September 7, 2017 FCC FACT SHEET* Twentieth Mobile Wireless Competition Report WT Docket No. 17-69 Background: The Communications Act requires the Commission to report annually to Congress on the state of competition in mobile wireless services and to include an analysis of whether there is effective competition. The 20th Mobile Wireless Competition Report fulfills the Commission’s obligation, presenting a variety of data from 2016, as well as certain information for early 2017 and additional supporting information from prior years. The Report conducts an analysis of that data and an assessment of various generally-accepted metrics of competition for mobile wireless services. What the Report Would Do: ? Analyze a number of facts, trends, and characteristics that taken together indicate there is effective competition in the marketplace for mobile wireless services. ? Among other factors, consider: o Service options and pricing. Providers continue to expand and adjust data plans and pricing; including adding new plans and reintroducing unlimited data plans to the marketplace. o Network speeds. The mean LTE download speed increased well over 60 percent from the first half of 2014 to the first half of 2017. o Access and availability. A substantial majority of consumers have access to four nationwide service providers, and there are numerous smaller providers that play an important competitive role in local and regional markets. o Network investment. Wireless service providers in the United States have made capital investments of more than $200 billion over the past seven years; although investment declined approximately 9% from 2015 to 2016. ? Cover other industry developments, including rising consumer demand and increased data output, falling prices, and access to additional spectrum. * This document is being released as part of a “permit-but-disclose” proceeding. Any presentations or views on the subject expressed to the Commission or its staff, including by email, must be filed in WT Docket No. 17-69, which may be accessed via the Electronic Comment Filing System (https://www.fcc.gov/ecfs/). Before filing, participants should familiarize themselves with the Commission’s ex parte rules, including the general prohibition on presentations (written and oral) on matters listed on the Sunshine Agenda, which is typically released a week prior to the Commission’s meeting. See 47 CFR § 1.1200 et seq. Federal Communications Commission FCC- CIRC17 09 - 08 * This document has been circulated for tentative consideration by the Commission at its [XX] open meeting. The issues referenced in this document and the Commission’s ultimate resolutions of those issues remain under consideration and subject to change. This document does not constitute any official action by the Commission. However, the Chairman has determined that, in the interest of promoting the public’s abilit\ to understand the nature and scope of issues under consideration, the public interest would be served b\ maNing this document publicl\ available. The Commission’s ex parte rules appl\ and presentations are subMect to “permit-but-disclose” ex parte rules. See, e.g., 47 CFR §§ 1.1206, 1.1200(a). Participants in this proceeding should familiarize themselves with the Commission’s ex parte rules, including the general prohibition on presentations (written and oral) on matters listed on the Sunshine Agenda, which is typically released a week prior to the Commission’s meeting. See 47 CFR §§ 1.1200(a), 1.1203. The draft document makes several references to a website containing web appendices. These “Web $ppendi[” documents are provided in draft form at the end of this document. 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 Annual Report and Analysis of Competitive Market Conditions With Respect to Mobile Wireless, Including Commercial Mobile Services ) ) ) ) ) ) ) ) WT Docket No. 17-69 TWENTIETH REPORT * Adopted: [] Released:[] By the Commission: TABLE OF CONTENTS Heading Paragraph # I. INTRODUCTION .................................................................................................................................. 1 II. CHARACTERISTICS OF THE MOBILE WIRELESS INDUSTRY ................................................. 11 A. Service Providers ............................................................................................................................ 12 1. Facilities-Based Service Providers .......................................................................................... 13 2. Resellers/Mobile Virtual Network Operators and Other Service Providers ............................ 15 B. Connections and Subscribers .......................................................................................................... 19 1. Total Connections and Subscribers .......................................................................................... 19 2. Net Additions ........................................................................................................................... 23 3. Churn ....................................................................................................................................... 25 4. Penetration Rates by Geographic Area .................................................................................... 27 5. Subscriber Demographics ........................................................................................................ 28 C. Market Shares and Concentration .................................................................................................. 30 D. Profitability ..................................................................................................................................... 33 E. Facilitating Access to Spectrum ..................................................................................................... 34 1. 6ervice 3roviders’ 6pectrum +oldings .................................................................................... 40 F. Wireless Infrastructure ................................................................................................................... 42 III. ELEMENTS OF INTER-FIRM RIVALRY ......................................................................................... 47 A. Pricing Levels and Trends .............................................................................................................. 48 1. Postpaid Service ....................................................................................................................... 49 a. 3ricing Trends and “8nlimited” 'ata 3lans ...................................................................... 50 b. Video Content Not Counted Towards Data Limits ........................................................... 52 Federal Communications Commission FCC- CIRC1709 - 08 2 2. Prepaid Service ........................................................................................................................ 53 3. Price Indicators for Mobile Wireless Services ......................................................................... 57 B. Differentiation in Mobile Wireless Devices/Services and Advertising/Marketing ........................ 62 1. Differentiation in Mobile Wireless Devices and Services ....................................................... 62 2. Advertising and Marketing ...................................................................................................... 66 C. Investment ...................................................................................................................................... 68 D. Nationwide Network Coverage and Technology Upgrades ........................................................... 69 1. Overall Mobile Wireless Network Coverage (Any Technology) ............................................ 74 a. Overall Coverage By A Certain Number of Service Providers ......................................... 74 b. Overall Coverage By Individual Service Provider ............................................................ 76 2. LTE Mobile Broadband Coverage ........................................................................................... 77 a. LTE Coverage By A Certain Number of Service Providers ............................................. 77 b. LTE Coverage By Individual Service Provider ................................................................. 78 3. Rural/Non-Rural Comparisons ................................................................................................ 79 a. Rural and Non-Rural Overall Coverage By A Certain Number of Service Providers ...... 81 b. Rural and Non-Rural Overall Network Coverage By Individual Service Provider .......... 82 c. Rural and Non-Rural LTE Coverage By A Certain Number of Service Providers ........... 83 d. Rural and Non-Rural LTE Coverage By Individual Service Provider .............................. 84 4. Coverage and Technology Upgrades by Service Provider ...................................................... 85 E. Speed of Service ............................................................................................................................. 87 1. Ookla ........................................................................................................................................ 90 2. RootMetrics ............................................................................................................................. 91 3. CalSPEED ................................................................................................................................ 92 IV. CONCLUSION ..................................................................................................................................... 93 V. PROCEDURAL MATTERS ................................................................................................................ 94 APPENDIX I: TRENDS IN CONSUMER USAGE APPENDIX II: CHARACTERISTICS OF THE MOBILE WIRELESS INDUSTRY APPENDIX III: ELEMENTS OF INTER-FIRM RIVALRY I . INTRODUCTION 1. Mobile wireless services are an essential and ubiTuitous part of $mericans’ dail\ lives, and competition in the provision of mobile wireless services drives innovation and investment to the ultimate benefit of the American people and economy. In this Twentieth Mobile Wireless Competition Report (Twentieth Report or Report), we fulfill our obligation, pursuant to Section 332(c)(1)(C) of the Communications Act (the Act), to report annuall\ to Congress on “competitive marNet conditions with respect to commercial mobile services.”1 In particular, the Section states “The Commission shall review competitive marNet 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 liNel\ to enhance competition.”2 1 47 U.S.C. § 332(c)(1)(C). 2 47 U.S.C. § 332(c)(1)(C). Federal Communications Commission FCC- CIRC1709 - 08 3 2. This Twentieth Report presents and reviews available 2016 data for all mobile wireless services, including voice, messaging, and broadband,3 and presents certain information, where available, for early 2017.4 As discussed below, our assessment of various characteristics of the mobile wireless industry described in Section II: Characteristics of the Mobile Wireless Industry and various indicators of how service providers compete as described in Section III: Elements of Inter-Firm Rivalry indicates that there is effective competition in the mobile wireless service marketplace. 3. As an initial matter, we note that Section 332(c)(1)(C) does not define “effective competition” or dictate a way to measure effective competition. In addition, there is no single definition of effective competition that is generally accepted by economists or competition policy authorities.5 In the Eighth Report through the Twelfth Report, the Commission, without defining the phrase “effective competition,” made a finding that the provision of mobile wireless services was effectively competitive based on an assessment of several “structural and performance measures of competition” over the relevant time periods.6 Beginning with the Fourteenth Report and continuing through the Sixteenth Report, the Commission expanded its assessment of competition in the provision of mobile wireless services to anal\ze a broader “mobile wireless ecos\stem” that included “upstream” and “downstream” marNet segments, such as network equipment, operating systems, and applications.7 In those three Reports, the Commission concluded that, because of the complexity of the mobile wireless ecosystem, it would not be meaningful to try to make a single, all-inclusive finding regarding effective 3 Our analysis in this Report is data-centric; it combines short discussions with substantial use of tables and charts in accessible data formats. We also are providing many of the charts and tables in the Twentieth Report, on a dedicated website that we intend to update before the release of the next Report as new data become available. Additional data and maps are also available on this website. FCC, Commercial Mobile Radio Services Competition Reports, https://www.fcc.gov/reports- research/reports/commercial-mobile-radio-services-competition-reports. 