Public ForumFor the 7th Annual CMRS

Competition Report

Federal Communications Commission

February 28, 2002

Charles R. Mahla, Ph.D.Econ One Research, Inc.Sacramento, California916 449 2860

www.econone.comwww.wirelesssurvey.com

Econ One’s Wireless Survey

• Not a consumer questionnaire• It is a “Survey” of Wireless Plans

• Data from Carriers’ Web sites

• Survey Entails collection/analysis of over 2,500 pricing plans each month.

• Four usage levels analyzed: 30, 150, 300, and 600 minutes per month.

• Three different Peak/off-peak assumptions.

• Top 25 Markets Since September 1999.

Econ One’s Wireless Survey…

• Does not estimate “average cost of service.”

• not attempt to value roaming or long distance.

• Does provide insight into service cost trends.

• Allows for inter-city trend and intra-carrier cost

Wireless Performance/Cost ofService Trends

• Demand for Wireless Service Continues to Grow

• Penetration and usage (MOU) continue to rise

• Cost of Service Continues to Fall

• Footprints are Getting Larger

• Localized Pricing is being Replaced by Regional/National Plans

Wireless MonthlyMinutes of Use (MOU)

Source:IDC, RCR News, May 15, 2000, “The Wireless Industry Scorecard,” Legg Mason, 3Q 2001.

89

155

247

363

0

50

100

150

200

250

300

350

400

1998 1999 2000 2001

MonthlyMinutes of Use

Num

ber

of M

inut

es p

er M

onth

Wireless PricingContinues Downward Trend

From December 2000 to December 2001average service rates based on the four usagebuckets included in our survey fell by 7.3%.

This decline followed a nearly 7% decline in

0

10

20

30

40

50

60

30 150 300 600

'December 2000

'December 2001

Wireless PricingContinues Downward Trend

+5.9% -4.5% -10.4% -11.7%

$

Mon

thly

Cos

t

Source: Econ One Research, Inc. Monthly Wireless Survey.

Wireless Performance/Cost ofService Trends

• The most expensive city was almost 34% more expensive than the least expensive city in

• The gap fell to 8% by December 2001.

Difficulties in Calculating anIndex of Cost of Service

• MOU data are hard to come by.

• Distribution of users by plan type unknown.

• Time-of-day usage statistics are not publicly

• Consumer surveys help—how accurate are they?

• City-specific MOU are even more difficult to find.

Econ One’s Findings on “Rural”Market Service Costs

• Conducted 25-market review in October 2001.

• Average number of carriers per market: 3.3.

• Average population: 95,611.

• Versus 4.4 million average population in Top 25 markets.

• Versus 4.9 per market in Top 25 markets.

• Market selection not “scientific.”

25 Markets Used in “Rural” Analysis

O mi 200 400 600 800 1000

25

21

22

23

24 1

2

3

4

5 6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

Plattsburgh, NY

Presque Isle, ME

Meadville, PA

Mt. Pleasant, MI

Fairmont, WV

Dyersburg, TN

West Plains, MO

Mason City, IA

Fergus Falls, MNDickinson, ND

Aberdeen, SD

Kalispell, MT

Riverton, WYTwin Falls, ID

Bend, OR

Eureka, CA

El Dorado, AR

McComb, MS

McAlester, OKRoswell, NM

Dodge City, KS

Grand Island, NE

Flagstaff, AZ

St. George, UT

Grand Junction, CO

Econ One’s Findings on “Rural”Market Service Costs

October 2001 70 % Peak Minutes of Usage Per Month

City 30 150 300 600 Average

Top 25 Markets $23.46 $34.69 $39.79 $51.61 $37.39"Rural" Markets $23.52 $31.09 $36.34 $54.39 $36.34

Large-Market Premium -$0.07 $3.60 $3.45 -$2.78 $1.05% Difference -0.3% 11.6% 9.5% -5.1% 2.9%

Average Monthly Charge for Wireless ServiceComparison Across Market Groups Surveyed

October 2001

(Dollars Per Month)

Econ One’s Findings on “Rural”Market Service Costs

Source: Econ One Research, Inc. and providers' websites as of October 5, 2001.

High-Low Spread Across CitiesComparison Across Market Groups Surveyed

October 2001

(Dollars Per Month)

Questions and Comments

Presentation Available for Downloadat: