Public Interest in Spectrum Divestiture Focus of Debate
Ordering selloff of 2.3 GHz and 2.5 GHz spectrum as a condition of AT&T’s merger with BellSouth would serve not the public interest but those of Clearwire and Sprint Nextel, AT&T is telling the FCC, said a source familiar with the merging companies’ position. The FCC is to vote Fri. on the merger. Sale of the spectrum remains in contention.
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AT&T and Clearwire -- the wireless broadband company wireless pioneer Craig McCaw controls -- have visited the FCC to make their cases (CD Oct 23 p1). Sprint and Clearwire, the only companies with substantial holdings in the band, each have been trying to assemble national networks. Clearwire claims going national is impossible without divestiture of the spectrum, due to BellSouth’s holdings in La., Fla. and Ga. Clearwire couldn’t be reached for immediate comment.
“The public interest standard is supposed to be about the public,” said the source, reflecting AT&T’s position. “What’s really going on here is a special interest by one particular investor and his lobbyist to suborn the FCC process in order to obtain spectrum under fire sale conditions. That clearly doesn’t align with the public interest… It’s impossible to make a compelling public interest argument for the divestiture.”
Sprint Nextel and Clearwire are the sector’s dominant players, together holding 85% of the spectrum nationwide, the source said. “It would shock me and I think many people if Democratic Commissioners at the FCC were to make a condition in this merger to divest spectrum simply because Craig McCaw wanted it,” the source said, reflecting AT&T’s arguments: “Frankly, I think any such position would be very difficult to defend publicly as anything other than a blatant giveaway to one particular investor. There’s no basis for it in antitrust law or any particular regulation or law at the FCC.”
AT&T says that, compared with Sprint Nextel’s holdings, AT&T and BellSouth’s 2.3 and 2.5 GHz are inconsequential, with a single small area of overlap between spectrum holdings in southern Ind. BellSouth already is testing the spectrum to offer wireless Internet, the source said. “It’s obviously spectrum that one would want to use to reach hard to serve areas,” the source said: “Trials cost money. You deploy a lot of equipment and services. Clearly if there were no intent to use the spectrum one wouldn’t be spending money on market trials.”