The Federal Communications Commission is in the process of proposing rules regarding new spectrum acquisition by wireless carriers. This includes a review of its spectrum screen used in analyzing spectrum license transfers. The matter is scheduled for a vote at the FCC's September 28 meeting.
Adoption of formal rules for how the agency analyzes the competitive effects of spectrum license acquisitions could reduce regulatory uncertainty. But new rules will be undesirable if they end up guaranteeing that wireless carriers are saddled with insurmountable regulatory roadblocks. New spectrum rules will only be desirable if they further innovation and investment in the wireless market. And those rules will do so only to the extent they encourage and enable wireless carriers to pursue new spectrum for upgrading and deploying next-generation wireless networks.
Importantly, the vibrant competition witnessed in today's wireless market counsels that the FCC should reject any outright or effective spectrum caps. The market is even more competitive than when the FCC discarded rigid caps back in 2000. According to the FCC's Wireless Competition Report, as of 2010, 99.2% of the population is served by two or more wireless voice providers, 97.2% is served by three or more, and 94.3% is served by four or more. Meanwhile, 91.9% of the population is served by two or more wireless broadband service providers, 81.7% is served by three or more, and 67.8% is served by four or more. Also, overall wireless connections skyrocketed from nearly 100 million at the end of 2000 to more than 331 million at year's end 2011. Monthly minutes of use shot up from 140 in 1993 to 696 in 2009. And average revenue per minute declined from $0.44 in 1993 to $0.07 in 2009, while average voice revenue per minute declined from $0.439 in 2000 to $0.049 in 2009.
Moreover, FCC spectrum rules must not over-emphasize market concentration concerns. Such measures fail to capture the dynamic nature of digital, data-centric, broadband-enabled wireless services. The FCC should likewise reject discriminatory treatment of spectrum bands for purposes of imposing caps or for narrowly defining product markets. To do otherwise would amount to a static approach.
Given the competition and innovation prevalent in the wireless market, actual or potential market power and consumer harm should be demonstrated before the FCC adopts further regulatory intervention regarding spectrum license acquisitions and use.
FCC spectrum rules should therefore place primacy on the potential benefits of next-generation wireless network upgrades and deployment resulting from spectrum license acquisitions by those wireless carriers most willing to undertake the necessary heavy investment.
A more predictable and certain agency process regarding spectrum license acquisition and transference will better incentivize wireless providers to engage in efficient and output-enhancing market transactions. But in order for new FCC spectrum rules to make those results attainable, they must not embody the restrictive approach witnessed in recent agency orders reviewing transfers of spectrum licenses. Such rules must recognize the competitive and innovative state of the wireless marketplace as well as the potential economic benefits that come from heavy investment in next-generation wireless services.