4 Some of the data are only published at year-end and are publicly available only in the middle of the following year. Quarterly and annual SEC filings for the public wireless service providers are available soon after the release of their financial releases; however, aggregate industry data for public and non-public service providers tend only to be available after they have been compiled by analysts and trade associations based on their set releases. For example, all CTIA±The Wireless Association (CTIA) data are now released based on year-end data available in its annual report published after the close of its industry survey. For these CTIA data, we are able to present only annualized numbers with no mid-year updates. 5 Implementation of Section 6002(b) of the Omnibus Budget Reconciliation Act of 1993; Annual Report and Analysis of Competitive Market Conditions With Respect to Mobile Wireless, Including Commercial Mobile Services, Nineteenth Report, 31 FCC Rcd 10534, 10537, para. 4 (WTB 2016) (Nineteenth Report); 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, Sixteenth Report, 28 FCC Rcd 3700, 3733-34, para. 15 (2013) (Sixteenth Report); see also Ex Parte Submission of the United States Department of Justice, GN Docket No. 09-51, at 11 (filed Jan. 4, 2010) (“>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 te[tbooN model of perfect competition.”); Amanda B. Delp and John W. Mayo, The Evolution of “Competition”: Lessons for 21st Century Telecommunications Policy, Review of Industrial Organization, 50:393-416 (2017) (discussing evolving and varying definitions of “effective competition” and “worNable competition” . 6 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, Eighth Report, 18 FCC Rcd 14783, 14796-98, para. 23 (2003). Prior to the Eighth Report, the Commission observed various degrees of evolving competition in the mobile wireless marketplace. 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, Fourth Report, 14 FCC Rcd 10145, 10206-207, Section III (1999). The Wireless Telecommunications Bureau adopted a similar approach in the Thirteenth Report. 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 (2009). 7 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 Mobile Wireless, Including Commercial Mobile Services, Fourteenth Report, 25 FCC Rcd 11407, 11411, 11433, para. 2, Figure 1 (2010) (Fourteenth Report). Federal Communications Commission FCC- CIRC1709 - 08 4 competition, and instead it presented an analysis of the competitive metrics and trends within the ecosystem.8 The Wireless Telecommunications Bureau, acting on delegated authority, followed this same approach in the Seventeenth Report through the Nineteenth Report.9 4. In this Twentieth Report, we conclude that the better way to fulfill our statutory obligation to report to Congress on competition with respect to “commercial mobile services” and to anal\ze “whether or not there is effective competition”10 is to return to the narrower, more well-defined scope of inquiry that the Commission adopted in the Eighth Report through the Twelfth Report, rather than the broader inquiry that the Commission utilized in the Fourteenth Report through the Sixteenth Report. Specifically, in this Twentieth Report, we focus only on competition in the provision of mobile wireless services, rather than attempting to examine the broader “mobile wireless ecosystem,” which the Commission previously found to be too complex to make a meaningful finding regarding effective competition.11 We do not attempt to do a full market definition or market power analysis, however, as this would involve an extremely detailed analysis of supply and demand factors at the national and local level.12 Instead, we consider a number of facts and characteristics of the provision of mobile wireless services, which taken together, indicate that there is effective competition. 5. Rising consumer demand and increased output. Both the number of wireless connections and average data usage per connection have been rising in recent years.13 For example, based on CTIA data, the total number of mobile wireless subscriber connections grew by approximately five percent, from approximately 378 million at year-end 2015 to approximately 396 million at year-end 2016.14 In addition, according to CTIA, reported wireless data volumes totaled 13.7 trillion MB in 2016, an increase of approximately 42 percent from 9.6 trillion MB in 2015, and an increase of approximately 238 percent from the 4.1 trillion MB reported in 2014.15 Further, CTIA reports that monthly data usage per smartphone subscriber rose to an average of 3.9 GB, an increase of approximately 39 percent from year-end 2015 to year-end 2016.16 8 See, e.g., Sixteenth Report, 28 FCC Rcd 3700, 3733, para. 14; Fourteenth Report, 25 FCC Rcd at 11411, para. 3. 9 See, e.g., Nineteenth Report, 31 FCC Rcd 10534, 10537, para. 4. 10 47 U.S.C. § 332(c)(1)(C). 11 See, e.g., Fourteenth Report, 25 FCC Rcd at 11411, 11433, para. 2, Figure 1. We note that, in Sections II.E: Facilitating Access to Spectrum and II.F: Wireless Infrastructure, we do focus on access to spectrum and infrastructure because they can be key indicators regarding ease of market entry and are facilitated in part by Commission policies. We also discuss devices in Section III.B: Differentiation in Mobile Wireless Devices/Services and Advertising/Marketing in the context of how mobile wireless service providers differentiate themselves from their rival competitors. 12 We note that in the context of Competition Report proceedings, we generally have access only to publicly available data, unlike the circumstances in our review of proposed secondary market transactions. 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 lead to narrower or broader market(s) than any used, suggested, or implied in this Twentieth Report. See, e.g., Nineteenth Report, 31 FCC Rcd at 10537, paras. 3-4; Sixteenth Report, 28 FCC Rcd at 3729-30, para. 4. Further, as with previous Reports, this Twentieth 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., Nineteenth Report, 31 FCC Rcd 10534 (2016); Sixteenth Report, 28 FCC Rcd 3700. 13 See infra Section II.B.1: Total Connections and Subscribers; Appendix 1: Trends in Consumer Usage, Chart 2. 14 See infra Section II.B.1: Total Connections and Subscribers. 15 CTIA Wireless Industry Indices Year-End 2016, at 96. Appendix 1: Trends in Consumer Usage, Chart 1 shows annual minutes, messages, and megabytes of wireless traffic from 2008 through 2016. 16 CTIA Wireless Industry Indices Year-End 2016, at 97. Appendix 1: Trends in Consumer Usage, Chart 2 shows average data usage per subscriber from 2010 to 2016 for both data-capable devices and smartphones. Section II.B.1: Differentiation in Mobile Wireless Devices/Services provides information on smartphone penetration rates. Federal Communications Commission FCC- CIRC1709 - 08 5 6. Falling prices. Various measures of Average Revenue per User (ARPU) are frequently used as a proxy for price, particularly in industries with multiple pricing plans and complex rate structures.17 In recent years, both average revenue per connection and average revenue per MB have been falling.18 According to CTIA, the industry ARPU per subscriber unit fell sharply during 2016 from $44.65 to $41.50, a decline of approximately 7 percent.19 According to analysis by Recon Analytics, the cost per MB has fallen significantly over the past decade, from $1.37 per MB in 2007 to less than half a cent per MB in 2016.20 Further, from year-end 2012 through year-end 2016, while the overall CPI increased by 4.5 percent, the annual Wireless Telephone Services CPI decreased by approximately 8 percent and the Telephone Services CPI decreased by approximately 3 percent.21 7. Network investment. Service providers have made significant investments in their networks, which have resulted in higher broadband deployment, expanded network coverage, and increased network densification. For example, according to CTIA, between 2010 and 2016, U.S. wireless service providers invested $200 billion,22 and they are expected to invest over $275 billion over the next several years.23 Considering network coverage, as of January 2017, at least four service providers covered approximately 92 percent of the U.S. population with 3G technology or better as compared to 82 percent at the beginning of 2014.24 Further, as of December 2016, at least four service providers covered approximately 89 percent of American consumers with LTE.25 While more limited than in non-rural areas, LTE coverage in rural areas has also increased: As of January 2017, at least four service providers covered approximately 55 percent of the population in rural areas, an increase from approximately 41 percent as of July 2015.26 Finally, service providers have also been densifying their 17 Implementation of Section 6002(b) of the Omnibus Budget Reconciliation Act of 1993; Annual Report and Analysis of Competitive Market Conditions With Respect to Mobile Wireless, Including Commercial Mobile Services, Seventeenth Report, 29 FCC Rcd 15311, 15328, para. 35 & n.52 (WTB 2014) (Seventeenth Report); Patrick McCloughan and Sean Lyons, Accounting for ARPU: New evidence from international panel data, Telecommunications Policy 30, 521-32 (2006); Eun-A Park, Krishna Jayakar, Competition between Standards and the Prices of Mobile Telecommunication Services: Analysis of Panel Data, TPRC 2015 (Aug. 15, 2015). See infra Section III.A.3: Price Indicators for Mobile Wireless Services. 18 See infra Section III.A.3: Price Indicators for Mobile Wireless Services, Charts III.A.3 and III.A.4. 19 CT,$ reported an industr\ average measure of “$verage Revenue per Reported subscriber 8nit,” or $R38, which is based “upon total revenues divided b\ the average total reported active units per survey period, divided by the number of months in the surve\ period,” i.e., an annualized monthl\ $R38. 20 FierceWireless, Industry Voices˛(ntner Consumer µ6urplus’ in Wireless Rises 2% in 2 ,@t’s critical the M912 does not compete to an\ meaningful degree with the host.” . 46 TracFone, TracFone Home, http://www.tracfone.com/ (last visited Sept. 1, 2017); Prepaid Phone News, Fourth Quarter 2016 Prepaid Mobile Subscriber Numbers by Operator (Feb. 14, 2017), http://www.prepaidphonenews.com/2017/02/fourth- quarter-2016-prepaid-mobile.html. TracFone currently operates the Straight Talk, NET 10, TracFone, Simple Mobile, Page Plus, Total Wireless, Telcel America, and SafeLink Wireless MVNO brands, http://www.tracfonewirelessinc.com/en/brands/ (last visited Sept. 1, 2017). Federal Communications Commission FCC- CIRC1709 - 08 9 these two service providers’ /T( networNs.47 In 2016, both Comcast48 and Charter Communications,49 the nation’s two largest cable providers, activated MVNO options they held with Verizon Wireless. The services offered will utilize a combination of Wi-Fi hotspots and the Verizon Wireless network.50 Comcast launched its service in the spring of 2017 as Xfinity Mobile,51 and Charter anticipates offering its service in 2018.52 17. Mobile Satellite Service Providers. Mobile Satellite Services (MSS) providers offer satellite- based communications to mobile devices. Traditionally, MSS has involved voice and narrowband data services. MSS services generally are targeted at users who require communications and asset tracking in remote areas, in disaster response situations, or other places where terrestrial mobile wireless network access may be limited. Examples of MSS customers include the oil industry, maritime users, public safety agencies, and other government/military operations. In 2016, the Commission modified its rules so as to allow Globalstar, Inc. (Globalstar) to seek authorization to use some of its MSS spectrum for low-powered terrestrial broadband service,53 and in 2017, the Commission’s International Bureau granted Globalstar’s request to modify its authorization pursuant to the new rules.54 18. Narrowband Data Service Providers. Narrowband data and paging services comprise a specialized market segment within the mobile wireless industry. These services include two-way messaging, as well as machine-to-machine (M2M) and other telemetry communications. They are consumed primarily by businesses, government users, and other institutions.55 47 )ierceWireless, *oogle 8nveils “3roMect )i” M912 with 6print and T-Mobile as Partners (Apr. 22, 2015), http://www.fiercewireless.com/story/google-unveils-project-fi-mvno-sprint-and-t-mobile-partners/2015-04-22. In June 2016, Google added U.S. Cellular as a partner. )ierceWireless, *oogle’s 3roMect )i to $dd 8.6. Cellular to 3artner 1etworN -une 8, 2016), http://www.fiercewireless.com/story/googles-project-fi-add-us-cellular-partner-network/2016-06-08. Google requires a Google phone (Pixel, Nexus 5X, 6, or 6P for the service). Similar Wi-Fi/Cellular hybrid services such as Republic Wireless, Ting, and RingPlus offer their subscribers a wide range of calling plans that feature both Wi-Fi and cellular calling along with text and data plans. Republic Wireless, Republic Wireless Home, https://republicwireless.com/ (last visited Sept. 1, 2017); Ting, Ting Home, https://ting.com/ (last visited Sept. 1, 2017); RingPlus, RingPlus Home, https://ringplus.net/ (last visited Sept. 1, 2017). 48 FierceWireless, Comcast to Launch Wireless Service in 2017 with Verizon MVNO, 15M Wi-Fi Hotpots (Sept. 20, 2016), http://www.fiercewireless.com/wireless/comcast-to-launch-wireless-service-2017-verizon-mvno-15m-wi-fi-hotspots. 