Small, Big Carriers at Odds on Spectrum Cap Revival

Rural carriers urged the FCC to impose a spectrum cap. Members of the National Telecommunications Cooperative Association “are finding it increasingly challenging to provide competitive wireless service in today’s era of wireless consolidation and massive nationwide wireless providers,” the NTCA said. Since the FCC lifted the last spectrum cap in 2001, more than a dozen wireless mergers or acquisitions have occurred, it said. And the top carriers “have dominated the last few spectrum auctions,” it said. In the 700 MHz auction, for example, only 37 percent of participating NTCA members got spectrum, it said.

Small carriers “have increasingly encountered abusive and anticompetitive practices by the nation’s largest carriers,” said Leap Wireless. The reason is “increased concentration within the wireless industry since 2003,” it said. U.S. Cellular “strongly supports” a market-by-market spectrum cap, but believes the FCC shouldn’t impose one without first issuing a rulemaking notice, the carrier said. The agency’s response to big carrier dominance and consolidation “has been inadequate,” it said. Spectrum screens have “been applied leniently” and “obviously [have] not prevented … massive industry consolidation,” it said.

A slew of smaller carriers also filed in support of a spectrum cap. Mergers have removed “virtually the entire middle tier of wireless carriers” from the market, companies that “might someday have grown large enough through spectrum acquisitions and other growth initiatives to become realistic national competitors,” said NTCH, a regional personal communications service carrier. The carrier urged the FCC to go above and beyond the RTG’s proposal, and apply a cap that includes “spectrum in the entire 2 GHz band, excluding spectrum used primarily for backhaul or other administrative purposes.” Other small rural wireless carriers -- including WestLink Communications and Mid-Rivers Cellular -- agreed in separate but almost identically worded comments, saying a cap would also lessen big carriers’ dominance in spectrum auctions.

Granting the RTG petition should be the FCC’s first step to improving rural deployment and competition, said the Rural Independent Competitive Alliance. The commission should additionally conduct spectrum auctions “on the basis of licenses covering areas no greater than a Cellular Market Area” and apply eligibility restrictions in future auctions “with respect to the licensing of spectrum in rural areas,” it said. The FCC also should permit rural carriers to use fallow spectrum in rural areas “currently uncovered by a carrier that holds a license that covers an area larger than a single CMA or Rural Service Area,” the RICA said.

AT&T and Verizon protested the petition. Applying a cap could “have the counterproductive result of punishing success and discouraging competition,” Verizon said. Recent consolidation doesn’t warrant aggregation limits, it said: “The very mergers RTG criticizes as showing the need for reinstating a cap prove precisely the opposite, because the Commission found those mergers to be pro-competitive,” the carrier said. No cap is needed because the wireless market is “robustly competitive,” AT&T said. “Not only are prices for mobile services falling, consumers have greater choice with respect to providers, the innovative services they may acquire, the pricing plans that fit their needs, and the devices available to address their mobile communications requirements.”

While the FCC should promote competition, it shouldn’t “abandon its current flexibility to analyze spectrum aggregation concerns on a case-by-case basis in favor of the inflexible hard spectrum cap” proposed by the RTG, said the Wireless Communications Association. The CTIA agreed: “Existing FCC merger and auction review policies give the Commission the flexibility to address the concerns raised, while accounting for the constantly changing wireless broadband environment.” The FCC “should work with industry and other federal agencies to identify spectrum below 3 GHz that can be brought to market to expand higher-bandwidth voice, data, and video mobile wireless services,” it said.

Imposing a spectrum cap would “jeopardize” the FCC’s ability to consider “the growing need of carriers to aggregate spectrum to meet the public’s ever-increasing appetite for bandwidth,” the WCA said. The TIA concurred in comments filed Monday, saying a cap could stifle the growth of wireless broadband (CD Dec 2 p7).

While the FCC should tackle spectrum aggregation concerns, much damage has already been done, NTELOS said. Considering a spectrum cap after Verizon Wireless bought Alltel “is very much like shutting the barn door after the horse is out and in the pasture,” the PCS carrier said.