Today Federal Trade Commission member Joshua Wright offered a definition of unfair method of competition during remarks made before the New York State Bar Association’s antitrust section. Mr. Wright argued that unfair method of competition as discussed in section 5 of the Federal Trade Commission Act left a lot of room for re-interpretation especially as commissions change due to members joining and moving on. A policy statement that set the definition more into regulatory stone would provide businesses with more certainty as they contemplate the appropriate business models necessary for entry into a market.
Unless Mr. Wright can sell his colleagues on the ideas he presented today, I wouldn’t worry about an in-depth analysis of what he offered, although what he offered was pretty substantive. The reason his proposed policy statement caught my eye, quite frankly, was because the statement was posted in a tweet by Federal Communications Commission member Ajit Pai which signaled to me that the statement was worth a look see.
My take away as it concerns the FCC is that the nation’s regulator of interstate telecommunications seems to skirt the issue of competition in the wireless telecommunications market. The FCC currently has a docket opened to address the state of competition in the wireless market. The FCC also avoids any declaration of competition in the wireless market which is peculiar given the existence of four major national players; AT&T, Verizon, Sprint, and T-Mobile, and a myriad of smaller carriers such as Virgin Mobile, Leap Wireless, ClearWire, and Boost Mobile.
A major part of the FCC’s problem, and I would suspect the FTC’s as well, is that they are too focused on the actual number and size of the players in the market. The very word, “market”, should be enough to set the FCC’s focus properly. Market is a relational term, and when we discuss markets, we are talking about the primary demand and supply relationship between consumer and producer. Given that the preamble of the Communications Act asks the FCC to concern itself with universal access by consumers to a communications network, the FCC has been focusing on just about everything else; from how much revenues T-Mobile generates to whether we, as consumers, actually give a damn about what management techniques Verizon uses to bring us broadband services.
Instead, the FCC’s focus should be on whether the consumers’ demand for services is being met; is the market providing the output necessary for meeting the communications needs of consumers. Given the increasing demand for smartphones and tablets with no reported problems with carriers opening up accounts, and again given the existence of four major carriers and quite a few regional carriers, the FCC should have been able to create a definition for competition that reflects what is happening in the market. It hasn’t done so. It hasn’t even tried.
What we need is a little boldness; for the FCC to step out and say, here is our policy statement on the meaning of competition. Here is what we mean by a competitive market. Until then, all I see is a 17th, 18th, and 19th state of wireless competition report that fails to definitively state that we are moving in the right direction.