A new report from The Brattle Group and NATE: The Communications Infrastructure Contractors Association concludes that there are significant and dangerous “structural failures” in the mobile industry, particularly in the tower climbing and construction sectors.
The report, titled “Market Failure in the Wireless Communications Industry,” says the situation poses long-term risks to national security, public safety, and wireless innovation.
“The findings underscore how a small group of dominant buyers — Verizon, AT&T, and T-Mobile — are leveraging outsized influence over a fragmented base of hundreds of infrastructure contractors, resulting in widespread underinvestment in skilled, specialized labor and creating an unsustainable economic model. The report characterizes the relationship between MNOs and contractors as a classic monopsony — where a few dominant buyers suppress compensation across a highly fragmented supply chain.”
The report found that 97% of the mobile market is controlled by the big three carriers. It cites what it refers to as evidence of “monopsony” power. Mobile contractors report that:
- Mobile network operator (MNO) pricing is insufficient to cover their costs (80%)
- Increased costs to manage customer materials (89%)
- That they are required to pay for third-party compliance programs (98%)
- Increasing late payments from MNOs (13%-41%)
- Limited success in contract renegotiations (Verizon 7%, T-Mobile 6%, AT&T 16%)
- Declining gross profit margins over the last three years (84%)
- Pricing agreements fail to account for site-specific challenges (96%)
- They do not receive compensation for these costs from MNOs (97%)
- Incurring increased training costs (84%)
The report also found that 54% of mobile contractors have reduced their employee count during the past three years.
Last week, the Ookla released a Speedtest Connectivity Report that emphasized the dominance of the big three. It found that T-Mobile was rated the best mobile network, Verizon was best in video and AT&T Fiber tops as the fastest internet service provider.
