Wireless Bureau to Probe Comcast CFO Statements on AWS Licenses
Officials behind SpectrumCo will face questions from the FCC Wireless Bureau after Comcast Chief Financial Officer Michael Angelakis told investors at a Citigroup conference that the company never planned to build out the AWS spectrum licenses it purchased in the 2006 auction. The questions are expected to come as part of the bureau’s analysis of Verizon Wireless’s pending buy of the licenses from SpectrumCo, FCC officials said Wednesday. Comcast likely will be asked to explain the comment in the initial interrogatory the bureau sends Comcast as it looks more closely at the deal, agency officials said.
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One FCC official said Wednesday the comments are troubling. No one is suggesting that the licenses were purchased under false pretenses, the official said, but “at the foundation of our rules, especially our auction rules, is the integrity of the bidders and the integrity of the process.” The official said carriers like T-Mobile and MetroPCS are actively building out the licenses they bought in the AWS auction while the SpectrumCo spectrum, which gave the consortium almost a national footprint, has been lying fallow.
"We never really intended to build that spectrum, so therefore it’s a really good use of that spectrum,” Angelakis said Jan. 5 (CD Jan 6 p7), commenting on the sale of the licenses to Verizon. Commissioner Robert McDowell said he was troubled by the statement (CD Jan 13 p1). Comcast issued a statement Tuesday clarifying Angelakis’s comments (CD Jan 17 p11), calling them “a shorthand reply on a subject with a long and complex history.” Comcast had no additional comment Wednesday.
The Comcast statement raises further questions, agreed Andrew Schwartzman, Media Access Project senior vice president. “While Comcast is, understandably, spinning this as an inconsequential statement, the implications are very troubling,” he said. “If the investigation turns up any smoking guns, there should be remedial action. That said, the real problem here is that the Commission imposed such loose restrictions on the AWS auctions that Comcast was able to sit on the spectrum, lawfully or otherwise. Thus, as is often the case, the bigger scandal may be what is permitted to happen in the first place."
The FCC should look closely at the Verizon/SpectrumCo deal in light of Comcast’s comments, said Matt Wood, Free Press policy director. “On one hand, Comcast denies it was speculating in spectrum and warehousing its AWS licenses -- on the other, earlier this month its CFO plainly admitted to doing so,” he said. “Despite the long-held belief that the highest bidder in a spectrum auction will always put these scarce resources to their best use, it’s clear from this episode that it’s not the case. ... The Verizon Wireless deals with Comcast and other giant cable companies have significant implications for the competitive landscape, and we trust that the FCC will give the proper attention to every facet of them -- including not only Comcast’s past actions with its licenses, but the new joint marketing agreements that appear to kill any hope for competition between phone and cable companies.” The other companies involved are Bright House Networks, Cox and Time Warner Cable, from which Verizon Wireless also is buying AWS licenses in two deals.
"The Comcast comments highlight what’s wrong with our current system of distributing spectrum,” said Public Knowledge Legal Director Harold Feld. “Here we have well-funded parties buying spectrum with no real plan beyond ‘it’s valuable, lets see if it works out.’ When it doesn’t work out, they sell it to the largest wireless providers, further aggravating the spectrum aggregation problems. When everyone can be acting in a perfectly rational, legal way, and we consistently end up with all the spectrum ultimately ending up in the hands of Verizon and AT&T, then either we need to fix the spectrum allocation system, have a substitute for spectrum allocation like automatic data roaming, or go back to regulated natural monopolies."
SpectrumCo’s record as a participant on issues before the FCC also appears to contradict Angelakis’s assertions. SpectrumCo made dozens of filings between January 2007 and August 2008 on various spectrum issues, FCC filings show. SpectrumCo employed some of the top communications attorneys in Washington in its advocacy efforts, at Hogan & Hartson (now Hogan Lovells) and Wilkie Farr.
SpectrumCo actively lobbied the FCC to offer 700 MHz spectrum in relatively small license sizes. “SpectrumCo’s AWS auction experience demonstrates that large spectrum blocks and large geographic service area licenses are not necessary for bidders to acquire a nationwide spectrum footprint,” the company said in a January 2007 filing (http://xrl.us/bmo5og). At one point, SpectrumCo was considered a likely major bidder for 700 MHz licenses (CD Jan 10/07 p5) though the company eventually sat out that auction. SpectrumCo was also active on roaming, filing an Oct. 1, 2007, petition for reconsideration seeking changes in the agency’s automatic roaming rules (http://xrl.us/bmo5n6).