49 FierceCable, Rutledge: Charter Has Asked Verizon to Activate MVNO Agreement (Sept. 21, 2016), http://www.fiercecable.com/cable/rutledge-charter-has-asked-verizon-to-activate-mvno-agreement. 50 FierceCable, Rutledge: Charter Has Asked Verizon to Activate MVNO Agreement (Sept. 21, 2016), http://www.fiercecable.com/cable/rutledge-charter-has-asked-verizon-to-activate-mvno-agreement. 51 WirelessWeek, Comcast Opens Enrollment For Its Mobile Plans With $45 Unlimited Offer (May 23, 2017), https://www.wirelessweek.com/news/2017/05/comcast-opens-enrollment-its-mobile-plans-45-unlimited-offer. 52 FierceCable, Charter’s Rutledge T-Mobile Doesn’t Understand Our MVNO Deal (Feb. 16, 2017), http://www.fiercecable.com/cable/charter-s-rutledge-t-mobile-doesn-t-understand-our-mvno-deal. 53 Terrestrial Use of the 2473.5-2495 MHz Band for Low-Power Mobile Broadband Networks; Amendments to Rules for the Ancillary Terrestrial Component of Mobile Satellite Service Systems, Report and Order, 31 FCC Rcd 13801 (2016). 54 FCC Satellite Policy Branch Information, Actions Taken, Report No. SAT-01260, Public Notice, DA 17-756 (IB Aug. 11, 2017). 55 There are approximately 7 megahertz of spectrum allocated to narrowband and paging services, and there are hundreds of licensees for these services, including private individuals, firms, and local and state governments. Federal Communications Commission FCC- CIRC1709 - 08 10 B. Connections and Subscribers 1. Total Connections and Subscribers 19. This Report uses several data sources to estimate the number of mobile wireless subscribers and connections.56 One such source, Numbering Resource Utilization Forecast (NRUF), tracks the quantity of phone numbers that have been assigned to mobile wireless devices.57 As shown in Chart II.B.1 below, the number of mobile wireless connections in December 2015, based on NRUF, was approximately 378 million, and during 2016, that number grew by approximately five percent to reach approximately 398 million by year-end 2016, while CTIA and UBS estimates were relatively similar.58 Chart II.B.2 presents data on total connections by service segment based on UBS data. It shows that, in 2016, the postpaid segment accounted for more than 60 percent of the total connections, the prepaid segment accounted for approximately 20 percent of the total connections, while wholesale connections and connected devices accounted for the remaining approximately 20 percent of total mobile wireless connections. 56 Different sources refer to their data as connections or subscribers, and they may have changed the terminology they use during the periods in which we present their data. When discussing the different data, we will use the terminology most currently used by the source, and where possible, provide a definition of this term. For example, CTIA explains their use of the terms “subscribers” and “connections” as follows “µ6ubscribers’ is used as a term of art, and reflects the number of revenue-generating units, eTuall\ describable as µwireless connections’ ± the equivalent of wireline µlines.’ The terms µsubscriber’ and µsubscribership’ do not denote unique individual subscribers. Indeed, the growing categories of non- traditional devices and machine-to-machine applications mean that the term µsubscribers’ is increasingly less descriptive of a growing share of the universe of active units. Nonetheless, individual users still number in the hundreds of millions.” CTIA Wireless Industry Indices Year-End 2016, at 12. Appendix II: Characteristics of the Mobile Wireless Industry, Tables II.B.i- ii provide detailed data on total mobile wireless connections, and total mobile wireless connections by service segment. 57 When all mobile wireless devices were assigned telephone numbers and subscribers generally carried one mobile device for making voice calls, NRUF data were a reasonably accurate measure of subscribership. Currently, however, consumers frequently use more than one mobile device that has been assigned a telephone number, particularly non-voice devices, such as Internet access devices (e.g., wireless modem cards and mobile Wi-Fi hotspots), e-readers, tablets, and telematics systems. In addition, certain service providers do not assign telephone numbers to at least some of the devices on their networks. Therefore, rather than measuring the number of individual subscribers, NRUF provides a measure of the number of mobile wireless connections or connected devices that have assigned telephone numbers. As the number of mobile wireless devices that lack telephone numbers increases, the NRUF data will become less accurate. 58 CTIA estimated that the total number of mobile wireless subscriber connections grew by approximately 5%, from approximately 378 million at year-end 2015 to approximately 396 million at year-end 2016. According to another data source, UBS, the total number of wireless connections rose from approximately 397 million in the 4Q2015 to approximately 417 million in 4Q2016, an increase of approximately 5%. UBS US Wireless 411, February 2017, Figure 25. Federal Communications Commission FCC- CIRC1709 - 08 11 Source: NRUF, CTIA Wireless Industry Indices Year-End 2016. Source: UBS Investment Research. UBS US Wireless 411, Version 51, Figure 17; UBS US Wireless 411, Version 59, Figure 42; UBS Wireless 411, Feb. 2017, Figure 25. 20. CTIA reports that monthly data usage per smartphone subscriber rose to an average of 3.9 GB per subscriber per month, an increase of approximately 39 percent from year-end 2015 to year-end 2016,59 while there 59 CTIA Wireless Industry Indices Year-End 2016, at 97. Appendix 1: Trends in Consumer Usage, Chart 2 shows average data usage per subscriber from 2010 to 2016 for both data-capable devices and smartphones. 2008 2009 2010 2011 2012 2013 2014 2015 2016 NRUF 279.6 290.7 301.8 317.3 329.2 339.2 357.1 378.2 398.4 CTIA 270.3 285.6 296.3 316.0 326.5 3 35 .7 355 .4 377.9 395 . 9 0 50 100 150 200 250 300 350 400 450 E st im a te d C o n n ec ti o n s (m il li o n s) Year Chart II.B.1 Total Mobile Wireless Connections 2008 - 2016 NRUF, CTIA NRUF CTIA 3 52.5 3 5 6 . 8 3 6 4 .0 371.5 376.2 382.3 3 90.0 396 . 4 402.0 407.3 412.8 416.7 0.0 50.0 100.0 150.0 200.0 250.0 300.0 350.0 400.0 450.0 500.0 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 T o ta l C o n n ec ti o n s (m il li o n s ) Quarter, Year Chart II.B.2 Quarterly Total Mobile Wireless Connections by Service Segment: 2014 - 2016 Based on UBS Data Postpaid Prepaid Wholesale Connected devices Federal Communications Commission FCC- CIRC1709 - 08 12 was a slight drop in total annual minutes of voice use (MOUs).60 In addition, total messaging traffic amounted to around 1.94 trillion messages for 2016, down from around 2.11 trillion messages in December 2015, a decrease of approximately 8 percent, and attributable to a sharp decrease in SMS/text messaging traffic of approximately 12 percent.61 Cisco’s 9isual 1etworNing ,nde[ (VNI) reported that as of September 2016, average data usage in North America was approximately 3.2 GB a month for an Android user and approximately 4.8 GB per month for an iOS user.62 Ericsson, in its November 2016 North American Mobility report, indicated that data traffic per active smartphone user equaled approximately 5.1 GB per month in 2016,63 while Cisco reported that smartphones in the United States consumed an average of 4.4 GB of mobile data per month in 2016.64 This trend in increasing data use appears due to multiple factors, including the increased adoption of smartphones and tablets, growth in streaming video, and the development of faster networks. According to Pew’s survey, by the end of 2016, smartphone and tablet ownership were 77 percent and 51 percent, respectively, up from 35 percent and 10 percent, in 2011.65 As of January 2017, Pew reported that just over one in ten American adults are “smartphone-onl\” ,nternet users˛they own a smartphone, but do not have traditional home broadband service.66 According to preliminary data from the Centers for Disease Control and Prevention (CDC), from December 2013 to December 2016, the percentage of U.S. households that were identified as wireless-only increased from approximately 41 percent to approximately 51 percent, making 2016 the first year in which a majority of U.S. households were wireless-only households.67 21. In addition to providing mobile wireless services directly to consumers and businesses, service providers may also provide M2M services.68 There are limited statistics on M2M communications.69 Many 60 CTIA Wireless Industry Indices Year-End 2016, at 91. Total annual minutes of voice use (MOUs) dropped slightly to 2.75 trillion in 2016, a decrease of approximately 5% compared to year-end 2015. Id. 61 CTIA Wireless Industry Indices Year-End 2016, at 96, 99. 62 Cisco, Cisco Visual Networking Index: Global Mobile Data Traffic Forecast Update, 2016-2021 White Paper, at 29 (Feb. 7, 2017), http://www.cisco.com/c/en/us/solutions/collateral/service-provider/visual-networking-index-vni/mobile-white- paper-c11-520862.html. Global mobile data traffic is predicted to grow at a Compound Annual Growth Rate (CAGR) of 47% from 2016 to 2021, resulting in 49 exabytes per month by 2021. Id. at 3. 63 Ericsson, Ericsson Mobility Report, On the Pulse of the Networked Society, at 2 (November 2016), https://www.ericsson.com/assets/local/mobility-report/documents/2016/ericsson-mobility-report-november-2016.pdf. 64 Cisco, VNI Mobile Forecast Highlights 2016-2021, http://www.cisco.com/assets/sol/sp/vni/forecast_highlights_mobile/#~Country (last visited Sept. 1, 2017). 65 Pew Research Center, Mobile Fact Sheet (Jan. 12, 2017), http://www.pewinternet.org/fact-sheet/mobile/ (last visited Sept. 1, 2017). 66 Pew Research Center, Mobile Fact Sheet (Jan. 12, 2017), http://www.pewinternet.org/fact-sheet/mobile/ (last visited Sept. 1, 2017). 67 CDC, NCHS, Stephen J. Blumberg and Julian V. Luke, Wireless Substitution: Early Release of Estimates from the National Health Interview Survey, July-December 2016, National Center for Health Statistics (May 2017), https://www.cdc.gov/nchs/data/nhis/earlyrelease/wireless201705.pdf. 68 M2M is a subset of the larger Internet-of-Things (IoT), and due to differing definitions, researchers may be including or excluding connections that are not specifically defined by the industry as M2M. These variations make it difficult to compare data from multiple reported sources. The IoT is seen by some commentators as the next major opportunity for providing advanced connections among devices, and many industries such as healthcare are beginning to use M2M networks to connect their numerous smart devices and machines. The Ericsson Mobility Report predicts that between 2016 and 2022, IoT will rapidly increase at a CAGR of 21%, making up over 18 billion of the total forecast of 29 billion connected devices in 2022. Ericsson, Ericsson Mobility Report, On the Pulse of the Networked Society, at 33 (November 2016), https://www.ericsson.com/assets/local/mobility-report/documents/2016/ericsson-mobility-report-november-2016.pdf. 69 As of 1Q2017, Chetan Sharma Consulting reports that connected devices for the U.S. accounted for 63% of net subscriber additions. Chetan Sharma, Industry Research (Q1 2017), http://www.chetansharma.com/consulting/market-research. For 2016, Cisco reports 109 million U.S. M2M connections, an increase of 58% from 2015. Cisco, VNI Mobile Highlights 2016- Federal Communications Commission FCC- CIRC1709 - 08 13 research firms forecast that the overall trends for M2M will become more significant as new and existing network service providers continue to deliver connectivity between devices, sensors, monitors, etc., and their networks.70 5G networks and services71 are expected to usher in an era of explosive growth for M2M.72 22. Table II.B.1 presents data on total mobile wireless connections for the largest service providers operating in the United States.73 2021 (M2M Connections and Traffic), http://www.cisco.com/assets/sol/sp/vni/forecast_highlights_mobile/. 70 See, e.g., McKinsey & Company, McKinsey Global Institute, The Internet of things: Mapping the Value Beyond the Hype (June 2015), http://www.mckinsey.com/~/media/McKinsey/Business%20Functions/McKinsey%20Digital/Our%20Insights/The%20Intern et%20of%20Things%20The%20value%20of%20digitizing%20the%20physical%20world/Unlocking_the_potential_of_the_I nternet_of_Things_Executive_summary.ashx; see generally Thierer, A. and Castillo, A., Mercatus Center at George Mason University, Projecting the Growth and Economic Impact of the Internet of Things (June 15, 2015), https://www.mercatus.org/system/files/IoT-EP-v3.pdf. 71 We do not intend to define what Tualifies as “*” in this Report. Standard bodies like the Third Generation Partnership Project (3GPP) and the International Telecommunication Union (ITU) plan to develop requirements for 5G by the middle of 2018. 3GPP, 5G-NR Workplan for eMBB (Mar. 9, 2017), http://www.3gpp.org/news-events/3gpp-news/1836- 5g_nr_workplan. 72 See, e.g., Cisco, VNI Mobile Highlights, 2016-2021, http://www.cisco.com/assets/sol/sp/vni/forecast_highlights_mobile/. “In the United States, the number of mobile-connected M2M modules will grow 5.4-fold between 2016 and 2021, reaching 587 million in number.” 73 We note that C 6pire’s total number of connections is not reflected in Table ,,.