How Does the FCC Evaluate Competition?

The FCC will identify specific markets that require additional review using a test known as the Herfindahl-Hirschman Index (HHI), which measures the concentration of wireless providers in the area. The commission will also look at the spectrum for mobile services in a given area and see what percentage of that spectrum is held by the parties in question.

AT&T executives have argued that in a local market analysis it will show that at least four carriers and sometimes five are available in most major cities. However, consumer groups like take issue with this notion and know that Verizon & AT&T are cozy cartels. It is obvious by analyzing the financials of the two biggest wireless players AT&T and Verizon have a significant advantage with annual revenues almost 5X larger than the nearest competitor. AT&T & Verizon generated $100B+ in annual revenue and are getting bigger while smaller competitors aren’t able to keep up especially in light of specialized deals with companies like Apple iPhone and their huge marketing budgets.

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