FCC Decisions Could Endanger Spectrum Momentum, Baker Says

The FCC made a mistake with the Harbinger satellite merger condition, which singled out two uninvolved carriers for restrictions on future spectrum access, Baker said. Further, the commission this year refused to find the mobile market to be competitive, a result that could suggest a more interventionist government approach and a competition policy that micromanages what has been a widely successful and consumer-driven market, she said.

Moving forward on net neutrality is another mistake, Baker said: The courts have told the FCC it has no authority to act, and Congress has told the agency not to act and particularly not in December. The partisan decision to push net neutrality could hurt the FCC’s ability to achieve its broader consensus agenda, she said. “It’s all about trust.” Essential to that agenda is a spectrum revamp that has clear bipartisan support, Baker said. There has been momentum on the Hill regarding spectrum, and the FCC has made good progress in its relationship with NTIA and the Department of Defense, she said. Now there’s general awareness of spectrum, she said. There will be fights over issues like healthcare and energy, and telecom is an area for bipartisan work, Baker said. Additionally, moving to Title I from Title II doesn’t make the net neutrality action a good decision or a compromise, she said. “There’s no identified market failure.” The international community is watching the FCC closely, Baker said. A priority for some European players is how to contain net neutrality in the U.S., she said.

Allocating spectrum owned by those like the broadcasters is a discussion that’s worth having, but the commission needs to make sure the broadcasters have the flexibility to do so, Baker said. “We just had the digital television transition … We need to give the broadcasters some time to think about what they are going to do with their spectrum.” She pointed to the Mobile Satellite Service (MSS) as a service that seems to have too much spectrum, judging by current use. MSS spectrum offers the commission an opportunity short term, she said. The agency also needs to focus on the secondary market, service rules and the rural markets, she said.

Increasing the openness of spectrum policy will be a key task in 2011, Baker said. That means a more transparent spectrum management system, she said. The future of spectrum includes greater sharing and efficiency of federal and other capacity, she said. A robust spectrum data base is central, she said. But the agency still needs the Congress to offer tools to manage spectrum more flexibly, she said. Meanwhile, “I still don’t think the broadband plan is a national plan,” Baker said. A national spectrum plan is needed, she said.

Regulators need to make sure the spectrum market is a level playing field, said Peter Cramton, a University of Maryland economics professor. A spectrum cap is a direct way to limit the concentration of spectrum for a particular type of service or in a particular area, he said. It’s critical in ensuring wireless competition, he said. But capping spectrum is a balance that needs to be taken up by the FCC, he said. There are countries like India and Mexico with active spectrum cap policies, but they aren’t the most competitive wireless markets, said Thomas Hazlett, a law and economics professor at George Mason University. Additionally, the Department of Justice is well-equipped for antitrust reviews, he said. But Cramton argued that the DOJ doesn’t address spectrum auction rules and the FCC should be the one that sets rules. Regulators need to recognize that wireless is an intensely competitive market, said Leonard Cali, a senior vice president of AT&T.