%.. C 6pire is the largest privatel\ held service provider in the U.S., and states that it has nearly one million subscribers. C Spire, About C Spire, http://www.cspire.com/company_info/about/more_info.jsp (last visited Sept. 1, 2017). Federal Communications Commission FCC- CIRC1709 - 08 14 Table I I .B.1 Estimated Total Connections for Publicly Traded Facilities –Based Mobile Wireless Service Providers ( in thousands) : 2013 –2016 74 Nationwide Service Providers EOY 2013 EOY 2014 EOY 2015 EOY 2016 EOY 2016 (%) Verizon Wireless 125,535 134,612 140,924 145,859 35.0 AT&T 110,276 120,620 128,679 134,875 32.4 T- Mobile 46,684 55,018 63,282 71,455 17.1 Sprint 54,622 55,929 58,578 59,515 14.3 Nationwide Service Provider Total 337,117 366,179 391,463 411,704 Regional Service Providers EOY 2013 EOY 2014 EOY 2015 EOY 2016 EOY 2016 (%) U . S. Cellular 4,774 4,760 4,876 5,079 1.2 Leap Wireless 4,551 * * * * NTELOS 465 449 306 * * Cincinnati Bell 340 82 * * * Regional Service Provider Total 10,130 5,291 5,182 5,079 1.2 Total Estimated Connections 347,247 371,470 396,645 416,783 Source: UBS US Wireless 411, Version 51, Table 21; Version 59, Figure 53; UBS Wireless 411, Feb. 2017, Figure 33. Total estimated connections figure includes data only for the service providers reported in this table. 2. Net Additions 23. As shown in Chart II.B.3 below, for 2016, there were approximately 20 million net additions based on NRUF data, compared with 18 million based on CTIA data. Preliminary subscriber data as reported by service providers on Form 477 show that for 2016, net subscriber additions totaled approximately seven million.75 Chart II.B.4 below shows net additions broken down by service segment: It shows that postpaid net additions peaked during 2014, and have declined through 2016. Chart II.B.4 further shows that the net number of connected device additions was consistently higher than prepaid additions, from 2013 through 2016.76 Finally, it indicates that, during 2013 through 2016, prepaid additions did not make up a significant percentage of total net additions. 74 Asterisks (*) indicate that the service provider is no longer separately reporting financial results. Shentel, a Sprint affiliate, acquired nTelos in 2016; AT&T acquired Leap Wireless in 2014; and Cincinnati Bell shut down its mobile operations in February 2015. 75 Based on Form 477, the preliminary total number of mobile voice telephone subscriptions at year-end 2016 was 341.3 million, as compared to 334.6 million at year-end 2015. We again note that the year-end Form 477 data are preliminary only, and the final data will be published in due course by the agency. See, e.g., FCC, Wireline Competition Bureau, Voice Telephone Services: Status as of December 31, 2015 (November 2016), https://apps.fcc.gov/edocs_public/attachmatch/DOC-342357A1.pdf. 76 Appendix II: Characteristics of the Mobile Wireless Industry, Table II.B.iii provides detailed data on quarterly net additions by service segment. Federal Communications Commission FCC- CIRC1709 - 08 15 Source: NRUF, CTIA Wireless Industry Indices Year-End 2016, Form 477. Source: UBS Investment Research. UBS US Wireless 411, V. 59, Figure 42; UBS US Wireless 411, Feb. 2017, Figure 25. 24. Chart II.B.5 below shows net subscriber additions by the four nationwide service providers from 2013 through 2016. Throughout this period, AT&T and Verizon Wireless consistently showed strong net additions. T-Mobile, which nearly doubled its net additions between 2013 and 2014, led the industry in this metric for 2015 and 2016. Sprint showed a strong upward trend in 2015, and maintained that growth in 2016. 10.0 17.9 21.1 20.2 9.2 19.7 22.5 18.0 4.2 11.8 11.9 6.8 0.0 5.0 10.0 15.0 20.0 25.0 2013 2014 2015 2016 Net A d d it io n s (m il li o n s) Year Chart II.B.3 Total Mobile Wireless Connections Annual Net Additions (2013 - 2016) NRUF CTIA Form 477 0 5,000 10,000 15,000 20,000 25,000 30,000 2013 2014 2015 2016N et A d d s (t h o u sa n d s) 2013 2014 2015 2016 Total 11,922 23,475 25,396 21,839 Prepaid 1,167 703 1,136 1,619 Wholesale 1,458 1,646 4,466 3,838 Connected Devices 4,601 6,966 8,211 8,578 Postpaid 4,696 14,161 11,401 7,804 Chart II.B.4 Annual Net Additions by Service Segment 2013 - 2016 Federal Communications Commission FCC- CIRC1709 - 08 16 Source: UBS Investment Research. UBS US Wireless 411, Version 51, Figure 14; UBS US Wireless 411, Version 59, Figure 62; UBS Wireless 411 Feb. 2017, Figure 35. 3. Churn 25. Churn measures the number of connections that are disconnected from mobile wireless service during a given period time period; it is usually expressed as a percentage.77 $ service provider’s churn rate depends on many factors, including the distribution of its customers between postpaid and prepaid service plans, customer satisfaction with their service provider, and switching costs.78 High levels of industry churn can indicate that consumers are not only willing but are also able to readily switch between service providers. 26. According to UBS, the industry weighted average monthly churn rates from the first quarter of 2013 to the fourth quarter of 2016 have ranged from 1.42 percent to 1.85 percent.79 For 2016, CTIA calculated an annual industry-wide churn rate of 26.3 percent, and a monthly rate of 2.21 percent,80 while for prepaid services, CTIA reported an annual industry-wide churn rate of 57.5 percent and a monthly churn rate of 4.79 percent.81 For the fourth quarter of 2016, churn rates of the nationwide service providers, as shown in Chart II.B.6 below, were 77 Churn is calculated by dividing the aggregate number of wireless subscriber connections who canceled service during a time period by the total number of wireless subscriber connections at the beginning of that time period. The churn rate for a time period that is longer than a month is equal to the weighted average of the churn rate for each month of that period (e.g., the three months in a quarter or the twelve months for an annual churn rate). Thus, a monthly churn rate of 1% averaged over the three-month reporting period would also be reported as 1%. For an annual calculation, if a service provider has an average monthly churn rate of 2%, the service provider would lose 24% of its subscribers over the course of a year. Service providers publish their monthly churn rate information as part of their quarterly filings with the SEC. 78 Nineteenth Report, 31 FCC Rcd at 10546-47, para. 18; Sixteenth Report, 28 FCC Rcd at 3865, para. 260. 79 UBS Investment Research. UBS US Wireless 411, February 2017, Figure 35. 80 CTIA Wireless Industry Indices Year-End 2016, at 40. 81 Id. at Appendix C, 11. 2013 2014 2015 2016 Verizon 8,868 9,235 6,276 4,955 AT&T 2,721 5,608 8,059 6,196 Sprint (2,500) 575 2,649 2,411 T-Mobile 4,300 8,334 8,264 8,173 (4,000) (2,000) - 2,000 4,000 6,000 8,000 10,000 Net S u b sc ri b er A d d it io n s (T h o u sa n d s ) Chart II.B.5 Annual Net Additions by Service Provider: 2013 - 2016 Federal Communications Commission FCC- CIRC1709 - 08 17 1.3 percent for Verizon Wireless, 1.7 percent for AT&T and T-Mobile, and 2.2 percent for Sprint. In the fourth quarter of 2016, industry weighted monthly churn was 1.61 percent, its highest in two years.82 Source: UBS Investment Research. UBS US Wireless 411, Version 49, Table 16. UBS US Wireless 411, Version 51, Figure 28. UBS US Wireless 411, Version 59, Figure 60; UBS US Wireless 411 Feb. 2017, Figure 35. 4. Penetration Rates by Geographic Area 27. To better understand the number of connections across geographic areas, for this Report we have estimated penetration rates (the number of mobile wireless connections per 100 people), using NRUF subscriber/connection data, for the 172 EAs of the United States. Our estimates suggest that 2016 regional penetration rates range from a low of 97 percent in Fayetteville-Springdale-Rogers, AR-MO to a high of 174 percent in Detroit-Ann Arbor-Flint, MI.83 That NRUF-based penetration rates can exceed 100 percent (including the nationwide penetration rate) is not surprising,84 since NRUF identifies the number of connected devices that have associated telephone numbers, and a single subscriber may have multiple connected devices.85 82 UBS Investment Research, Wireless Telecommunications Wireless 411: A Difficult Market Asking for Repair?, at 19 (Feb. 2017). 83 Web Appendix II: Characteristics of the Mobile Wireless Industry (EA Penetration Rates: 2013-2016), https://www.fcc.gov/20th-cmrs-report-web-appendices provides more details. 84 At the end of 2016, the penetration rate was at least 100 percent in 160 of 172 EAs. 85 According to the U.S. Census Bureau, the combined population of the 50 states, the District of Columbia, and Puerto Rico, as of July 1, 2016, was estimated to be 326.5 million. U.S. Census Bureau, American FactFinder, https://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid=PEP_2016_PEPANNRES&src=pt (last visited Sept. 1, 2017). We note that, if NRUF is used to calculate a mobile wireless penetration rate (of a population), then that penetration rate is overstated due to the number of individuals who have more than one mobile wireless device. 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 AT&T 1.4% 1.4% 1.3% 1.4% 1.4% 1.5% 1.4% 1.6% 1.4% 1.3% 1.3% 1.5% 1.4% 1.4% 1.5% 1.7% Verizon Wireless 1.3% 1.2% 1.3% 1.2% 1.2% 1.2% 1.3% 1.4% 1.3% 1.2% 1.2% 1.2% 1.2% 1.2% 1.3% 1.3% Sprint 2.5% 3.2% 2.3% 2.2% 3.2% 2.4% 2.3% 2.4% 2.1% 2.3% 2.2% 2.5% 2.3% 2.1% 2.1% 2.2% T-Mobile 3.3% 2.6% 2.5% 2.5% 2.6% 2.1% 2.2% 2.5% 2.0% 2.0% 1.9% 1.9% 1.7% 1.7% 1.7% 1.7% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% C h u rn R a te Chart II.B.6 Quarterly Churn Rate for Nationwide Mobile Wireless Providers 1st Quarter 2013 - 4th Quarter 2016 Federal Communications Commission FCC- CIRC1709 - 08 18 5. Subscriber Demographics 28. Household income and age are correlated with overall mobile wireless subscription rates as well as smartphone subscription rates. Based on January 2017 survey data from ComScore MobiLens,86 Chart II.B.7 below shows the percentage of mobile wireless subscribers overall, and smartphone subscribers in particular, who fall within various income classes, as well as the overall percentage of U.S. households that fall within the same income range. The chart shows that mobile wireless subscribers and smartphone subscribers are more likely to have higher incomes. For example, approximately 22 percent of the population lives in households with an annual income of less than $25,000, but only approximately 18 percent of mobile wireless users and approximately 15 percent of smartphone users are in this bracket. Conversely, approximately 26 percent of the population live in households with an annual income over $100,000, but approximately 28 percent of mobile wireless subscribers and approximately 31 percent of smartphone subscribers are in this income bracket. Source: ComScore, MobiLens Audience Profile January 2017, and U.S. Census Bureau. 29. Chart II.B.8 below shows the composition of mobile users by age. Although the percentage of mobile devices is evenly distributed across age groups, smartphone ownership is somewhat more concentrated in younger age groups. 86 Survey data based on ComScore MobiLens, January 2017. ComScore MobilLens U.S. data are derived from a monthly survey of approximately 30,000 respondents ages 13 and older, who are recruited to represent U.S. Census demographics. The total universe size is estimated from data provided b\ CT,$ and com6core’s monthl\ subscriber studies. Income data are found in Income and Poverty in the United States: 2015 by the U. S. Census Bureau, Table A-1: Households by Total Money Income, Race, and Hispanic Origin of Householder: 1967 to 2015 (Sept. 2016), https://www.census.gov/content/dam/Census/library/publications/2016/demo/p60-256.pdf. 22.0% 18.2% 15.4% 22.7% 21.1% 20.1% 16.7% 19.0% 19.1% 12.1% 13.7% 14.5% 26.4% 28.0% 30.9% U.S. Households U.S. Mobile Subscribers U.S. Smartphone Subscribers Chart II.B.7 Total U.S. Households, Mobile Subscribers and Smartphone Subscribers by Income Bracket (January 2017) $100k+ $75k to <$100k $50k to <$75k $25k to <$50k <$25k *CTIA - 395.9 million (12/2016) *NRUF - 398.4 million (12/2016) . Federal Communications Commission FCC- CIRC1709 - 08 19 Source: ComScore MobiLens, 3-Month Average, January 2017. C. Market Shares and Concentration 30. Revenues and customers (or in the case of wireless, subscribers and/or connections) are often used to measure the size of an industry and a company. In turn, the size of a company relative to the total size of the industry determines its market share. In general, changes in market share may provide a signal of the relative competitiveness of a company's products or services. In 2016, total wireless service revenues were approximately $189 billion, a year-over-year decrease of $3.4 billion (or approximately two percent).87 Providers’ service revenues and market shares by service revenues are shown in Table II.C.1 below. In addition, Table II.B.1 above shows market shares by connections/subscribers for year-end 2016. 