10/23 FCC Comments With Public Knowledge Supporting Stronger Spectrum Holding Rules To Promote Competition

OTI’s Wireless Future Project filed comments with Public Knowledge supporting a revised and stricter limit on the aggregate spectrum holdings of the big mobile carriers as a means of promoting competition and consumer choice for mobile broadband services. The FCC sought comment on AT&T’s Petition for Rulemaking, which aims to establish a targeted mid-band spectrum screen similar to the spectrum screen previously established by the Commission for low-band spectrum below 1 GHz, as well as on alternative adjustments to the agency spectrum screen to promote competition, digital equity and inclusion (DEI).

Our groups opposed simply granting AT&T’s Petition for Rulemaking. Grant of AT&T’s proposal as written would not enhance competition. Instead, it would foreclose the largest rivals to AT&T (especially T-Mobile) from competing with AT&T for valuable mid-band spectrum licenses while leaving AT&T free to outbid smaller competitors and would-be new entrants. Instead, we suggested the following changes to the FCC’s spectrum screen and broader policies to promote competition:

• Restructure the screen to support four-firm competition rather than three-firm competition. Since its adoption in 2004, the Commission has structured its screen to support three equal sized providers per market.¹ But as both traditional antitrust analysis and the Commission’s own experience has demonstrated, subscribers need a minimum of four national providers to see vigorous competition between providers. Spectrum aggregation limits should reflect this reality.
• Convert the current screen into a genuine hard cap. At present, the screen merely requires the Commission to take a “hard look” at specific markets where a carrier exceeds its limits. Prior to adoption of the screen, the Commission used a hard cap to limit spectrum aggregation. A hard cap rather than a soft screen would make it more difficult for the largest providers to absorb smaller players.
• Adopt a weighting criteria that recognizes the different value of different spectrum frequencies. Although PK/OTI do not support the limited petition submitted by AT&T, our groups agree that the Commission’s spectrum policies should reflect the differences in physical characteristics of the different frequencies. Because carriers need a suitable mix of frequencies to offer an increasingly wider suite of services, the Commission should use this weighting criteria for all spectrum bands.
• Continue to use auction-specific limits in addition to general spectrum aggregation limits to promote new entry and enhance DEI. In addition to general spectrum aggregation limits, the Commission has used auction-specific limits to encourage new entrants, reduce concentration of licenses, and increase the likelihood of success for minority-owned and women-owned firms.² The Commission should continue this practice.
• Address the vertical integration of MVNOs with facilities based providers and adopt policies to enhance MVNO competition. MVNOs are not substitutes for facilities-based providers. But they do provide some limited price competition with facilities based providers (as well as competing with each other). The increasing vertical integration of MVNOs both reduces the likelihood that MVNOs will aggressively compete against facilities-based providers and reduces the likelihood that facilities-based providers will lease capacity to rival MVNOs, diminishing their capacity to compete with each other or for new MVNOs to enter the market.
• Greater emphasis on unlicensed spectrum, shared access regimes, and opportunistic sharing. As cable operators have demonstrated, unlicensed spectrum and other forms of local and opportunistic access to shared spectrum can enhance competition. The Commission should adopt policies that go beyond increasing unlicensed spectrum for Wi-Fi and consider adopting policies designed to enhance competition.
• Other policies to encourage DEI. The 2.5 GHz window remains the most prominent example of using spectrum policy to enhance digital equity and inclusion. But in addition to building on this success, the Commission should consider other ways to use spectrum to enhance digital inclusion.

Footnotes

¹ See Wireless Telecommunications Bureau and Office of Economics and Analytics, T-Mobile License LLC, Cellco Partnership, Applications for 3.7-3.98 GHz,ULS File No. 0009446137, ULS File No. 0009446983, Memorandum Opinion & Order Par. 3.

² See n.4 supra.