FCC to Analyze Competition after Spectrum Auctions
The FCC issued an order clearing purchases by Verizon Wireless and Union Telephone of C-block licenses in this year’s 700 MHz auction. The order said the commission will do a market-by-market competitive analysis of spectrum bought by carriers in future auctions. The studies will resemble those done after spectrum licensees are taken over by other companies. The commission rejected a request by Google for further clarification of the open-access rules for the C- block licenses.
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Chairman John Dingell, D-Mich., of the House Commerce Committee had asked FCC Chairman Kevin Martin during an April hearing on the 700 MHz auction why the FCC examines spectrum holdings in merger reviews but not before awarding spectrum licenses bought at auction.
Martin surprised other commissioners by circulating an item that would have put the C-block licenses bought by Verizon Wireless and Union through a full competitive analysis, agency sources said Friday. The general counsel’s office objected, raising procedural questions. As the Nov. 4 meeting neared, Martin circulated a revised order saying that the commission would be analyzing impact on competition but not applying that analysis as it would during a merger. Verizon Wireless did agree to a single divestiture: Cellular market area 551 in New Jersey. The order was approved by the FCC on circulation and released late Thursday.
According to the order, based on the 95 MHz screen that the FCC has used in mergers Union Telephone had spectrum holdings in one market requiring further review and Verizon Wireless spectrum in 17 markets. But the FCC said even if it had imposed a full competitive analysis, the acquisitions wouldn’t result in “competitive harm” in any markets reviewed.
“I am pleased that we have refrained from introducing a wholly new competitive analysis, which would have been procedurally deficient given the lack of notice or opportunity for public comment,” Commissioner Robert McDowell said in a written statement on the order. Industry and FCC sources said the order may have important effects. “Eventually, the FCC will hold another major auction and when it does, it says here, the screen will apply,” said a wireless industry attorney.
The FCC, meanwhile, largely sidestepped questions raised in a May petition by Google. The company asked for a ban on Verizon Wireless’ limiting applications on any devices intended for use on C block spectrum, “including those devices that Verizon Wireless provides to its own customers for use on the company’s C Block network” and seeking clarification of open-access provisions in the 700 MHz rules. The Public Interest Spectrum Coalition filed in support of Google. Verizon Wireless replied that the petition is “meaningless, procedurally infirm, and speculative, and should therefore be rejected,” the FCC said.
The FCC said it will require Verizon Wireless to comply with its open-platform rules but won’t offer clarification. Commissioners Michael Copps and Jonathan Adelstein said in a joint statement, concurring with the order, that the FCC should have dealt with Google’s calls for greater clarity.
“When we voted to establish service rules for that spectrum, we both expected that the C-Block winner would observe the openness rules for its own devices as well as those sold by third parties,” Copps and Adelstein said. “And we believe today that the language in the Commission’s rules establishes this legal requirement. However, to the extent that any parties believe the language is not clear enough, we would have preferred that the Commission dispel any potential confusion by making this point directly in today’s item.”
The FCC is following the right course, Commissioner Deborah Tate said. “I viewed the open access conditions imposed on the 700 MHz C Block as a limited experiment designed to promote additional access to devices and applications that do not harm a provider’s network,” she said. “This does not mean… that a C Block licensee with hundreds of devices must make every phone it sells consistent with this rule.”