FCC may review how much spectrum carriers can hold

FCC Chairman Julius Genachowski will propose to his fellow commissioners that the agency review its rules for how much spectrum a carrier should be able to hold.

FCC spokesman Neil Grace confirmed to FierceWireless earlier reports from the Wall Street Journal and The Hill about the proposed order. The commission is likely to vote on the order Sept. 28. According to the reports, the order will look at spectrum transfers between companies and will likely explore whether to treat lower-band spectrum differently than higher-band radio waves.

The rules determine the FCC'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. Wireless carriers, including AT&T Mobility (NYSE:T), have welcomed opportunities to review the rules, and the FCC is reviewing them in light of the calls from carriers and public interest groups for a review.

The timing of the order is interesting, considering the FCC recently approved Verizon Wireless' (NYSE:VZ) $3.9 billion purchase of 20 MHz of nationwide AWS spectrum from a group of cable companies, as well as related spectrum deals with T-Mobile USA and Cricket provider Leap Wireless (NASDAQ:LEAP). In approving the Verizon deal, the FCC noted the importance of Verizon's AWS spectrum swap with T-Mobile. Without the spectrum T-Mobile said it would have been limited to a 5x5 MHz LTE deployment.

Consumers groups and smaller carriers have repeatedly stated that both Verizon and AT&T own too much spectrum below 1 GHz. Both carriers are using their extensive 700 MHz holdings to build out LTE networks. Further, Verizon said its newly acquired AWS spectrum will be used to supplement its 700 MHz-based LTE network. And AT&T too is hunting for more spectrum in the wake of its failed $39 billion bid for T-Mobile. The carrier is working to acquire 2.3 GHz WCS spectrum to use for LTE, and late last year AT&T acquired 700 MHz spectrum from Qualcomm (NASDAQ:QCOM).

"It's becoming a national duopoly, and the government will have conflicts over how it balances its two goals," Stifel Nicolaus analyst Chris King told Bloomberg recently He noted that the government wants as much money as possible for spectrum licenses, and "it's AT&T and Verizon that will always be the highest bidders."

The review of the FCC's spectrum rules will also come before it auctions off broadcast spectrum for wireless use, according to The Hill, which noted that the legislation that approved those incentive auctions urged the FCC to review its spectrum screen. The FCC will seek input from the public and companies, and will look at whether it should apply one standard screen for all deals.

Interestingly, a National Journal report, citing unnamed sources, said that at its Sept. 28 meeting the FCC may also propose rules for the incentive auctions themselves. However, the report noted that the FCC would not confirm whether this would be the case.

For more:
- see this WSJ article (sub. req.)
- see this The Hill article
- see this Bloomberg article
- see this National Journal article

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