31. By year-end 2016, the four nationwide service providers accounted for approximately 98 percent of the nation’s mobile wireless service revenue, up from approximately 96 percent in 2013. As shown in Table II.C.1, AT&T and Verizon Wireless continued to maintain the largest market shares in 2016, while Sprint’s market share declined from approximately 15 percent in 2014 to approximately 13 percent in 2016, and T- Mobile’s marNet share increased from approximately 12 percent to approximately 15 percent over that same time period.88 87 CTIA Wireless Industry Indices Year-End 2016, at 45. Total wireless service providers’ revenues, as reported by CTIA, include monthly service fees, usage-related charges, activation charges, vertical services (voicemail, enhanced calling features, and other services), out-collect roaming revenues, and data service revenues. Prepaid revenues increased approximately six percent to $27.1 billion in 2016, and accounted for slightly more than 14 percent of total wireless industry revenues. CTIA Wireless Industry Indices Year-End 2016, Appendix C, at 15. 88 Based on service revenues, the market share for regional service providers fell from close to 5 percent in 2013 to under 2 percent by year-end 2016. These estimates are based on UBS US Wireless 411 Reports, which do not provide subscriber numbers for C Spire, a privately held regional service provider that has approximately one million subscribers. 6 . 9 % 7.7% 12.2% 14.1% 17.0% 19.6% 16.0% 17.8% 16.9% 17.3% 15.7% 13.7% 15.4% 9 . 9 % U.S. Mobile Phone Subscribers U.S. Smartphone Subscribers Per ce n t o f S u b sc ri b er s Chart II.B.8 Total Mobile Subscribers Compared to Smartphone Subscribers, by Age January 2017 6 5+ yrs old 55-64 yrs old 45-54 yrs old 35-44 yrs old 25-34 yrs old 18-24 yrs old 13-17 yrs old Federal Communications Commission FCC- CIRC1709 - 08 20 Table II.C.1 Service Revenues and Market Shares Based on Service Revenues for Mobile Wireless Service Providers ($ millions) , 2008 –2016 Source: UBS Investment Research. UBS US Wireless 411, Feb. 2017, Figure 36. 32. Market Concentration (NRUF Subscriber/Connection Data). The Commission employs the Herfindahl-Hirschman Index (HHI), a widely-accepted measure of market concentration in competition analysis, to measure mobile wireless concentration. The HHI is calculated by summing the squared market shares of all firms in any given market.89 In this Report, we calculate HHIs based on the NRUF data by Economic Area (EA) to maintain continuity with past Reports,90 and to ensure that we do not compromise the confidential information found in the NRUF data.91 Although high market concentration levels in a given market may raise some concern that a market is not competitive, this is not necessarily the case.92 To evaluate the competitiveness of any market, one must consider multiple factors, including prices and trends in prices, non-price rivalry, investment, 89 To the extent that this Report uses the term “marNets,” we do not intend it to be interpreted as s\non\mous with the concept of the “relevant marNet,” which the Commission defines in the conte[t of secondary market transactions review. See, e.g., Applications of AT&T Inc., Leap Wireless International, Inc., Cricket License Co., LLC and Leap Licenseco, Inc. for Consent To Transfer Control and Assign Licenses and Authorizations, Memorandum Opinion and Order, 29 FCC Rcd 2735, 2735, para. 27 (WTB, IB 2014) (AT&T-Leap Order). 90 Following widespread industry practices, the Commission generally attributes the subscribers of MVNOs to their host facilities-based service providers, including when it calculates market concentration metrics. 91 NRUF subscriber data indicate the number of assigned phone numbers that a wireless service provider has in a particular wireline rate center (there are approximately 18,000 rate centers in the country). Rate centers are geographic areas used by local exchange carriers for a variety of reasons, including the determination of toll rates. Harry Newton, Newton’s Telecom Dictionary: 19th Expanded & Updated Edition 660 (July 2003). All mobile wireless service providers must report to the Commission the quantity of their phone numbers that have been assigned to end users, thereby permitting the Commission to calculate the total number of mobile wireless subscribers. For purposes of geographical analysis, the rate center data can be associated with a geographic point, and all of those points that fall within a county boundary can be aggregated together and associated with much larger geographic areas based on counties. We note that the aggregation to larger geographic areas reduces the level of inaccuracy inherent in combining non-coterminous areas, such as rate center areas and counties. 92 It is well understood that we can observe intense competition even with a small number of firms in the market. See, e.g., Ernest Gellhorn, Antitrust Law and Economics (4th ed.), West Publishing, 1994, at 117 (stating “>m@arNet shares are not s\non\mous with marNet power the\ should marN the beginning for careful anal\sis, not the end of it.” ; Michael Whinston, Antitrust Policy toward Horizontal Mergers, in Handbook of Industrial Organization, Vol. 3, ed. Mark Armstrong and Robert Porter (Elsevier, 2007); John Sutton, Sunk Costs and Market Structure, MIT Press, 1991; Joseph Farrell and Carl Shapiro, Antitrust Evaluation of Horizontal Mergers: An Economic Alternative to Market Definition, The B.E. Journal of Theoretical Economics, Vol.10, Issue 1, Article 9; Gregory J, Werden and Luke M. Froeb, Unilateral Competitive Effects of Horizontal Mergers in Handbook of Antitrust Economics, ed. Paolo Buccirossi, (Cambridge: MIT Press, 2008). Service Providers 2013 2014 2015 2016 Revenue Market Share Revenue Market Share Revenue Market Share Revenue Market Share Verizon Wireless 69,033 36.5% 72,630 38.7% 70,396 38.1% 66,580 36.8% AT&T 61,552 32.5% 61,032 32.5% 59,837 32.4% 59,386 32.8% T-Mobile 20,535 10.9% 22,375 11.9% 24,821 13.5% 27,844 15.4% Sprint 29,263 15.5% 27,959 14.9% 25,845 14.0% 24,215 13.4% U.S. Cellular 3,595 1.9% 3,398 1.8% 3,350 1.8% 3,051 1.7% Federal Communications Commission FCC- CIRC1709 - 08 21 innovation, and any barriers to entry.93 As of year-end 2013, the weighted average HHI (weighted by population across the 172 EAs in the United States) for mobile wireless services was 3,027. As of year-end 2016, the weighted average HHI for mobile wireless services was 3,101.94 Chart II.C.1 shows the relationship between the HHI by EA and EA population densities. This chart indicates that HHI values tend to decline as the population density increases. The most concentrated EAs tend to be more rural, while major metropolitan areas lie in the least concentrated EAs. This 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.95 93 Applications of AT&T Inc. and DIRECTV For Consent to Assign or Transfer Control of Licenses and Authorizations, Memorandum Opinion and Order, 30 FCC Rcd 9131, 9140, paras. 19-20 (2015); AT&T-Leap Order, 29 FCC Rcd at 2756- 57, para. 49; Applications of AT&T Wireless Services, Inc. and Cingular Wireless Corporation, Memorandum Opinion and Order, 19 FCC Rcd 21522, 21544-45, paras. 41-42 (2004). 94 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). U.S. Department of Justice and the Federal Trade Commission, Horizontal Merger Guidelines (Aug. 19, 2010), http://www.justice.gov/atr/public/guidelines/hmg-2010.pdf. The Commission’s initial HHI screen identifies, for further case- by-case market analysis, those markets in which, post-transaction: (1) the HHI would be greater than 2800 and the change in HHI would be 100 or greater; or (2) the change in HHI would be 250 or greater, regardless of the level of the HHI. See, e.g., Sprint-Shentel-NTELOS Order, 31 FCC Rcd at 3639, para. 17 & n.50; AT&T-Leap Order, 29 FCC Rcd at 2753, para. 41 & n.140. 95 Relatively high fixed costs in relation to the number of customers may limit the number of firms that can enter and survive in a market. See, e.g., John Sutton, Sunk Costs and Market Structure, MIT Press, 1991; Luis Cabral, Introduction to Industrial Organization, MIT Press, 2000, Chapter 14; Dennis W. Carlton and Jeffrey M. Perloff, Modern Industrial Organization (4th ed.), Addison, Wesley, Longman, Inc., 2005, at 41; George S. Ford, et al., Competition After Unbundling: Entry, Industry Structure, and Convergence, Federal Communications Law Journal, 2007, 59:2, at 332, 337. 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 0 200 400 600 800 1,000 1,200 H H I Population per Square Mile Chart II.C.1 2016 HHIs Plotted Against 2010 EA Population Density Source: NRUF, Census Federal Communications Commission FCC- CIRC1709 - 08 22 D. Profitability 33. In the absence of the data necessary to estimate economic profits,96 accounting profits can instead be estimated using various metrics available to wireless industry observers,97 though we note that economists have questioned the use of accounting profits.98 One such common accounting profits metric, based on company data reported to the Securities and Exchange Commission (SEC), is EBITDA (Earnings before Interest, Taxes, Depreciation, and Amortization). As shown in Table II.D.1 below, for the five largest facilities-based mobile wireless service providers in 2016, EBITDA per subscriber ranged from a low of $11.05 (U.S. Cellular) to a high of $22.71 (Verizon Wireless). A second indicator of mobile wireless profitability is the EBITDA margin, which expresses EBITDA as a percentage of service revenue. Dividing EBITDA by service revenues facilitates cross- provider comparisons. The EBITDA margin of seven publicly reported mobile service providers for the past four years is shown in Chart II.D.1. As of year-end 2016, the EBITDA margins of the four nationwide service providers ranged from approximately 35 percent for T-Mobile to approximately 53 percent for Verizon Wireless. Table II.D. 1 Annual EBITDA per Subscriber ($/month), 2013 –2016 Mobile Wireless Service Providers 2013 2014 2015 2016 Verizon Wireless 23.56 22.67 23.70 22.71 AT&T 19.55 18.39 18.74 18.30 Sprint 7.53 9.14 11.01 13.00 T- Mobile 10.08 9.20 10.39 11.80 U . S. Cellular 7.34 6.01 11.74 11.05 Source: UBS US Wireless 411, Feb. 22, 2017, Figure 37. Annual figures are calculated by taking the average of each quarter for each year. 96 Economic profit is defined as total revenue minus total costs including opportunity costs. One of the main distinctions between economic profit and accounting profit is capital costs, which reflect a firm’s opportunit\ costs. 'ennis Carlton and Jeffrey Perloff, pp. 247-52, Modern Industrial Organization, 2005. A true measure of economic profit, especially in a capital intensive industry such as the mobile wireless industry, would reflect cash flows over a period of time that is long enough to recoup investment costs, and would account for a firm’s weighted average cost of capital. Because limitations on data availability make it difficult to measure true economic profit, we consider EBITDA as a crude proxy measure. Fourteenth Report, 25 FCC Rcd at 11544, para. 215. 97 Measures of profitability are widely used by industry observers and analysts, and can provide useful indicators of absolute and relative provider performance. Fourteenth Report, 25 FCC Rcd at 11544, para. 214. 98 See e.g., Franklin Fisher and John McGowan, On the Misuse of Accounting Rates of Return to Infer Monopoly Profits, American Economic Review, 1983, Vol. 73, Issue 1, 82- stating “accounting rates of return, even if properl\ and consistently measured, provide almost no information about economic rates of return”  Dennis Carlton and Jeffrey Perloff, pp. 247-52, Modern Industrial Organization, 2005. Federal Communications Commission FCC- CIRC1709 - 08 23 Chart II.D. 1 Reported EBITDA Margins (%) for Selected Publicly Traded Facilities- Based Wireless Service Providers, 2013 –2016 Source: UBS US Wireless 411, Feb. 22, 2017, Figure 37. E. Facilitating Access to Spectrum 34. Spectrum is a critical input in the provision of mobile wireless services.99 It can affect whether, when, and where existing service providers and potential entrants will be able to expand capacity or deploy networks.100 Incumbent service providers may need additional spectrum to increase their coverage or capacity, while new entrants need access to spectrum to enter a geographic area.101 In addition, increasing consumer demand for mobile data is expected to continue increasing service providers’ need for spectrum.102 99 Non-spectrum inputs in the provision of mobile wireless services include cellular base stations and towers to carry transmissions and backhaul, which routes voice and data traffic from base stations to mobile switching centers. Backhaul may be provided via wireless spectrum, copper, or fiber, though copper may lack sufficient capacity for current data demands. 100 Mobile Spectrum Holdings Report and Order, 29 FCC Rcd at 6134, para. 2; see also Nineteenth Report, 31 FCC Rcd at 10572, para. 49; Sixteenth Report, 28 FCC Rcd at 3769, para. 85. 101 Nineteenth Report, 31 FCC Rcd at 10572, para. 49; Sixteenth Report, 28 FCC Rcd at 3769, para. 86. 102 Mid-Band Spectrum NOI, at 3-4, paras. 5-6. 