required to be LNP-capable by May 24, 2004. 47
C.F.R. § 52.31(a). Prior to the Commission’s actions, the switching cost was significant. A recent study found that
the implementation of LNP enhanced competition in the wireless telecommunication industry, where the
competitive effects were more pronounced for higher volume users. Park, M., 2009, “The Economic Impact of
Wireless Number Portability,” Working Paper, University of Minnesota. Using data from EconOne and
MyRatePlan.com, Park found that for the plans with fewest minutes, average prices decreased by $0.19 per month
(0.97 percent). In contrast, average prices for medium- and high-volume plans decreased by $3.64 per month (4.84
percent) and $10.29 per month (6.81 percent), respectively. See also Viard, V. B., 2007, “Do Switching Costs Make
Markets More or Less Competitive? The Case of 800-Number Portability,” RAND Journal of Economics. His
results show that competition intensified (via a price reduction of around 14 percent per customer) after the
implementation of 800-number portability. The average number of wireless subscribers per month porting their
phone number from one service provider to another has been steadily increasing over time to an average of 1.3
million per month for the first nine months of 2009, up from 0.9 million per month in 2005, the first full year after
all mobile wireless providers were required to be LNP capable. Stroup, C. and Vu, J, February 2010, Numbering
Resource Utilization in the United States
, Federal Communications Commission.
919 Service providers in the United States generally use one of two technically incompatible air interfaces (GSM or
CDMA) and handsets are built to work with one interface. Thus, GSM handsets cannot be used with a service
provider that deploys a CDMA interface. Even if both providers employ the same underlying air interface, handset
replacement may be necessary because many handset models are produced to the specifications of a single wireless
service provider to enable certain functionalities unique to that service provider.
920 See Section VII.B.1., Mobile Wireless Handsets/Devices and Operating Systems, supra.
921 Marketing research suggests that repeated use of an incumbent provider increases the likelihood that a consumer
will continue to choose that provider rather than switch to another service provider. Baker, C. A., 2007, “Breaking
up is hard to do: Consumer Switching Costs in the U.S. Marketplace for Wireless Telephone Service,” AARP Public
Policy Institute. Farrell, J and Klemperer, P, 2007, “Coordination and Lock-in: Competition with Switching Costs
and Network Effects,” Handbook of Industrial Organization, Volume 3, 1970-2056, Elsevier.

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industry churn rate is in excess of 24 percent. Churn rate varies by industry segment, with Chart 19
indicating that the churn rate for pre-paid/reseller services is several percentage points higher than for
post-paid plans. Part of this differential may be explained by the presence of ETFs, and part of it may be
explained by differences in other service and product characteristics between pre-paid and post-paid
plans. This difference between average pre-paid and post-paid churn rates is reflected in the churn rates
of different service providers according to the distribution of their customer bases across pre-paid and
post-post service plans.

B.

Consumer Access to Information on Mobile Wireless Services

308.
In order to make informed decisions, consumers need detailed information about the
price, availability, quality, and features of mobile wireless services. All mobile wireless service providers
offer resources on their websites that advertise their products, services, and prices and that give potential
customers information on their networks, service plans, and terms of service. A number of third parties –
such as Consumer Reports, trade associations, marketing and consulting firms, and several websites –
also provide consumers with an overview and comparison of the mobile wireless services available in
their local areas.922 In addition, organizations such as Consumer Reports and J.D. Power publish the
results of their wireless user surveys, which rate wireless service providers based on customer
satisfaction. Additional third party surveys and studies relevant to provider service quality appear above
in Section V.H., Network Performance.
309.
Most service provider websites include online street-level coverage maps so consumers
can assess the level of service they can expect to receive in a given area.923 Nonetheless, it can be
difficult for consumers to compare coverage between providers in a particular geographic location, as the
providers’ coverage maps do not currently provide the capability for overlay viewing. Independent
websites such as BillShrink have begun to compile coverage data, which enables consumers to
comparison shop based upon coverage at specific geographic locations. The coverage data released by
providers may provide only a binary “yes” or “no” coverage reading and is not quality of service data that
would account for variable environmental and network conditions or the actual service quality
experienced by consumers.924
310.
In addition to coverage maps, mobile wireless service providers also publish “up-to” or
“typical” data throughput rates for their data networks. However, these published data throughput rates
are generally rough estimations of actual performance. Several third parties test mobile wireless network
performance and publish their results, which can include metrics for coverage, reliability, and data
throughput rates.925 As discussed above, the Commission has recognized the importance of accurate, up-
to-date data on mobile broadband performance for consumers and has solicited information on the
measurement of mobile broadband network performance and coverage, including the best metrics and

