Verizon Wireless will pay $2.67 billion in cash and assumed debt for Rural Cellular, it said Monday. The Bell also reported strong Q2 results, bolstered by its FiOS and wireless businesses. And Verizon officials used the company’s quarterly conference call to update investors about FairPoint and the MCI integration, spectrum auction strategy and the iPhone’s effect on the wireless business.
Wireless Spectrum Auctions
The FCC manages and licenses the electromagnetic spectrum used by wireless, broadcast, satellite and other telecommunications services for government and commercial users. This activity includes organizing specific telecommunications modes to only use specific frequencies and maintaining the licensing systems for each frequency such that communications services and devices using different bands receive as little interference as possible.
What are spectrum auctions?
The FCC will periodically hold auctions of unused or newly available spectrum frequencies, in which potential licensees can bid to acquire the rights to use a specific frequency for a specific purpose. As an example, over the last few years the U.S. government has conducted periodic auctions of different GHz bands to support the growth of 5G services.
Irate at government and industry plans for telling people about the DTV transition, Senate Commerce Committee Chairman Daniel Inouye, D-Hawaii, said Thursday he plans a fall hearing to press for ways to improve those efforts. “We're going to do something about this,” Inouye said after a hearing at which he said polls showed up to 90 percent of people in the U.S. don’t know of the Feb. 17, 2009, digital transition, or that after it their analog TVs won’t work. Government efforts have yielded “too few results,” he said.
The 700 MHz band open access controversy will be decided Tuesday, July 31, the FCC said late Tuesday. The agenda meeting may or may not finalize all aspects of the 700 MHz band auction, including the size of the blocks and whether bidding will be secret.
FCC Chairman Kevin Martin has made a “good start to open things up” with a proposal for the 700 MHz auction, House Telecom Subcommittee Chairman Ed Markey, D-Mass., said at an oversight hearing Tuesday. The plan could be improved by making wireless carriers let consumers switch carriers and take along their phones, and by addressing early-termination fees, Markey said. But Republicans sharply criticized the idea of putting restrictions on the spectrum, which many said would reduce auction revenue.
The House Telecommunications Subcommittee is expected to zero in on the 700 MHz auction in a Tuesday FCC oversight hearing as debate continues on whether the FCC should impose open access requirements on successful bidders. The latest wrinkle was Google’s Friday declaration that it will bid in the auction if the FCC applies the stiff open access requirements the company favors.
AT&T supports the limited open access plan for the 700 MHz auction that FCC Chairman Kevin Martin proposed, it said. The stance seemingly reverses AT&T’s position last week, when it warned that a Google open access plan would invite lawsuits. “That seems a remarkable turnaround,” said a Public Knowledge spokesman. Another source close to the debate wondered aloud how one week AT&T could write so “substantive” an ex parte filing against adding open access conditions and the next endorse Martin’s plan.
Spectrum value is lost when incumbents get the FCC to modify their licenses at no charge, said J.H. Snider, research director of New America Foundation’s Wireless Future Program. To protect spectrum value, the FCC should charge for license revisions, Snider, author of a paper on spectrum “giveaway,” told a Tuesday panel. Another participant estimated that the U.S. loses out on $10 billion yearly in potential fees.
EchoStar deems FCC Chairman Kevin Martin’s open access proposal “a step in the right direction” for the coming 700 MHz auction, David Goodfriend, vice president of law and public policy, told a Minority Media & Telecommunications Council (MMTC) conference Tuesday. He said the satellite provider has no position on open access but hopes any such rules will make it easier for a company other than a cable operator or Bell to bid in the auction. Goodfriend said he reads Martin’s proposal to mean it would prevent “blocking” and “locking” of cell phones, resembling FCC program access rules that EchoStar backs. “The fundamental question is whether or not this regulatory construct will become so burdensome as to scare away investors altogether,” he said.
The FCC could boost interest in 700 MHz spectrum among small businesses by allowing bids for small geographic blocks, FCC Commissioner Jonathan Adelstein said at a Minority Media & Telecommunications Council conference Monday. To help minorities buy radio and TV stations, Adelstein and Commissioner Robert McDowell said, Congress should reinstate tax certificates. Until Congress killed them in 1995 out of fear they were being abused, such certificates gave companies tax breaks for selling media assets to minorities. The National Association of Broadcasters is among the supporters of reinstatement (CD July 16 p13).
If the FCC imposes open access requirements on a block of 700 MHz upper-band spectrum, rural and other small wireless operators may lose the chance to win spectrum in the lower band, according to a Monday letter signed by 139 operators and released by CTIA. According to rules proposed last week by FCC Chairman Kevin Martin, spectrum in the upper band is expected to be auctioned in regional economic areas, thought to be too big for most small and regional operators. In lower band, licenses are far smaller and so more attractive to smaller operators. “Although many smaller licenses may initially cost more, large carriers will likely choose to bid on the many smaller licenses rather than accept larger, encumbered licenses,” wrote the companies. The companies reject the compromise Martin seems to be proposing by auctioning the upper band large block with open access but keeping smaller licenses in the lower band. The proposal trades the “speculative gains” of “novel and untested” open access for “the benefits of rural deployment,” said the companies.