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The U.S. wireless market clearly exhibits a "long tail" distribution. Just four of the country’s mobile operators accounted for 90 percent of the market share in the first quarter of 2009, say researchers at Wireless Intelligence.

 

Also, the four largest providers added five more share points between them between 2007 and 2008, so their dominance is even growing.

 

There are at least 120 mobile providers in the market, serving local areas and communities across the country either on a single-state or multi-state basis, say researchers at Wireless Intelligence.

 

Many of those operators have 300,000 or fewer subscribers and a market share of below 0.15 percent.

 

The fifth-largest provider, US Cellular, has 6.2 million subscribers. Sixth-largest MetroPCS has 6.1 million customers. The seventh biggest, Leap Wireless (News - Alert), has 4.3 million subscribers.

 

Centennial Wireless, the number-eight provider, has 700,000 customers while ninth-ranked Cincinnati Bell (News - Alert) has 500,000 and nTelos Wireless has 400,000.

 

The distribution has a curve even more exaggerated than the Pareto theorem suggests a typical market will have: roughly an 80-20 rule, where "20 percent of the providers have 80 percent of the share."

 

But the U.S. wireless market has 90 percent of the market captured by just three percent of the providers. One could note roughly the same structure in the wired services market, where three providers have about 90 percent of the market share in the "telecom" services segment.

 

In the digital domain, the existence of such distributions typically is meant to illustrate the principle that many more products, and different products, can be sold online than offline. That is true.

 

In the capital-intensive communications business, there is a twist, though. Smaller providers often do not sell "different" products or use different channels or packaging, but do sell to different customers, in different geographies.

 

There is an expectation or hope in some quarters that digital technologies and the "long tail" can disrupt markets. In fact, a long tail distribution seems to be the inevitable result of the operation of any competitive market.

 

Technologies and demand curves change. Newer tastes emerge. Market boundaries often blur and transform.

 

But it might be more true to say that even when newer technologies supplant older technologies, the new market structure will resemble the old one. A small number of suppliers will have a hugely disproportionate market share. The issue is how we conceptualize “real markets.” Real markets always have a Pareto distribution. The issue is how we characterize markets that are in transition.

 

We might temporarily consider the “VoIP” market distinct from “voice,” or “voice” from “unified communications,” or UC from each of its somewhat discrete components. Ultimately, an organic new market will emerge, with a Pareto distribution.