IP: FCC Votes to Abolish Spectrum Limits

[David Farber <dave () farber net>]

> FCC Votes to Abolish Limits
> On Wireless Spectrum Ownership
>
> By MARK WIGFIELD
> Dow Jones Newswires
> 7bd7158.jpg
>
> WASHINGTON -- The Federal Communications Commission voted 3-1 Thursday to 
> abolish limits restricting the amount of valuable airwaves a wireless 
> telephone carrier can accumulate in a market.
>
> The agency will raise the so-called spectrum cap by 22% for a year, and 
> completely eliminate it in January 2003. The change was a top priority of 
> many of the largest players in the wireless industry, which said they had 
> insufficient amounts of a basic wireless resource -- spectrum -- to 
> provide advanced services or accommodate heavy traffic in the largest markets.
>
> But small carriers like Leap Wireless International Inc. fought the 
> change, saying it will trigger consolidation, reduce competition, and 
> stifle innovation. Sprint PCS, whose spectral efficiency is currently a 
> competitive advantage, had advocated a much slower track to repeal.
>
> In addition, the FCC will no longer bar the two conventional analog 
> cellular carriers licensed in each urban market from buying each other. 
> The so-called cellular cross-ownership restriction will remain in rural 
> areas, where less competition to the historic cellular duopoly has emerged 
> from digital service that is rapidly becoming the norm in urban areas.
>
> Elimination of the cap was triggered by Congress's requirement in the 1996 
> Telecommunications Act that the FCC review its rules every two years with 
> an eye toward deregulating competitive markets. But the final decision had 
> the imprint of the FCC's Republican Chairman Michael Powell, who has 
> placed special emphasis on the deregulatory aspects of the law.
>
> If the FCC can't deregulate in the highly competitive wireless market, he 
> asked rhetorically before the vote at the FCC's monthly meeting, then 
> where can it.
>
> "By any standard, this is the most competitive market in the 
> telecommunications industry," he said. "It would be fanciful to say" that 
> competitive pricing, abundant consumer choice and innovation "came solely 
> from this rule."
>
> But in a strong dissent, the FCC's sole Democrat, Michael Copps, said the 
> commission failed to justify repeal or show how the public would benefit. 
> In areas where carriers need more spectrum, the FCC could have waived the 
> cap, or it could have raised it slightly overall rather than eliminate it.
>
> "Let's not kid ourselves," he said. "This is, for some, more about 
> corporate mergers than anything else. Just look at what the analysts are 
> talking about as the specter of spectrum cap renewal approaches: Their 
> almost exclusive focus is on evaluating the candidates for corporate 
> takeovers and handicapping the winners and losers in the spectrum bazaar 
> we are about to open."
>
> Write to Mark Wigfield at 
> <mailto:mark.wigfield () dowjones com>mark.wigfield () dowjones com