A Call for Help

“‘The U.S. [cell phone] industry is a freak of nature, an artificial creation with more competitors than the economic reality justifies,’ argues Scott Ford, president of Arkansas-based Alltel, the largest regional cell phone company. ‘It’s the biggest issue facing the industry. We are rapidly moving from wealth creation to wealth destruction.’ What’s needed is a wrenching, top-to-bottom consolidation – and it is coming soon, thanks to the unlikeliest of saviors: the FCC. By year-end the FCC is expected to eliminate, or at least loosen, restrictions that have effectively banned large-scale consolidation. The most important restriction is the cap on how much radio-wave spectrum a single cellular firm can control in a given city; another rule bans cross-ownership of certain types of cellular licenses. Together the regulations effectively guarantee fragmented, unprofitable markets.”

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