Consolidation in the Wireless Phone Industry

The initial wireless phone industry in the United States had many competitors, but due to mergers and acquisitions the industry has become highly consolidated. This paper documents the history of the consolidation. More importantly, I use the geographic path of consolidation to distinguish whether consolidation has been motived by retail market power or efficiency explanations. One efficiency explanation is that consumers prefer national coverage areas. I use data on roaming agreements in the early cellular industry to analyze whether contracts can substitute for roaming agreements. Finally, in joint work with Patrick Bajari and Stephen Ryan we estimate the consumer valuation for national coverage areas using plan demand data. ∗Financial support of the NET institute (http://www.NETinst.org) is gratefully acknowledged. Research assistance has been provided by Edmund Cheng, Charles Kinzer, and Manasi Vydyanath.