COPPS DISSENTS STRONGLY AS FCC APPROVES RURAL ORDER

The decision could lead to additional wireless consolidations, Copps charged.

Chmn. Powell said the FCC decision on cross-ownership would not lead to undue consolidation. “The fact remains that if a merger resulted in unacceptable levels of concentration the Commission would block it,” he said. “One can disagree about whether you pursue a case-by-case approach or a line-drawing approach, but most notions are motivated by the same concern.”

One wireless carrier source said the cross-ownership decision should be compared to other moves by the FCC to do away with rigid rules, similar to elimination of the spectrum cap. The change applies only to cellular, not PCS service.

But Copps disagreed. “So what is the FCC’s plan to bring better service to rural America? First, we eliminate the rule that prohibits cellular carriers from merging,” Copps said: “No rule will henceforth prevent carriers from merging even when there are only 2 competitors in the market and the merger would result in a monopoly for rural consumers. While a use-it-or-lose-it rule “sounds like a reasonable way to meet our obligations to rural America and to ensure that public spectrum is put to its highest and best use” the Commission pushed the issue “into another interminable [rulemaking],” Copps added.

Copps also sharply criticized the Commission for failing to make a decision on the “use-it-or-lose-it rule” for spectrum, instead sending the issue out for more comment in a further rulemaking. Comr. Adelstein joined Copps in dissenting in part to the rural order, saying the FCC should have more aggressively required that carriers give back licenses they don’t use to serve rural America. “I think we passed up a real opportunity to tackle a number of significant barriers to spectrum access,” Adelstein said.

CTIA supported much of the order. “We are particularly encouraged by the Commission’s elimination of the cellular cross-ownership restriction, which will mean that case-by- case application of the FCC’s competition policy, not arbitrary line drawing, will govern rural wireless markets, as it does in other industry segments,” said CTIA Pres. Steve Largent.

Carri Bennet, gen. counsel to the Rural Telecommunications Group, agreed with Copps and Adelstein that the FCC should have finalized a use-it-or-lose-it rule. “The FCC’s reliance on secondary markets to ensure spectrum opportunities for rural carriers who serve rural America is misguided,” Bennet said. “The FCC has a long way to go in improving its approach to secondary markets before it can realistically impact rural deployments.”

The FCC took several other actions Thurs. that had been promoted by wireless carriers and other interests on rural deployment, the secondary market, and “smart antennas.”

In one of the most significant developments in the rural item, the FCC agreed to increase power levels for transmitters in rural area, a change promoted by carriers. But details on that provision were sketchy. The FCC also: (1) Determined that smaller licensing areas may be appropriate in some spectrum blocks. (2) Adopted a default definition of “rural” as a county with a population density of below 100 persons per square mile. (3) Allowed carriers to grant a security interest in wireless licenses to the Rural Utilities Service. (4) Amended its rules so some geographic-area licenses can comply with build-out requirements by showing they provide “substantial service.”

The FCC also approved further liberalization of the secondary spectrum market, over a Copps dissent. Copps said there may be “policy justifications” for the order but it’s also potentially illegal under the Communications Act. FCC issued a report and order and notice of further rulemaking.

Comr. Abernathy said the rules should stimulate the secondary market: “As I have stated before, an open, market- based regulatory approach is the best way to ensure the health of our industry and the robustness of its consumer offerings. Already, we have seen promising activity in the secondary markets for spectrum; in less than 5 months, at least 54 spectrum leasing applications have been filed.”

Among the provisions, FCC said it would allow public safety agencies to lease spectrum to other safety agencies -- a change that had been anticipated by the wireless industry. FCC also approved an order promoting the use of smart antennas.