Telecommunications:

Competition in the Cellular Telephone Service Industry

T-RCED-92-72: Published: Jul 1, 1992. Publicly Released: Jul 1, 1992.

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GAO discussed competition in the cellular telephone industry. GAO noted that: (1) since two firms provide service in the cellular market, it is unlikely that the industry's pricing will be competitive; (2) resellers buy blocks of cellular service at wholesale rates, but do not own or operate cellular systems or compete with the two major carriers at the wholesale level, a situation that does not lend itself to competitive pricing at the resale level; (3) neither the Federal Communications Commission (FCC) nor the states have evaluated the industry's profitability, although the states are authorized to regulate intrastate cellular rates; (4) it could not determine whether prices in the cellular marketplace were competitive, and the issue may require further examination because of the potential for noncompetitive behavior; and (5) emerging technologies that allow a similar service may improve the competitive structure of the industry, if the services are provided by firms other than those in the market, but there are controversies over the appropriate means of regulating these technologies.

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