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 Verizon Wireless 50.4 49.8 51.1 47 52.14 50.29 49.5 42 55.8 56.1 56.4 52.9 60.5 61.5 59.5 52.8 AT&T 43.2 42.4 42 37.4 45.92 42.64 43.1 36.7 45.3 48.5 49.4 43.2 49.5 49.8 50.1 45.4 Sprint 19.2 17.6 16.2 14.4 25.34 25.30 19.9 15.4 25.6 31.7 30.8 29.9 34.7 40 38.6 40.3 T-Mobile 28.9 24.7 26.2 24 20.39 26.46 23.7 29.8 23.9 29.6 30.3 34.8 32.1 35.8 34.1 35.2 Metro PCS 27.2 32.1 28.9 31.9 22.6 41.1 41.5 27.9 Leap (Cricket) 16.1 21.8 21.4 18 17 24.8 18 20.8 17.4 21.5 11.1 9.1 US Cellular 20.4 19.9 18.3 -7.8 9.27 11.19 11.2 8.2 20.2 19.7 23.2 17.1 20.7 22 21.3 22.6 52.8 45.4 40.3 35.2 9.1 22.6 -10 0 10 20 30 40 50 60 70 P er ce n ta g e Federal Communications Commission FCC- CIRC1709 - 08 24 35. Spectrum bands vary in their propagation characteristics, and these variations have implications for how spectrum is deployed.103 Spectrum below 1 GHz (low-band spectrum) has certain propagation advantages for network deployment over long distances, and for penetrating buildings and urban canyons, while spectrum above 1 GHz (mid- or high-band spectrum) allows for the better transmission of large amounts of information.104 In the Spectrum Frontiers Order, the Commission noted that technological advances have made possible the use of ultra-high frequency bands above 24 GHz, or mmW bands, for the provision of mobile broadband.105 In the Mid-Band Spectrum NOI, the Commission observed that bands between 3.7 GHz and 24 GHz could yield a balance of coverage and capacity that could provide a critical input to operators to deploy new and improved wireless services to rural, remote, and underserved areas of the country.106 36. Recognizing the importance of spectrum in the provision of mobile wireless services, Congress, under the Communications Act, requires that the Commission implement spectrum policies that promote competition, innovation, and the efficient use of spectrum to serve the public interest, convenience, and necessity.107 Consistent with this statutory mandate, the Commission has established policies to make spectrum available to existing mobile service providers and potential new entrants through initial licensing, primarily by competitive bidding, and through secondary market transactions.108 37. On March 30, 2017, for example, bidding concluded in the broadcast television spectrum incentive auction,109 which made available 70 megahertz of low-band spectrum in the 600 MHz band for commercial use.110 In the 3.5 GHz proceeding,111 the Commission established a three-tiered spectrum 103 Service providers deploy their spectrum bands differently depending on the nature of the service, geography, density, or other factors in their network build-out. Nineteenth Report, 31 FCC Rcd at 10572, para. 50 & n.103; Sixteenth Report, 28 FCC Rcd at 3789, para. 119. 104 Mobile Spectrum Holdings Report and Order, 29 FCC Rcd at 6135, para. 3; Nineteenth Report, 31 FCC Rcd at 10572, para. 50. In this sense, low-band spectrum ma\ be thought of as “coverage” spectrum, and higher band spectrum may be thought of as “capacit\” spectrum. 105 Spectrum Frontiers Order, 31 FCC Rcd at 8020, paras. 6-7. 106 Mid-Band Spectrum NOI, at 3-4, para. 6. 107 47 U.S.C. § 309(j)(3)(B). 108 Mobile Spectrum Holdings Report and Order, 29 FCC Rcd at 6143-44, 6167-68, 6190, 6193, 6221-22, 6223-24, paras. 17, 67-69, 135, 144, 225-27, 231-32. The Commission generall\ has adopted “fle[ible use” policies, thereb\ allowing licensees to decide which services to offer and what technologies to deploy on spectrum used for the provision of mobile wireless services. 109 The incentive auction was composed of a reverse auction component in which eligible broadcasters voluntarily offered to relinquish some or all of their spectrum usage rights and a forward auction component where mobile wireless providers could bid for new, flexible-use licenses suitable for providing mobile broadband services. Expanding the Economic and Innovation Opportunities of Spectrum Through Incentive Auctions, Report and Order, 29 FCC Rcd 6567 (2014) (Incentive Auction Report and Order). 110 Broadcast Auction Scheduled to Begin March 29, 2016; Procedures for Competitive Bidding in Auction 1000, Including Initial Clearing Target Determination, Qualifying to Bid, and Bidding in Auctions 1001 (Reverse) and 1002 (Forward), Public Notice, 30 FCC Rcd 8975 (2015). The incentive auction generated approximately $19.8 billion in (gross) bids for 70 megahertz of licensed spectrum nationwide, and as a result of this auction, the 600 MHz Band Plan includes 70 megahertz, or seven paired five megahertz blocks, of licensed spectrum and 14 megahertz of spectrum available for unlicensed use and wireless microphones. Incentive Auction Closing and Channel Reassignment Public Notice; The Broadcast Television Incentive Auction Closes; Reverse Auction and Forward Auction Results Announced; Final Television Band Channel Assignments Announced; Post-Auction Deadlines Announced, Public Notice, 32 FCC Rcd 2786, 2793, para. 15 & n.19 (MB, WTB 2017) (Closing and Channel Reassignment Public Notice). 111 The 3.5 GHz Band encompasses 3550-3700 MHz. Amendment of the Commission’s Rules with Regard to Commercial Operations in the 3550-3650 MHz Band, Report and Order and Second Further Notice of Proposed Rulemaking, 30 FCC Rcd 3959, 3961, para. 1 (2015) (3.5 GHz Order and 2nd FNPRM); Amendment of the Commission’s Rules with Regard to Commercial Operations in the 3550-3650 MHz Band, Order on Reconsideration and Second Report and Order, 31 FCC Rcd Federal Communications Commission FCC- CIRC1709 - 08 25 authorization framework to facilitate a variety of small cell and other broadband uses of the 3.5 GHz Band on a shared basis with incumbent federal and non-federal users of the band.112 The innovative spectrum sharing techniques established are currently being implemented by the Commission and other stakeholders, which will allow the introduction of 150 megahertz of contiguous spectrum for the Citizens Broadband Radio Service for the exploration of new technologies and spectrum sharing.113 The Commission’s “Spectrum Frontiers” rulemaking proceeding also took significant steps towards enabling the next generation 5G evolution of wireless technologies. On July 14, 2016, the Commission released a Report and Order and Further Notice of Proposed Rulemaking, which adopted new licensing, service, and technical rules for using three spectrum bands above 24 GHz and sought comment on which additional bands could be made available.114 The service rules established a framework for flexible services, including mobile services, shared with fixed, satellite, and federal government uses in the mmW bands.115 38. 6ubMect to the Commission’s approval, licensees ma\ transfer licenses, in whole or in part (through partitioning and/or disaggregation), on the secondary market.116 In reviewing proposed transfers of control of spectrum, the Commission uses an initial spectrum screen117 to help identify, for case-by-case review, local markets where changes in spectrum holdings resulting from the transaction may be of particular concern.118 As set out in various transaction orders reviewing proposed license transfers, however, the Commission has not limited its consideration of potential competitive harms solely to markets identified by its initial spectrum screen, if it encounters other factors that may bear on the public interest inquiry.119 In the past decade, in the context of 5011 (2016) (3.5 GHz Second Order). CTIA and T-Mobile have petitioned for changes to the rules governing the Citizens Broadband Radio Service. Wireless Telecommunications Bureau and Office of Engineering and Technology Seek Comment on Petitions for Rulemaking Regarding the Citizens Broadband Radio Service, Public Notice, 32 FCC Rcd 5055 (WTB, OET 2017). 112 3.5 GHz Order and 2nd FNPRM, 30 FCC Rcd at 3967, 3978, paras. 24, 54. 113 Id. at 3962, 3975, 3992-93, paras. 4, 44, 98-100. 114 The Spectrum Frontiers Order adopted service and licensing rules for the 24 GHz, 37 GHz, and 39 GHz bands. In addition, it made available the 64-71 GHz band for use by unlicensed devices. Spectrum Frontiers Order, at 8018-19, para. 4. In the Spectrum )rontiers’ Further Notice of Proposed Rulemaking, comment was sought on making additional bands available. Id. 115 Id. at 8018-19, paras. 2-4. 116 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. 117 The Commission, in its initial screen, includes spectrum that it finds is suitable and available for the provision of mobile wireless services. See, e.g., Mobile Spectrum Holdings Report and Order, 29 FCC Rcd at 6169, para. 71; Sprint-Shentel- NTELOS Order, 31 FCC Rcd at 3638-39, para. 17. In addition, if a proposed transaction involves the transfer of customers, the Commission’s initial HHI screen identifies, for further case-by-case market review, those markets in which, post- transaction: (1) the HHI would be greater than 2800 and the change in HHI would be 100 or greater; or (2) the change in HHI would be 250 or greater, regardless of the level of the HHI. See, e.g., Sprint-Shentel-NTELOS Order, 31 FCC Rcd at 3639, para. 17 & n.50; AT&T-Leap Order, 29 FCC Rcd at 2753, para. 41 & n.140. 118 See, e.g., Mobile Spectrum Holdings Report and Order, 29 FCC Rcd at 6221-22, para. 225; see also AT&T-Leap Order, 29 FCC Rcd at 2752-53, paras. 39, 41. For transactions that result in the acquisition of wireless business units and customers or change the number of firms in any market, the Commission also applies an initial screen based on the size of the post- transaction HHI and the change in the HHI. See, e.g., Sprint-Shentel-NTELOS Order, 31 FCC Rcd at 3638-39, para. 17, n.50. In addition, the Commission determined in the Mobile Spectrum Holdings Report and Order that increased aggregation of below-1-GHz spectrum would be treated as an “enhanced factor” under its case-by-case review of license transfers if post- transaction the acquiring entity would hold approximately one-third or more of the currently suitable and available spectrum below 1 GHz. See, e.g., Mobile Spectrum Holdings Report and Order, 29 FCC Rcd at 6240, paras. 282-88. 119 See, e.g., Mobile Spectrum Holdings Report and Order, 29 FCC Rcd at 6221-22, para. 225; Sprint-Shentel-NTELOS Order, 31 FCC Rcd at 3635-36, para. 9; AT&T-Leap Order, 29 FCC Rcd at 2752, para. 39. Federal Communications Commission FCC- CIRC1709 - 08 26 its review of secondary market transactions, the Commission periodically has determined that additional spectrum was suitable and available, and therefore subject to inclusion in the spectrum screen.120 The current suitable and available spectrum included in the spectrum screen is as follows: Table II.E.1 Spectrum Included in the Spectrum Screen 121 Spectrum Band Megahertz (Amount) 600 MHz 70 700 MHz122 70 Cellular 50 SMR 14 Broadband PCS 130 AWS-1 90 AWS-3 65 AWS-4 40 H Block 10 WCS 20 BRS 67.5 EBS 89 Total Amount of Spectrum 715.5 39. In reviewing proposed transactions, the Commission generally conducts further competitive review to determine whether a particular proposed transaction would result in an increased incentive or ability for the assignee or transferee to behave in an anticompetitive manner for those markets identified by the spectrum or 120 Incentive Auction Closing and Channel Reassignment, Public Notice, 32 FCC Rcd 2786 (WTB 2017); Sprint-Shentel- NTELOS Order, 31 FCC Rcd at 3637-38, paras. 15-16; Mobile Spectrum Holdings Report and Order, 29 FCC Rcd at 6172- 87, 6187-90, paras. 82-125, 126-34; 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 for Consent To Assign and Transfer Licenses, Memorandum Opinion and Order, 27 FCC Rcd 16459, 16470-71, para. 31 (2012) (AT&T WCS Order); Sprint Nextel-Clearwire Order, 23 FCC Rcd at 17598-99, para. 70; Amendment of Part 27 of the Commission’s Rules to Govern the Operation of Wireless Communications Services in the 2.3 GHz Band, Report and Order, 25 FCC Rcd 11710, 11711, para. 1 (2010); Applications of Sprint Nextel Corporation and Clearwire Corporation for Consent To Transfer Control of Licenses, Leases, and Authorizations, Memorandum Opinion and Order, 23 FCC Rcd 17570, 17599, para. 72 (2008) (Sprint Nextel-Clearwire Order); Applications of AT&T Inc. and Dobson Communications Corporation for Consent To Transfer Control of Licenses and Authorizations, Memorandum Opinion and Order, 22 FCC Rcd 20295, 20307-08, para. 17 (2007). 121 We note that we consider AWS-1 and BRS spectrum as available on a nationwide basis. While 15 megahertz of AWS-3 spectrum are available on a nationwide basis (1695-1710 GHz), we will evaluate the availability of the remaining 50 megahertz of AWS-3 spectrum (1755-1780 GHz and 2155-2180 GHz) on a market-by-market basis. Further, while 112.5 megahertz of EBS spectrum are available, we discount this spectrum such that 89 megahertz is included in the screen for review of proposed transactions. Mobile Spectrum Holdings Report and Order, 29 FCC Rcd at 6177-79, 6184-6187, paras. 100-102, 118-25. 