FCC to Review Spectrum Screen

Republicans concerned it could adversely affect spectrum revenues

By John Eggerton -- Broadcasting & Cable, 9/28/2012 1:24:15 PM

The FCC voted Friday to review its spectrum screen, which potentially limits -- it triggers additional scrutiny -- the amount of mobile wireless spectrum any one company can own in a market.

While FCC chairman Julius Genachowski said it was a needed review, there was major pushback from Republican commissioners, concerned that any tightening of that screen or capping of holdings or move away from the current case-by-case determination could negatively affect participation in the broadcast spectrum incentive auction.

"There is no question that it is time for the Commission to update its policies on measuring how spectrum aggregation impacts competition in the wireless industry," said Commissioner Mignon Clyburn in casting her vote.

The FCC is seeking comment--the notice includes no tentative conclusions--on the following:

•"Continuing the current approach to evaluating mobile spectrum holdings in the context of transactions and auctions-a case-by-case analysis, or moving to a different approach such as bright-line limits;
• "Including additional spectrum bands in evaluating spectrum holdings;
• "Updating the Commission's geographic market analysis, including to consider the impacts of mobile spectrum holdings at the national as well as local levels;
• "Whether the Commission should make distinctions among bands in assessing spectrum holdings; and
• Updating the Commission's attribution rules."

The review of the spectrum holdings threshold was seen by some as a way to get around the fact that no limits on the size of spectrum bidders was included in the spectrum auction legislation.

Commissioner Ajit Pai, who concurred in the decision, said he, for one, was skeptical about any steps that would discourage participation and the potential take from those spectrum auctions, including any narrowing of the screen.

Geoffrey Manne, executive director of the International Center for Law & Economics, is concerned that if the FCC tries to screen out larger wireless players from the spectrum auction via adjusting the screen, it would be tantamount to "micromanag[ing] scarcity as an activist intervenor in the market - screening-out some market participants as ‘too big,' and scrutinizing every scarcity-induced merger, deal, spectrum transfer, usage cap, pricing decision and content restriction for how much it deviates from a fanciful ideal," he blogged.  

Public Knowledge senior staff attorney John Bergmayer says the FCC spectrum holdings NPRM quite differently. "The current screen is outdated -- its biggest flaw being that it treats all spectrum alike, even though some spectrum bands are better-suited to mobile broadband than others.  And the current screen has been ineffective as a tool to prevent concentration, as the last few years have seen Verizon and AT&T build up an ever-growing ‘spectrum gap' between them and their nearest competitors.

"It would do little to promote wireless competition if AT&T or Verizon simply acquired the new spectrum that becomes available under the incentive auction process, so it makes sense for the Commission to revisit its screen now."