Telecommunications: Cellular Service Competition

GAO discussed the competitive structure of the cellular telephone service industry and whether the Federal Communications Commission's (FCC) policies ensure the availability of cellular services at competitive prices. GAO noted that: (1) a market in which only two firms provide a service is unlikely to have competitive prices because the firms may have incentives to recognize their interdependence and maintain prices above the competitive level; (2) resellers who buy blocks of cellular service at wholesale rates and then repackage and sell the service to consumers do not generally provide lower rates; (3) FCC has not periodically obtained cost and pricing data to evaluate the profitability of the industry; (4) states have authority to regulate intrastate cellular rates; and (5) emerging technologies that provide service similar to cellular service may improve the competitive structure of the industry if they are furnished by firms other than those already providing cellular service in a given market.