WASHINGTON--The FCC voted to begin a review of its rules for how much spectrum a carrier should be able to hold, something that has been welcomed by wireless carriers that want more transparency on the rules.
The FCC voted 5-0 on the proposed rule changes, which will be open for public comment. The review will likely have a large impact on how carriers approach spectrum acquisitions. Industry executives, including AT&T (NYSE:T) CEO Randall Stephenson and Sprint Nextel (NYSE:S) CEO Dan Hesse, have spoken approvingly of the FCC's proposed rule changes, arguing that a more transparent process will benefit carriers. Public interest groups have also pushed for the review.
Several FCC commissioners noted that the agency last reviewed its policies related to spectrum holdings a decade ago, when it removed spectrum caps. The rulemaking will explore the agency's so-called spectrum-screen, which it uses when reviewing spectrum transactions. If a carrier acquires too much spectrum and violates the screen, the deal is more closely scrutinized. Currently, the screen is different for each proposed transaction.
FCC officials said the rulemaking will look at whether there needs to be "bright line" limits on how much spectrum a carrier can hold. The proposed rulemaking will also look at which spectrum bands to include in the review as well as how different geographic areas or markets should be considered. Additionally, the rulemaking will explore whether and how to treat spectrum below 1 GHz differently than higher-band radio waves.
FCC Chairman Julius Genachowski said nothing in the proposed rules changes the FCC's policies or views, and that the commission is not prejudging the outcome of the review. He said the goal is to spur more innovation in the wireless market.
Commissioner Robert McDowell, one of the commission's two Republicans, said he does not agree "with a view that the current approach on a case-by-case basis is broken at its foundation." He said that even the idea of spectrum caps could harm the mobile market. "I am concerned that reviving this concept would create unnecessary and harmful market uncertainty," he said.
Ajit Pai, one of the FCC's other Republican commissioners, said he was worried that any proposed rules affecting the spectrum screen could discourage participation by carriers in the auction of broadcast TV spectrum, which the FCC is moving forward with.
Many smaller carriers are increasingly worried about the spectrum that large carriers, and AT&T and Verizon Wireless (NYSE:VZ) in particular, are acquiring. For example, the Competitive Carriers Association has urged the FCC to combine AT&T's various spectrum purchases into one comprehensive transaction that the agency could more effectively review.
CCA is also pushing the FCC to place stipulations on the spectrum if it approves of AT&T's purchases, including 700 MHz interoperability and data roaming regulations. AT&T, for its part, has staunchly argued against such a move, contending it would "introduce delay that is contrary to the public interest."
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