The FCC’s 14th annual report on the state of competition in the wireless industry released this week has raised concerns among wireless carriers that the commission might use it to justify greater regulation of the wireless industry.

Of greatest concern to industry stakeholders was that, unlike past reports, which found that the wireless industry was “effectively competitive,” this year’s report does not reach that conclusion. The FCC notes that Verizon and AT&T combined now have a market share of more than 60% and growing and that industry concentration has increased 32% since 2003. Also of concern was the FCC’s observation that capital investment declined as a percentage of industry revenue between 2005 and 2008, from 20% to 14%.

Steve Largent, president and CEO of CTIA-The Wireless Association, said in a statement that the CTIA was “disappointed and confused” about the lack of an “effective competition” finding and also defended U.S. carrier network investment.  The $44 billion that the wireless industry invested in networks and spectrum in 2008, he said, was more than carriers in Germany, France, Italy, Spain and the U.K. invested on a combined basis during the same period, he said.

Verizon also drew on third-party sources to defend the state of U.S. wireless competition. “Competition is bringing enormous benefits to consumers, as reflected in the American Consumer Satisfaction Index’s new report showing wireless customer satisfaction is at an all-time high,” said Verizon Senior Vice President of Federal Regulatory Affairs Kathleen Grillo in a statement.

On a more positive note for the telecom industry, the FCC said that “as mobile wireless broadband usage grows, access to spectrum becomes increasingly important for competition.” The FCC also noted that most of the spectrum below 1 GHz in both the cellular band and the 700 MHz band is not widely held.

The comments build on recommendations made in the National Broadband Plan issued by the FCC in March, which call for freeing up an additional 500 MHz of spectrum within 10 years.

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