The four biggest cellular providers may end up dominating the market and making excessive profits because of FCC policies, says the Government Accountability Office.
In a report, the GAO notes that some carriers and consumer groups perceive certain Federal Communications Commission wireless policies as having prevented the entry and growth of small and regional carriers.
These include spectrum policies, special access prices, early termination fees and exclusive handset arrangements.
And while prices have fallen dramtically over the last ten years, says the report, the industry is in danger of consolidating into a situation where it's dominated by four major companies - AT&T, Sprint-Nextel, Verizon and T-Mobile.
The GAO is now calling for the FCC to expand its data collection on industry investment and costs to consumers.
"The GAO’s findings, together with the FCC’s recent report on wireless competition, paint a clear picture of an increasingly concentrated industry, in which competitors and consumers pay high prices to pad the high profit margins of AT&T and Verizon," says Free Press Policy Counsel M Chris Riley.
"Inflated backhaul costs, misguided spectrum policies and exclusive rights to popular devices have fostered an environment where companies cannot compete on a level playing field. With the lack of competition, consumers are paying the price through early termination penalties, hidden and vague usage restrictions, and non-transparent, nonsensical charges and fees."
The CTIA, which represents mobile carriers, says the report is largely positive.
"In finding that wireless consumers are seeing 'lower prices and better coverage', today’s GAO report confirms what we’ve been saying for a long time - that the US wireless industry is extremely competitive and continues to respond to increasing consumer demand by delivering real benefits for American consumers," says CTIA president and CEO Steve Largent.
"It is significant that the GAO reports that the cost of wireless service in 2009, adjusted for inflation, is about 50 percent less than in 1999."