122 This does not include the 20 megahertz of 700 MHz spectrum allocated to public safety. In March 2017, AT&T was selected by FirstNet to build a nationwide public safety broadband network. AT&T Newsroom, AT&T Selected By FirstNet To %uild $nd Manage $merica’s )irst 1ationwide 3ublic 6afet\ %roadband 1etworN 'edicated To )irst Responders Mar. 30, 2017), http://about.att.com/story/firstnet_selects_att_to_build_network_supporting_first_responders.html. Federal Communications Commission FCC- CIRC1709 - 08 27 HHI screen, or that implicate enhanced factor review,123 or where the Commission encounters other factors that may bear on the public interest inquiry.124 The case-by-case review that the Commission undertakes considers factors that are important in predicting the incentives and ability of service providers to successfully reduce competition in relevant product and geographic markets,125 and then evaluates any public interest benefits to determine whether the proposed transaction, on balance, serves the public interest. In addition, the Commission can condition approval of a license transfer on the divestiture of licenses or certain other commitments where necessary to find that an application serves the public interest.126 1. Service Providers’ Spectrum Holdings 40. Table II.E.2 and Table II.E.3 below present spectrum holdings by service provider. As of May 2017, the four nationwide service providers, Verizon Wireless, AT&T, Sprint, and T-Mobile, together, held approximately 76 percent of all spectrum, measured on a MHz-POPs basis. 123 Mobile Spectrum Holdings Report and Order, 29 FCC Rcd at 6233, 6240, paras. 267, 286-88. 124 For example, the Commission also considered whether harms in numerous local markets may result in nationwide harms and has considered potential harms from concentration in a particular band with an important ecosystem. See, e.g., Applications of Cellco Partnership d/b/a Verizon Wireless and SpectrumCo LLC and Cox TMI, LLC for Consent To Assign AWS-1 Licenses, Memorandum Opinion and Order, 27 FCC Rcd 10698, 10721-22, 10727, paras. 64, 76 (2012) (Verizon Wireless-SpectrumCo Order). 125 These competitive variables include, but are not limited to: the total number of rival service providers; the number of rival firms that can offer competitive service plans the coverage b\ technolog\ of the firms’ respective networNs the rival firms’ marNet shares the combined entit\’s post-transaction market share and how that share changes as a result of the transaction; the amount of spectrum suitable for the provision of mobile telephony/broadband services controlled by the combined entity; and the spectrum holdings of each of the rival service providers. See, e.g., Sprint-Shentel-NTELOS Order, 31 FCC Rcd at 3640-41, para. 21; AT&T-Leap Order, 29 FCC Rcd at 2745-46, para. 21. 126 See, e.g., Sprint-Shentel-NTELOS Order, 31 FCC Rcd at 3651-53, paras. 45-49; AT&T-Leap Order, 29 FCC Rcd at 2743- 44, para. 16; Verizon Wireless-SpectrumCo Order, 27 FCC Rcd at 10711, para. 30. Federal Communications Commission FCC- CIRC1709 - 08 28 Table I I . E.2 Percentage Spectrum Holdings, Measured on a MHz - POPs Basis by Licensee , by Frequency Band * 600 MHz 700 MHz Cell. SMR PCS H Block AWS- 1 AWS- 3 AWS- 4 WCS BRS EBS Spectrum 70 meg. 70 meg. 50 meg. 14 meg. 130 meg. 10 meg. 90 meg. 65 meg. 40 meg. 20 meg. 67.5 meg. 112.5 meg. **** AT&T 3.8% 41.6% 44.5% 0.0% 29.3% 0.0% 16.2% 33.6% 0.0% 100.0% 0.0% 0.0% Sprint 0.0% 0.0% 0.0% 96.5% 28.6% 0.0% 0.0% 0.0% 0.0% 0.0% 86.8% 69.8% T- Mobile 45.3% 14.2% 0.1% 0.0% 22.0% 0.0% 41.0% 5.6% 0.0% 0.0% 0.0% 0.0% VZW 0% 31.0% 47.5% 0.0% 16.4% 0.0% 39.1% 18.9% 0.0% 0.0% 0.0% 0.0% USCC 2.6% 3.6% 4.0% 0.0% 1.1% 0.0% 0.8% 2.6% 0.0% 0.0% 0.0% 0.0% DISH** 26.2% 6.6% 0.0% 0.0% 0.0% 100.0% 0.0% 35.0% 100.0% 0.0% 0.0% 0.0% Other 22.0% 3.0% 3.9% 3.5% 2.6% 0.0% 2.9% 4.3% 0.0% 0.0% 13.2% 30.2% * Staff estimates as of May 2017. Abbreviations for spectrum bands: Cell. (Cellular), SMR (Specialized Mobile Radio Service), PCS (Personal Communications Service), BRS (Broadband Radio Service), and EBS (Educational Broadband Service). ** DISH currently does not provide mobile service. *** In the application of the spectrum screen in proposed secondary market transactions, EBS spectrum is discounted such that 89 megahertz is included. Federal Communications Commission FCC- CIRC1709 - 08 29 Table II.E .3 Population - Weighted Average Megahertz Holdings by Licensee , by Frequency Band * 600 MHz 700 MHz Cell. SMR PCS H Block AWS- 1 AWS- 3 AWS- 4 WCS BRS EBS Spectrum Counted 70 meg. 70 meg. 50 meg. 14 meg. 130 meg. 10 meg. 90 meg. 15 meg. 40 meg. 20 meg. 67.5 meg. 112.5 meg. *** AT&T 2.6 29.2 23.6 0.0 38.1 0.0 14.6 20.3 0.0 20.0 0.0 0.0 Sprint 0.0 0.0 0.0 13.9 37.3 0.0 0.0 0.0 0.0 0.0 58.6 78.5 T- Mobile 30.8 9.9 0.0 0.0 28.7 0.0 36.9 3.4 0.0 0.0 0.0 0.0 VZW 0.0 21.7 25.2 0.0 21.4 0.0 35.2 11.4 0.0 0.0 0.0 0.0 USCC 1.8 2.5 2.1 0.0 1.5 0.0 0.7 1.6 0.0 0.0 0.0 0.0 DISH** 17.8 4.6 0.0 0.0 0.0 10.0 0.0 21.1 40.0 0.0 0.0 0.0 Other *** 14.9 2.1 2.0 0.5 3.4 0.0 2.6 2.6 0.0 0.0 8.9 34.0 * Staff estimates as of May 2017. ** DISH currently does not provide mobile service. *** In the application of the spectrum screen in proposed secondary market transactions, EBS spectrum is discounted such that 89 megahertz is included. 41. Chart II.E.1 shows the population-weighted average megahertz spectrum holdings of nationwide wireless service providers by frequency, and provides a side-by-side comparison of each licensee’s total spectrum holdings by band, measured by population-weighted average megahertz.127 127 We consider population-weighted spectrum holdings in order to account for customer density in different geographic areas. A spectrum license in Los Angeles or New York City, for example, covers more customers than a spectrum license over the same amount of land area in White Sands, New Mexico. Federal Communications Commission FCC- CIRC1709 - 08 30 Note: Staff estimates as of May 2017. F. Wireless Infrastructure 42. Wireless infrastructure facilities constitute another major input in the provision of mobile wireless services. In addition to towers and other tall structures, such as lattice towers, guyed towers, monopoles, rooftops, water towers, and steeples, wireless infrastructure also includes distributed antenna systems (DAS)128 and small cells,129 deployed to improve spectrum efficiency for 4G and future 5G services, and to address coverage and capacity issues indoors, in densely populated areas outdoors, and even underground.130 For example, small cells 128 A DAS network consists of three primary components: (i) a number of remote communications nodes (DAS node(s)), each including at least one antenna for the transmission and reception of a wireless service provider’s R) signals ii a high capacity signal transport medium (typically fiber optic cable) connecting each DAS node back to a central communications hub site; and (iii) radio transceivers or other head-end equipment located at the hub site that propagates and/or converts, processes or controls the communications signals transmitted and received through the DAS nodes. The HetNet Forum, Distributed Antenna Systems (DAS) and Small Cell Technologies Distinguished, at 3 (Feb. 2013), http://www.thedasforum.org/resources/send/2-resources/24-das-and-small-cell-technologies-distinguished. 129 “Small cell” is an umbrella term for operator-controlled, low-powered radio access nodes, including both those that operate in licensed spectrum and those that operate in unlicensed carrier-grade Wi-Fi. Small cells typically have a range from 10 meters to several hundred meters. Small Cell Forum, Small Cell Definition, http://www.smallcellforum.org/about/about-small-cells/small-cell-definition/ (last visited Sept. 1, 2017). 130 The HetNet Forum, Distributed Antenna Systems (DAS) and Small Cell Technologies Distinguished, at 6 (Feb. 2013), http://www.thedasforum.org/resources/send/2-resources/24-das-and-small-cell-technologies-distinguished; Accelerating Wireless Broadband Deployment by Removing Barriers to Infrastructure Investment, Notice of Proposed Rulemaking and Notice of Inquiry, 32 FCC Rcd 3330, 3343, para. 32 (2017) (Wireless Infrastructure Notice). Another component of a wireless service provider’s networN are bacNhaul connections that linN a mobile wireless service provider’s cell sites to the mobile switching centers that provide connections to the provider’s core networN, the public switched telephone networN, or the Internet, carrying wireless voice and data traffic for routing and onward transmission. Backhaul facilities are generally - 10 20 30 40 50 60 70 Verizon Wireless AT&T Sprint T-Mobile USCC DISH Other M H z- Po p s (B il li o n s) Chart II.E.1: Spectrum Holdings by Band Weighted by Population EBS BRS WCS AWS-4 AWS-3 AWS-1 H Block PCS SMR Cellular 700 MHz 600 MHz Federal Communications Commission FCC- CIRC1709 - 08 31 and DAS antennas can be placed on utility poles, buildings, or traffic signal poles in areas where constructing towers is not feasible or wireless traffic demands are too great to be met solely with large cells.131 43. In order to expand or to improve coverage in existing service areas, and to accommodate newer technologies, mobile service providers historically have deployed additional cell sites. According to CTIA, there were 308,334 cell sites in use at year-end 2016, up from 307,626 as of year-end 2015 (approximately 0.2 percent increase).132 Mobile service providers increasingly have started to deploy small cells and DAS sites to fill local coverage gaps, to densify networks and to increase local capacity, or to prepare for their 5G network.133 According to one analyst, between 100,000 and 150,000 small cells could be installed nationwide by the end of 2018.134 Rather than building their own DAS deployments, some service providers share neutral host systems owned by third-party operators.135 44. A specialized communications tower industry has developed to provide and manage the support structures for the cell sites. Today, there are more than 120 tower and DAS operators in the United States,136 and a majority of towers are now owned or operated by independent companies rather than by mobile wireless service provided by incumbent local exchange carriers (ILECs), competitive local exchange carriers (CLECs), competitive fiber and microwave wholesalers, cable providers, and independent backhaul operators. Nineteenth Report, 31 FCC Rcd at 10589, para. 75; Sixteenth Report, 28 FCC Rcd at 3912, para. 336. 131 Because DAS sites are less visible than tower structures, they may be particularly desirable in areas with stringent siting regulations, such as in historic districts. 132 CTIA Wireless Industry Indices Year-End 2016, at 72. Because multiple cell sites can be co-located in the same “tower” site, the reported cell sites should not be eTuated with “towers.” The reported cell sites include repeaters and other cell- extending devices (e.g., femtocells or distributed antenna systems). Id. at 72. Appendix II: Characteristics of the Mobile Wireless Industry, Table II.F.i provides information on year-end cell site counts by service provider. 133 See, e.g., Sprint Q2 2016 Earnings Call transcript, at 4, http://s21.q4cdn.com/487940486/files/doc_financials/quarterly/2016/Q2/S-US-20161025-1881741-C.pdf; see also FierceWireless, Sprint Exec Acknowledges Small Cell µMisunderstandings,’ Promises Expanded Rollout in 2017 (Jan. 19, 2017), http://www.fiercewireless.com/wireless/sprint-exec-acknowledges-small-cell-misunderstandings-promises-expanded- rollout-2017; Verizon 2016 Annual Report, at 39; RCR Wireless, Verizon Claims 'Largest Small Cell Deployment' in the U.S (Mar. 17, 2017), http://www.fiercewireless.com/wireless/verizon-claims-largest-small-cell-deployment-any-u-s-carrier; CTIA Comment, at 38; RCR Wireless, AT&T Explains Small Cell Siting Strategy (Nov. 10, 2016), http://www.rcrwireless.com/20161110/network-infrastructure/att-explains-small-cell-siting-strategy-tag4-tag99; New Network Technologies Coming for Our Customers in 2017, Verizon Blog (Jan. 23, 2017), http://www.verizon.com/about/news/new-network-technologies-coming-our-customers-2017-building-2016- accomplishments; see also RCR Wireless, Carrier small cells appear slowly but surely (May 24, 2016), http://www.rcrwireless.com/20160524/carriers/carrier-small-cells-tag4. 134 S&P Global Market Intelligence, John Fletcher, Small Cell and Tower Projections through 2026, SNL Kagan Wireless Investor (Sept. 27, 2016); see also CT,$ Comments at  “Charter intends to eventually extend its own network, including densification via small cells”  RCR Wireless, Crown Castle: Small Cell Revenue Could Equal Tower Revenue (Oct. 25, 2016), http://www.rcrwireless.com/20161025/network-infrastructure/crown-castle-small-cell-revenue-could-rival-tower- revenue-tag4. 135 Wireless Infrastructure Association, Distributed Antenna Systems (DAS) in Mid-Tier Markets, at 4, http://wia.org/wp- content/uploads/Distributed-Antenna-Systems-DAS-in-Mid-Tier-Markets.pdf; RCR Wireless, Sprint network expanding in New England thanks to GNW and ExteNet (July 6, 2016), http://www.rcrwireless.com/20160706/carriers/sprint-network- expanding-in-rural-new-england-thanks-to-gnw-and-extenet-tag4; RCR Wireless, Crown Castle spends more on small cells than on new towers (Dec. 15, 2015), http://www.rcrwireless.com/20151216/network-infrastructure/crown-castle-spends- more-on-small-cells-than-on-new-towers-tag4. 