Key Takeaways from “A Communications Oligopoly on Steroids”July 24, 2017
Public Knowledge President and CEO Gene Kimmelman partnered with Consumer Federation of America Research Director Mark Cooper and the Washington Center for Equitable Growth to publish “A Communications Oligopoly on Steroids: Why antitrust enforcement and regulatory oversight in digital communications matter.” You can download the paper here and view the key takeaways from their research below.
- On average, prices for cable, broadband, wired telecommunications, and wireless services charged by the telecommunications oligopoly in the United States are inflated by about 25 percent above what competitive markets should deliver, costing the typical U.S. household more than $45 a month, or $540 a year.
- U.S. consumers in aggregate pay almost $60 billion per year to the telecommunications oligopoly due to inflated prices for cable, broadband, wired telecommunications, and wireless services.
- The concentration of four main U.S. telecommunications companies enables these firms to earn astronomical profits. Their earnings before interest, taxes, and depreciation and amortization, or EBITDA, a standard financial measure of profitability, are between 50 percent and 90 percent compared to the national average for all industries of just under 15 percent.
- The measure of market concentration of these four telecommunications firms based on the standard Herfindahl-Hirschman Index, or HHI, used by antitrust regulators, stands at between 2,800 and 6,600 compared to the currently acceptable market concentration level of 2,500.
- Due to rigorous antitrust enforcement in 2011 that blocked a proposed merger between AT&T and T-Mobile, the wireless services sector of the telecommunications industry is the only one with meaningful competition. By 2015, the average revenue per user accrued by wireless services providers was between $4-to-$5 less than it would have been, saving consumers in total more than $11 billion per year.