922 See Fourteenth Report, 25 FCC Rcd at 11553-54 ¶ 231. For example, websites such as billshrink.com,
myrateplan.com, reviews.cnet.com/cell-phone-buying-guide, and prepaidreviews.com, provide consumers with free
and user-friendly means to identify the best wireless service to meet their needs.
923 See CTIA Comments at 44-45; Sprint Nextel Comments at 16. See, e.g., AT&T Coverage Viewer,
http://www.wireless.att.com/coverageviewer/#?type=voice">http://www.wireless.att.com/coverageviewer/#?type=voice (visited Oct. 16, 2012); Sprint – Nationwide Coverage,
http://coverage.sprintpcs.com/IMPACT.jsp?PCode=vanity:coverage">http://coverage.sprintpcs.com/IMPACT.jsp?PCode=vanity:coverage (visited Oct. 16, 2012); T-Mobile, Personal
Coverage Check,http://www.t-mobile.com/coverage/pcc.aspx"> http://www.t-mobile.com/coverage/pcc.aspx (visited Oct. 16, 2012); Verizon Wireless, Coverage
Locator,
http://www.verizonwireless.com/b2c/CoverageLocatorController?requesttype=NEWREQUEST&market=All">http://www.verizonwireless.com/b2c/CoverageLocatorController?requesttype=NEWREQUEST&market=All
(visited Oct. 16, 2012).
924 In addition, to our knowledge, no reliable coverage dataset currently exists besides Mosaik’s licensed dataset, for
which the underlying contours are generally supplied by providers who may use different definitions of coverage.
See National Broadband Plan, at 25, n.56; 39.
925 See Section V.H, Network Performance, supra.

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data collection methods to use.926 Information on mobile broadband availability can also be found in the
National Broadband Map.927
311.
Through the Consumer Code for Wireless Service, CTIA and the service providers that
are signatories to the Code, voluntarily commit to providing consumers with information to assist them in
the selection of mobile wireless service.928 For example, implementation of initial trial periods in multi-
month service subscriptions is a policy that may alleviate a “buyer’s regret” problem, and some wireless
service providers have implemented formal procedures to permit consumers to use their service on a trial
basis for periods ranging from 14 to 30 days, consistent with one of the elements of CTIA’s Consumer
Code.929 In addition to offering a trial period for new service, signatories to CTIA’s Consumer Code
commit to disclose rates, additional taxes, fees, surcharges, and terms of service; provide coverage maps;
and make customer service readily accessible.930 In July 2010, CTIA updated the Consumer Code to
require carriers to ensure disclosure of data allowances offered in a service plan, whether there are any
prohibitions on data service usage, and whether there are network management practices that will have a
material impact on the customer’s wireless data experience.931 The Consumer Code also states that
prepaid service providers must disclose the period of time during which any prepaid balance is available
for use.932
312.
Bill Shock. Some mobile wireless service providers also have policies in place that
attempt to prevent “bill shock” among their customers, i.e., a sudden increase in their monthly bill that is
not caused by a change in service plan. Bill shock can happen when a customer unknowingly exceeds
plan limits for data, voice, or text, or is unaware of the magnitude of international roaming charges.
Survey results released by the Commission in May 2010 indicate that 30 million Americans – or one in
six mobile users – have experienced bill shock.933 In addition, according to survey data published by
Consumer Reports in January 2011, one in five survey respondents reported receiving an unexpectedly
high bill in the previous year.934
313.
The Commission has been proactively working to clear up consumer confusion
surrounding bill shock. On October 14, 2010, the Commission proposed new rules that would require
mobile service providers to send usage alerts to consumers when they approach and reach monthly plan
limits, and also send alerts when they were about to incur international roaming charges. As a result of
these proposals, the Commission reached an agreement with CTIA that its member providers could
voluntarily agree to provide these types of alerts that the Commission was proposing. In October 2011,
CTIA revised its Consumer Code to require that its participating providers provide four types of alerts