136 Wireless Estimator, Top 100 Tower Companies in the U.S., http://wirelessestimator.com/top-100-us-tower-companies-list/ (last visited Sept. 1, 2017). Federal Communications Commission FCC- CIRC1709 - 08 32 providers.137 Independent tower operators own, operate and lease shared wireless communications and broadcasting towers, manage other tall structure sites (such as rooftops and water towers), and to a lesser extent, own and operate neutral facilities to host small cells and DAS networks for mobile service providers.138 In most cases, tower operators and property owners lease antenna, rooftop and other site space to multiple wireless service providers.139 45. As of December 2016, according to one estimate, the three largest publicly-traded neutral host providers (Crown Castle, American Tower, and SBA Communications) owned or operated approximately 95,000 towers (not including DAS and small cells).140 At the end of December 2016, the top three tower operators had 1.8 to 2.2 tenants per tower site and had significant capacity available for additional antennas or tenants.141 Chart II.F.1 shows that, as of April 2017, there were three or more tower operators in 91 percent of counties nationwide, and six or more tower operators in 53 percent of counties based on tower site data collected from 44 tower providers.142 As shown in Chart II.F.2, tower operators tend to build and operate more towers in more densely populated areas. For example, as of June 2017, the average number of tower sites per county was 45 for counties with a population density between 75 and 100 people per square mile, compared to 781 per county for counties with a population density between 2000 and 4000 people per square mile. Between April 2016 and April 2017, the average number of tower sites per county increased from 584143 to 815 in the most densely-populated counties, with a population density of over 4000 people per square mile. This likely reflects both network densification efforts by mobile service providers and the inclusion of more tower operators in the sample. 137 Some major wireless service providers have sold their tower business to third party tower operators. See, e.g., American Tower, American Tower Corporation Closes Verizon Transaction (Mar. 30, 2015), http://www.americantower.com/corporateus/investor-relations/press-releases/news-item.htm?id=2030383. 138 American Tower 2016 Annual Report (10-K), at 1 & 27; Crown Castle 2016 Annual Report (10-K), Part 1, at 1 & 4; SBA Communications 2016 Annual Report (10-K), Part 1, at 1; see also Crown Castle, Crown Castle Announces Agreement to Acquire Lightower (July 18, 2017), http://investor.crowncastle.com/phoenix.zhtml?c=107530&p=irol- newsArticle&ID=2287220. 139 See, e.g., American Tower 2016 Annual Report, at 1, http://www.verizonwireless.com/b2c/realestate/ (last visited Sept. 1, 2017). 140 Wireless Estimator, Top 100 Tower Companies in the U.S. (Crown Castle at 40,039, American Tower at 39,989, SBA at 14,873, and as of December 2016, not including rooftop sites, DAS and small cells), http://www.wirelessestimator.com/t_content.cfm?pagename=US-Cell-Tower-Companies-Complete-List (last visited Sept. 1, 2017). 141 American Tower 2016 Annual Report, Part I, at 4 (1.9 tenants per tower), Crown Castle 2016 Annual Report, at 18 (2.2 tenants per tower), and SBA 2016 Annual Report, Item 1, at 4 (1.8 tenants per tower). 142 Tower site information was downloaded from 44 tower providers’ websites in $pril 20. Wireless Estimator, Top 100 Tower Companies in the U.S., http://www.wirelessestimator.com/t_content.cfm?pagename=US-Cell-Tower-Companies- Complete-List (last visited Sept. 1, 2017). The 44 tower providers are American Tower Corporation, AT&T, Arcadia Towers, Badger Towers, Branch Communications/Branch Towers, Crown Castle, Communication Enhancement, Clearview Tower Company, Central States Tower Holdings, Day Wireless Systems, ForeSite, Grain Management, Hayes Towers, Heartland Towers, Hemphill Tower, Horizon Tower, Horvath Communications, Industrial Communications, K2 Towers, KGI Wireless, Message Center Management, MidAmerica Towers, Milestone Communications, Municipal Communications, Nsight Tower Holdings, Performance Development Group, Phoenix Tower International, Prime Tower Development, RG Towers, SBA Communications Corporation, Skyway Towers, Sprint, Subcarrier Communications, T-Mobile, Tarpon Towers, Telecom Tower Group, TowerCo, TowerCom, Tower King, Tower Sites Inc., Tower Ventures, Unison Site Management, Vertical Bridge Holdings, and Wireless Access Group. 143 Nineteenth Report, 31 FCC Rcd at 10587, Chart IV.B.2. Federal Communications Commission FCC- CIRC1709 - 08 33 Source: Data collected from 44 tower companies on standalone towers, rooftops, DAS, and small cells (April 2017). Source: Data based on 44 tower companies. Counties considered rural are those with 100 people or less per square mile. Population density is from the 2010 U.S. Census. Tower sites include standalone towers, rooftops, DAS, and small cells. 46. Several factors affect the cost and speed with which towers and DAS sites can be deployed or modified. Three of the most important are: (i) the capital cost of deploying or modifying a site; (ii) the cost and time involved in obtaining the necessary zoning approvals from local authorities; and (iii) the cost and time involved in complying with federal environmental and historic preservation laws, which includes engagement 8 74 194 283 380 541 519 399 261 200 136 90 47 0 0 100 200 300 400 500 600 0 1 2 3 4 5 6 7 8 9 10 11 12 13+ Nu m b er o f C o u n ti es Number of Site Operators in a County Chart II.F.1 Number of Counties with a Certain Number of Site Operators, April 2017 6.1 12.8 20.3 27.6 38.3 45.2 73.9 84.1 137.2 170.5 226.6 177.3 395.6 780.8 815.5 0 100 200 300 400 500 600 700 800 900 <=1 (1, 10] (10, 25] (25, 50] (50, 75] (75, 100] (100, 150] (150, 200] (200, 250] (250, 500] (500, 750] (750, 1000] (1000, 2000] (2000, 4000] >4000 A ve S it e C n ts p er C n ty County Population Density Range (persons per square mile) Chart II.F.2 Ave Tower Site Counts per County vs. Pop Density, April 2017 Rural Federal Communications Commission FCC- CIRC1709 - 08 34 with state and Tribal historic preservation authorities.144 In terms of capital expenditures, co-locating wireless equipment on existing structures is often the most efficient and least costly solution for mobile wireless service providers that need new cell sites, and co-location reduces the cost of entry or market expansion. Estimates of the average cost of building a new cell site tower range from $150,000 to $300,000,145 while the average cost of co- location on an existing tower is about 30 percent of the total cost of a new tower.146 The per-site cost (including both capital and operating costs) for small cells is estimated to be less than half of the per-site cost for macro sites.147 According to CTIA, over the past seven years, mobile wireless providers collectively have invested more than $30 billion annually, on average, in next-generation networks and wireless infrastructure.148 III. ELEMENTS OF INTER-FIRM RIVALRY 47. Mobile wireless service providers compete for customers across many dimensions, including on price, service characteristics, service quality, advertising and marketing, investment, network coverage and technology, and speed of service. Such price and non-price rivalr\ can influence a customer’s choice of a service provider and thus impose significant competitive constraints on the ability of individual service providers to raise price or reduce quality or quantity, especially in high technology industries that experience rapid innovation.149 This Section presents data on various elements of price and non-price rivalry. A. Pricing Levels and Trends 48. The following discussion of developments in mobile service pricing focuses on pricing changes during the period covered by this Report.150 We note first that mobile service providers offer nationwide pricing plans throughout their service area, with little pricing disparity between rural and non-rural markets.151 The majority of mobile wireless subscribers in the United States are billed monthly, after service has been provided (postpaid service), while others pay for services in advance of receiving them (prepaid service). 1. Postpaid Service 49. In 2016, we observed two significant trends in post-paid pricing plans as providers sought to distinguish themselves from their rivals: increased pricing pressure as indicated by the return of “unlimited” data 144 Nineteenth Report, 31 FCC Rcd at 10537, para. 74; Sixteenth Report, 28 FCC Rcd at 3908, para. 328. 145 Statistic Brain Research Institute, Cell Phone Tower Statistics (April 24, 2017), http://www.statisticbrain.com/cell-phone- tower-statistics/ (average cost of building a cell phone tower is $150K); see also PCIA Comments to the Seventeenth Report, at  -une , 20 “on average, a new wireless support structure costs approximately $250,000 to $300,000”  Cit\ of Wayzata, Minnesota, SEH, Telecommunications Site Options Analysis Report, Table 1, at 25 (Dec. 5, 2012), http://www.wayzata.org/DocumentCenter/View/402 (estimating the cost of building a new telecommunication tower is between $265K and $277K for three sites in City of Wayzata, Minnesota); RCR Wireless, AT&T Cell Site of the Future Hits a Speed Bump (July 17, 2014), http://www.rcrwireless.com/article/20140717/infrastructure-2/att-cell-site-future-hits-speed- bump/ (last visited Sept. 1, 2017) (stating the cost per site was coming in at $380,000 in the New York metro area). 146 Statistic Brain Research Institute, Cell Phone Tower Statistics, http://www.statisticbrain.com/cell-phone-tower-statistics/ (last visited Sept. 1, 2017) (average cost of building a cell phone tower is $150K, while the average yearly cell phone tower lease rate is $45K, about 30% of the cost of building a new cell tower). 147 Senza Fili Consulting, The Economics of Small Cells and Wi-Fi Offload, at 2 (2012), http://www.senzafiliconsulting.com/Portals/0/docs/Reports/SenzaFili_SmallCellWiFiTCO.pdf. 148 CTIA Comments at 29. 149 Nineteenth Report, 31 FCC Rcd at 10599, para. 94; Sixteenth Report, 28 FCC Rcd at 3732, 3796-97, paras. 9, 136. 150 This renders unnecessary a separate, standalone rate survey authorized in the 2011 Order that modernized the universal service program for awarding support to mobile service providers in high-cost areas. Connect America Fund, Report and Order and Further Notice of Proposed Rulemaking, 26 FCC Rcd 17663, 17694, 17708-09, paras. 85, 113, and 114 (2011). 151 Nineteenth Report, 31 FCC Rcd at 10592, para. 81; Sixteenth Report, 28 FCC Rcd at 3797, para. 137. Federal Communications Commission FCC- CIRC1709 - 08 35 plans, and the offering of content particularl\ video that does not count against a customer’s data limit.152 Also, service providers have offered various promotions designed to partiall\ or full\ compensate consumers’ switching costs.153 a. Pricing Trends and “Unlimited ” Data Plans 50. Service providers frequently revise their pricing plans to attract customers. For example, in February 2016, Sprint introduced the Sprint Better Choice Plan, which included unlimited voice and text and a choice of six tiers of data, including one plan with unlimited data.154 In July 2016, Verizon launched the New Verizon Plan, which revised the previously existing five data tiers by adding 30 percent to 50 percent more data per tier for only a moderate increase in price.155 In August 2016, AT&T launched the AT&T Mobile Share Advantage Plan, which started at $30 per month for 1 GB of data±up from $20 a month for 300 MB of data. AT&T further offered a plan with 3 GB of data at $40 per month, while 30 GB of data was $135 per month.156 In late August 2016, T-Mobile introduced the One+ Plan, which added unlimited tethering, 3G international roaming, and unlimited GOGO in-flight Wi-Fi, to their One Plan for an additional $25 fee.157 In August 2016, US Cellular launched the Data Shared Connect Plan, which included unlimited talk and text and 2 GB of data for $30 per month, and up to 24 GB for $100 per month.158 According to analysis by Recon Analytics and CTIA, presented in FierceWireless, the cost per MB has fallen from $1.37 in 2007 to less than half a cent in 2016.159 51. One significant trend that has developed recently is the return of “unlimited” data plans.160 In January 2016, AT&T introduced the AT&T Unlimited Plan for DIRECTV (or U-Verse). While that plan was made available only to DIRECTV subscribers,161 it signaled a shift towards service providers again offering 152 Zero-rating is the exempting of certain data uses or content from counting towards a subscriber’s monthl\ limit. Fifteenth Report, 26 FCC Rcd at 10594, para. 85. 153 Nineteenth Report, 31 FCC Rcd at 10595-96, para. 87. 154 FierceWireless, Sprint Takes Aim at Verizon with Data-heav\ µ%etter Choice’ )amil\ 3lans )eb. , 20 , http://www.fiercewireless.com/wireless/sprint-takes-aim-at-verizon-data-heavy-better-choice-family-plans. 155 3C Mag, 9erizon’s 1ew 3lans 2ffer +igher Rates %ut More 'ata -ul\ , 20 , http://www.pcmag.com/news/345869/verizons-new-plans-offer-more-data-higher-rates. 156 )ierceWireless, $T T )ollows 9erizon’s /ead, ,ntroduces 3ricier 3lans, More 'ata and Removes 2verage Charges (Aug. 17, 2016), http://www.fiercewireless.com/wireless/at-t-follows-verizon-s-lead-introduces-pricier-plans-and-more-data. 157 PC Mag, T-Mobile $dds µOne Plus’ Plan for µPower Users’ (Aug. 29, 2016), http://www.pcmag.com/news/347392/t- mobile-boosts-one-plan-video-streaming-speeds. 158 U.S. Cellular, U.S. Cellular Adding Customer Value With New Shared Connect Pricing Plans (Aug. 25, 2016), https://www.uscellular.com/about/press-room/2016/USCELLULAR-ADDING-CUSTOMER-VALUE-WITH-NEW- SHARED-CONNECT-PRICING-PLANS.html. 159 FierceWireless, Industry Voices˛(ntner Consumer µ6urplus’ in Wireless Rises 2% in 2