FCC chief defends review of wireless deals

By Juliana Gruenwald

May 8, 2012

Federal Communications Commission Chairman Julius Genachowski on Tuesday defended his agency’s review of recent wireless-industry transactions, saying that ensuring competition in the wireless sector does not take away from the agency’s efforts to free up more spectrum to meet the public’s growing demand for mobile technologies.

“Some have recently argued that the government’s review of transactions in the wireless space—or, let’s be frank, review of one specific transaction—is somehow causing a shortage of spectrum and leading that company to raise prices for consumers,” Genachowski said. “But the overall amount of spectrum available has not changed, except for steps we’re taking to add new spectrum on the market.”
 
During remarks at the wireless-industry group CTIA’s annual convention in New Orleans, Genachowski touted the FCC’s efforts to help mobile providers meet their customers’ growing demand for wireless technologies by freeing up more spectrum.
In remarks that appeared to refer to the agency’s move to block AT&T’s bid last year to buy T-Mobile USA, Genachowski also dismissed those who say the FCC’s push to ensure there is robust competition in the wireless market forces inefficient use of spectrum.
 
“The notion that competition drives spectrum inefficiency is at odds with our history with mobile, which demonstrates that competition drives investment in efficiency-enhancing technologies and the evolution of business models to the benefit of consumers and providers,” he said. “The FCC’s track record here is very clear, and our review of one transaction that crossed a line simply proves that there is a line—and that the commission will be diligent in exercising its important responsibilities.”
 
The comments did not appear to sit well with AT&T. “The merger AT&T proposed last year was all about creating more capacity by combining the spectrum holdings and networks of two companies. The FCC was within its rights to withhold its approval,” the company said in a blog post on Tuesday. “But it is incorrect when it denies the impact such decisions have on the price of wireless services.… Without additional capacity, which would have been created by our transaction, prices rise.”
 
The FCC is weighing another controversial wireless-industry transaction involving the nation’s biggest wireless provider. Verizon Wireless is seeking FCC approval to buy spectrum from a group of cable companies. Some public-interest groups and smaller rivals, most notably T-Mobile, are opposing the deal, saying it will harm competition and keep valuable spectrum out of the hands of firms that need it more.
 
Last week, AT&T Senior Executive Vice President Jim Cicconi argued that the FCC must make it easier for those who are not using their spectrum to sell it to firms that can put it to use now. 
 
Genachowski, however, pointed to several proceedings that he said would remove barriers to allow for spectrum to be repurposed and auctioned for use by wireless companies. He noted, for example, a proceeding the FCC is considering to allow airwaves now set aside for satellite use to be used by terrestrial providers.
 
He also announced that the FCC is moving ahead with a call by the National Telecommunications and Information Administration for wireless companies to share spectrum now used by federal agencies. CTIA and others have been pushing NTIA to free up a valuable chunk of spectrum in the 1755-1850 megahertz band, which they say can be paired with spectrum in the 2155-2180 megahertz band that the FCC has ready to auction.
 
Genachowski said that the FCC was launching a pilot project to test the sharing concept in one part of that band, 1755-1780. He said T-Mobile filed an experimental application on Friday to test the sharing concept.
 
“The wireless industry, the FCC, and NTIA all have a great interest in evaluating this band and determining the feasibility of reallocating it from federal to commercial wireless use. Testing will focus on the ability of federal and commercial uses to share the spectrum during an interval where federal use for certain systems may continue,” T-Mobile said in its application last week.
 
Genachowski noted that spectrum legislation passed in February requires the FCC to auction the 2155-2180 spectrum within three years. Given the time and money it would take to clear the 1755 band of federal users, he said, “sharing is the most promising way forward.”

By Juliana Gruenwald

May 8, 2012

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