AT&T Calls for Constructive, Fact-Based Dialog with FCC on New Government Push to Regulate Vibrant U.S. Wireless Industry

New Regulation Could Have Unforeseen Consequences for Industry Jobs, Investment, Innovation, Mobile Internet and Consumer Costs

San Diego, California, October 7, 2009

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In an address here at CTIA’s semi-annual convention, AT&T Mobility and Consumer Markets President and CEO Ralph de la Vega called for a constructive, fact-based dialog with the FCC on the impact of new regulation on America’s growing and world-leading wireless industry.

de la Vega, who is incoming chairman of the CTIA board, urged a cautious approach to any new government regulation of a vibrant industry that is “one of America’s great success stories.

“Our industry is highly competitive, innovative and thriving. Because of significant private investment, made possible by limited regulation, U.S. wireless consumers enjoy the broadest array of innovative wireless services and devices, the highest usage levels, the lowest prices, and the most competitive choices of any wireless market in the world,” de la Vega said.

“We are eager for the opportunity to have a constructive, fact-based dialog with FCC Chairman Genachowski and his colleagues,” said de la Vega. “It is an honor to have him here at this critical time for our industry.

“Before we begin ‘fixing’ what isn’t broken, we need to be thoughtful about the consequences. We believe the marketplace today is vibrant, and there is no need to burden the mobile Internet with onerous new regulations,” said de la Vega. “Imposing new regulations on an intensely-competitive market that has been such a phenomenal success could have unforeseen consequences for jobs, investment, innovation, networks, and how the industry structures and prices services to customers.”

The FCC is conducting inquiries into the wireless industry regarding competition and innovation. Additionally, the FCC has announced an upcoming rule making on net neutrality that would apply to wired and wireless networks.

“As part of our dialog with the FCC, we hope to present some important facts to show how — and why — less regulation is the best path to the future for America’s wireless industry,” said de la Vega.

According to de la Vega, the U.S. wireless industry:

  1. Is the most competitive in the world: The U.S. has more wireless operators than any other developed country in the world, with four national carriers, and 173 regional, local and specialty operators1. The U.S. wireless industry is the least concentrated among developed countries2. Ninety-five percent of Americans can choose from at least three carriers3.
    Sources: 1OECD Communications Update (Organization for Economic Cooperation and Development) 2Herfindahl-Hirschman Index, Bank of America / Merrill Lynch “Global Wireless Matrix 4Q08,” and 3FCC's Annual CMRS Competition Report
  2. Offers the best value: Compared to other developed countries, the U.S. wireless industry delivers the lowest effective per-minute price in the industrialized world. Not only do U.S. customers pay the least, they pay 60 percent less than the average of the 26 OECD countries’ price. U.S. wireless customers also enjoy the highest minutes of use — almost three times the minutes of use of many other developed countries.
    Source: Bank of America / Merrill Lynch “Global Wireless Matrix 4Q08”
  3. Offers more choices: U.S. wireless customers can select from among 630 devices from more than 30 manufacturers1. Those devices are increasingly powerful: 84 percent of handsets are web-enabled and 89 percent are data-capable1. Customers can choose from among almost every major operating system, enjoy an amazing variety of applications and today they lead the world in application downloads2.
    Sources: 1CTIA, and 2Strategy Analytics
  4. Is poised for next wave of wireless growth: Industry analysts estimate that the emerging wireless devices and machine-to-machine applications market could generate $90 billion in global revenue by 2013. The U.S. wireless industry is investing heavily to nurture this nascent industry. Emerging consumer devices like personal navigation devices, e-readers, netbooks and other consumer electronics are beginning to take off, while machine-to-machine applications promise to transform the productivity and efficiency of American businesses.
    Source: Rethink Wireless
  5. Has made massive investments: U.S. wireless companies have invested $264 billion since 1985, with $120 billion of that in the last five years alone. Last year, during challenging economic times, American operators invested $20 billion in wireless networks. The industry has also invested $33 billion in payments to the Federal Government in the last two spectrum auctions to ensure it can meet customers’ future mobile broadband needs.
    Source: CTIA
  6. Is a virtuous cycle of investment and innovation: Spectrum is purchased; mobile broadband networks are built; innovative devices and applications are launched; and customers consume more data using new apps on mobile broadband devices, which in turn creates the need for more spectrum and promotes more innovation in devices and applications, and increased data usage.
  7. Leads the world in 3G subscribers: The United States has only 7 percent of the world’s wireless subscribers1 but 22 percent of the world’s 3G subscribers2. According to the GSM Association (GSMA), AT&T has twice as many customers using HSPA technology (the world’s leading 3G technology standard) as the next closest carrier in the world.
    Sources: 1Bank of America / Merrill Lynch “Global Wireless Matrix 4Q08,” and 2Informa Telecoms & Media Group
  8. Has exploding data consumption: AT&T wireless data usage has increased nearly 5,000 percent during last 12 quarters (2Q06-2Q09). Also, a small number of users are consuming a disproportionate amount of data: the top 3 percent of smartphone customers use 40 percent of all smartphone data.
    Source: AT&T
  9. Faces unique constraints compared to wireline networks: A single fiber strand has theoretical capacity of 25,000,000 Mbps while the theoretical capacity for LTE or 4G wireless using radio spectrum is 100 Mbps (assuming 2X 10 MHz channels). Additionally, radio spectrum is shared by users in any given location. Because of those facts, a few heavy data users can “crowd out” many average customers if wireless carriers lack the flexibility to manage bandwidth usage for the benefit of all customers.
    Source: AT&T
  10. Is thriving: At stake is an industry growing five times as fast as the U.S. economy — industry analysts calculated 2.4 million American jobs1, $19 billion in taxes and fees each year1, and an estimated $860 billion in business productivity over a 10-year period2.
    Sources: 1CTIA, and 22008 Ovum Wireless Report

“The facts are clear: the U.S. wireless industry’s virtuous cycle of innovation and investment is working to deliver real value to American consumers,” said de la Vega. “We want that to continue.”

Further illustrating AT&T’s commitment to push innovation to the next level, AT&T also launched www.att.com/innovations — a site dedicated to the first completed decade of AT&T innovation in the 21st century. Supporting Mr. de la Vega’s remarks at CTIA, the new site reflects on AT&T’s effort to set a leader’s pace in bringing more innovation and customer choice to areas such as devices, networks and application development.

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