926 Id.
927 See Section IV.B.1.b, Coverage by Technology Type, supra.
928 See CTIA, Consumer Code for Wireless Service, availablehttp://files.ctia.org/pdf/ConsumerCode.pdf"> at http://files.ctia.org/pdf/ConsumerCode.pdf (visited
Oct. 16, 2012). (Consumer Code for Wireless Service).
929 See CTIA Comments at 44-45; See also Consumer Code for Wireless Service. The ability of consumers to
terminate a wireless service contract within 14 days is also one of a number of provisions of the Assurance of
Voluntary Compliance agreed to by AT&T (then Cingular), Sprint Nextel, and Verizon Wireless with the attorneys
general of 32 states on June 25, 2004.
930 See CTIA Comments at 46; See also Consumer Code for Wireless Service.
931 See CTIA Comments at 46; CTIA, CTIA-The Wireless Association® Announces Updates to Its ‘Consumer Code
for Wireless Service,’
Press Release, July 28, 2010, available at
http://www.ctia.org/media/press/body.cfm/prid/1992">http://www.ctia.org/media/press/body.cfm/prid/1992 (visited Oct. 16, 2012).
932 Id.
933 Federal Communications Commission, “FCC Survey Confirms Consumers Experience Mobile Bill Shock and
Confusion About Early Termination Fees,” rel. May 26, 2010.
934 Best Phones & Plans, Consumer Reports, Jan. 2011, at 29.

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(data, voice, text, international roaming) by April 17, 2013, and at least two out of the four types of alerts
by October 17, 2012.935 The member providers agreeing to this plan account for service to 97 percent of
U.S. wireless customers and all customers are included unless they opt out. As of October 2012, the
Commission announced that participating U.S. wireless companies had met or exceeded the initial
deadline in CTIA’s Consumer Code to provide two out of the four specified alerts, and that were on track
to provide all of the specified alerts by April 2013.936
314.
As part of the Commission’s effort to empower consumers by putting information online,
the Commission has established a web site where consumers can find out which providers are
implementing their voluntary commitments.937 The web site contains a table showing which providers
are providing which types of alerts and the Commission will regularly update the table to reflect each
provider’s progress in providing the agree-upon alerts, based on information that CTIA provides the
agency.
315.
Open Internet Rules. The rules on Internet openness adopted by the Commission in
December 2010 require both fixed and mobile broadband Internet providers to “publicly disclose accurate
information regarding the network management practices, performance, and commercial terms of its
broadband Internet access services sufficient for consumers to make informed choices regarding use of
such services.”938 In providing guidance regarding effective disclosure models, the Commission indicates
that among the types of information that might be included in an effective disclosure are pricing terms
such as monthly prices, usage-based fees, and fees for early termination or additional network services.939

C.

Surveys of Consumer Satisfaction with Service Providers

316.
In January 2011, Consumer Reports published the results of its annual survey on service
quality for mobile wireless service providers in 23 metropolitan areas.940 For each city, the service
providers received a numerical “reader score” based on overall customer satisfaction.941 In addition to
providing city-specific ratings, Consumer Reports also provided summary ratings, for both “conventional
(contract)” and “no-contract” service providers in all cities surveyed.942 In the summary ratings for

935 Shttp://www.fcc.gov/blog/new-fcc-website-help-consumers-beat-%E2%80