AT&T, Verizon Attack Auction Limits in Recommendations to Congress

Stakeholders submitted comments in response to a Communications Act update white paper issued earlier this month by House Republicans. Comments were due Friday (CD April 28 p7), but the committee has yet to publicly release any nor given any indication of how many it received.

"Congress should ensure that property-like rights attach to spectrum licenses and that the FCC does not have the ability to unilaterally make materials changes [sic] to those rights,” Verizon said in its comments, saying the change is necessary for carrier investment. Both carriers pressed the idea that restrictions would hurt the government’s ability to earn revenue and auction success in general. Verizon cited foreign auctions, mentioning an unrestricted Danish auction that raised 50 times more than a restricted Dutch auction. Antitrust law should guide any government spectrum acquisitions and be the only basis for any auction restrictions, AT&T said. It said the FCC should use a spectrum screen for assessing such spectrum acquisitions, with “a safe harbor for spectrum holdings that do not exceed the screen.”

The Competitive Carriers Association, however, backs limits and argued that AT&T and Verizon dominate the wireless market, it told Congress in comments. “Absent transparent and upfront spectrum rules, the largest two carriers will continue to aggregate spectrum, thwart access to other critical inputs, and eventually swallow their competitors,” CCA said, warning against duopoly. “From 2002 to 2012, the market share of the largest two carriers increased from under 40% to nearly 70%, and this dangerous consolidation trend continued throughout 2013.” AT&T and Verizon, as well as CCA, among others, have lobbied Congress on this issue, hotly contested as the FCC designs its 2015 broadcast TV spectrum incentive auction. CCA spent $120,000 in Q1 this year, according to its lobbying disclosure form, and paid TwinLogic Strategies $50,000. AT&T spent $3.67 million and Verizon $3.55 million lobbying on their many priorities over that same period.

NTCA agreed with CCA on limits, according to its comments. Congress and the FCC “should take reasonable steps to ensure that no company is provided the opportunity to obtain all that remains of low-band spectrum in any given market,” NTCA said. There should be “additional specific limits on spectrum below 1 GHz,” which rural providers “have a particular interest in” due to that spectrum’s “better coverage across large geographic areas” and technical superiority, NTCA said. It requires construction of fewer towers, it said: “Tower construction is costly, particularly in rural areas, and small providers have very limited resources."

All parties emphasized the appetite for spectrum and considered ways to free up government spectrum for commercial use. “There are various tools Congress can use -- both carrots and sticks -- to free up additional spectrum by encouraging federal agencies to continue to strive to use spectrum more efficiently,” Verizon said. “With respect to any spectrum the federal government makes available through this process, Congress should reject calls to abandon the flexible exclusive-use licensing model that has proven so extraordinary [sic] successful for both consumers and taxpayers.”

Dividing spectrum management between NTIA and the FCC may impede policy innovation, NTCA said: “Under the direction of a single agency, the government could more readily strategize the best spectrum policy by looking at new technical and policy solutions to create an efficient ecosystem. For example, it may be possible to allow commercial utilization of spectrum with prioritization of government use as needs arise."

"Congress should continue to view flexible exclusive-use licenses as the primary tool for increasing the amount of commercially available spectrum,” PCIA-The Wireless Infrastructure Association advised. “To capitalize on infrastructure’s potential to enhance spectrum use, the Communications Act update should ensure infrastructure deployment regulations have clear, predictable standards for review across the country, creating regulatory certainty that encourages investment.”

AT&T backs the Federal Spectrum Incentive Act, HR-3674, which cleared the House Commerce Committee in December. “AT&T believes that this approach would provide an appropriate incentive to federal agencies,” it told Congress. “Indeed, higher percentages should be shared with agencies that relinquish, rather than share, their federal spectrum allocations. Furthermore, revenue received by an agency from the auction should be protected from being ‘zeroed out’ in the budget process via funding cuts concerning other agency matters.” CCA also suggested this bill among ones that “merit consideration” from Congress. CCA named S-1776, the Rural Spectrum Accessibility Act, as another. CCA supports using smaller geographic license sizes, it said. Verizon judged it “crucial” that Congress lead, and the company named several initiatives united in that they “provide mechanisms that encourage government users to operate more like private ones, i.e., to accomplish their critical missions using spectrum more efficiently.” Verizon pointed to ideas such as adopting “the Defense Base Closure and Realignment model of directing broad-based reallocation of spectrum” as well as “assigning an Office of the Management of the Budget [sic] auditor to identify.”

PCIA emphasized a need for government agencies to streamline review processes for facilities, and backed buildout requirements “when properly applied.” CCA also praised “appropriately structured” buildout requirements and urged Congress to tell the FCC “to use clear, predictable requirements to promote efficient deployment.” CCA likes the idea of “geographic-based buildout requirements,” especially in areas that aren’t as dense, it said.

It’s “unworkable” to rebuild spectrum policy from scratch, the Information Technology and Innovation Foundation warned. But spectrum assignment should take into account new principles, such as sharing, application flexibility, aggregation efficiency, dynamic capacity assignment and the favoring of high-performance receivers. Interference mitigation and coordination is better left to the market if possible, ITIF said. Michael Marcus, a former FCC official who now consults on spectrum, also submitted comments lamenting the slow pace of proceedings at the agency as well as confused executive-branch government management structures on this front. “The 1934 [Communications] Act appears to have anticipated a pro-active FCC with respect to new technologies,” Marcus added. “Realities of recent funding levels have limited this, but Congress should address what really are its goals for FCC here.” (jhendel@warren-news.com)