With federal regulators concerned about cutting the number of major national wireless carriers from four to three, a possible Sprint/T-Mobile merger would face an uphill battle at the FCC and Department of Justice, industry observers say. Reports emerged last week that Sprint, the nation’s third largest carrier, and T-Mobile US, its fourth largest, are looking at a deal to merge (CD Dec 16 p15). The Wall Street Journal reported Friday that Sprint is looking at making a bid north of $20 billion for T-Mobile in the first half of next year, while it also studies “regulatory concerns."
House Communications Subcommittee Republicans want to bring up five central issues with the five FCC commissioners this week, based on the majority committee staff memo for the hearing: Commercial spectrum auctions, government spectrum, universal service, FCC reform and the IP transition. The panel’s oversight hearing is at 10 a.m. Thursday in 2123 Rayburn. “Several fundamental implementation questions about the broadcast incentive auction remain unanswered, including broadcast station valuation and border coordination,” the memo said (http://1.usa.gov/1hKIydb). “It remains unclear how the FCC intends to craft auction rules that comport with the changes made to the Communications Act by the Spectrum Act.” The memo criticized the FCC quantile regression analysis, “aggravated by the widely-recognized need for comprehensive corrective action and the long delay in Commission action on waivers sought by many of these companies for relief in the interim,” and backed more process updates. The memo mentioned the spectrum and FCC process legislation House Commerce will consider in markup and vote on this week (CD Dec 10 p3).
FCC Chairman Tom Wheeler made the broadcast incentive auction more feasible by delaying it Friday (CD Dec 9 p1), but the first-of-its-kind auction won’t be easy, according to interviews Monday with former chairmen of both parties, broadcast and wireless lawyers and public-interest officials. They said not holding the auction until mid-2015, later than the 2014 then-Chairman Julius Genachowski planned, gives Wheeler more time to resolve issues like limits on bidding for the top-two U.S. carriers and holding two other wireless spectrum auctions this year.
The FCC is far short of the “critical mass” of broadcasters necessary to make its broadcast incentive auction a success, Preston Padden, executive director of the Expanding Opportunities for Broadcasters Coalition, plans to tell the Senate Commerce Committee in testimony next week. The full committee plans a hearing on spectrum auctions Tuesday at 2:30 p.m. in 253 Russell. Without broadcaster participation, there will be no spectrum to auction, Padden plans to say. Fostering participation should be a top FCC priority, according to Padden’s prepared testimony, which says the FCC’s scoring design runs “contrary to the statutory directive” on how market forces should influence the auction. The coalition, a recipient of no money from carriers, opposes restricting AT&T and Verizon participation, Padden will also say. He will also argue that the FCC must “permit, and even encourage, innovative ‘out-of-the-box'” channel sharing proposals.” Stations need to know the starting prices the FCC will offer, Padden will add. Witnesses for the hearing have not yet been announced.
A House Republican dismissed the prospects of video legislation introduced recently by Senate Commerce Committee Chairman Jay Rockefeller, D-W.Va. “That’s not really going to see very much work in our side, if any,” said House Communications Subcommittee Vice Chairman Bob Latta, R-Ohio, speaking on an episode of C-SPAN’s The Communicators, set to be telecast Saturday, of Rockefeller’s Consumer Choice in Online Video Act. “I don’t see it moving along in the House.” He doubts the Satellite Television Extension and Localism Act will be a comprehensive bill and cited subcommittee Chairman Greg Walden, R-Ore., expressing desire for a clean reauthorization. “Dec. 31, 2014, is going to be here before we know it,” Latta said, referring to when STELA will expire. FCC spectrum auctions have occupied much subcommittee attention, particularly given the immense complexity of the broadcast incentive auction, Latta said. “This auction is going to be absolutely crucial,” he said, mentioning the revenue expected to come from it -- more than $20 billion. “We want it to be fair. You've got to really look at who the players are going to be out there.” He said there will have to be companies “willing to sell.” If AT&T and Verizon are excluded from the auction, it may cause others not to participate and affect overall revenue, he said. The subcommittee has invited all five FCC commissioners for a potential December oversight hearing. “It’s important that they all appear before us in committee, and that the committee can ask them questions to find out where they're going,” particularly in the area of process reform, Latta said, citing an interest in the “thought and philosophy” of the commissioners. Latta emphasized transparency and predictability and the importance of moving proceedings along at the agency. He stressed “cost-based analysis.”
Congress needs to make sure FirstNet is funded adequately, TIA President Grant Seiffert told House Communications Subcommittee leaders in a Thursday letter (http://bit.ly/Ik2Qef), released Friday. The subcommittee held an oversight hearing on FirstNet Thursday. The $7 billion slated for FirstNet must become “available as planned” by law, which means “Congress should continue to urge the FCC to promptly and effectively implement the voluntary incentive auction of television broadcast spectrum, with a special focus on broadcaster outreach in the top 10 markets where the potential auction revenue from bidders is at the highest,” Seiffert wrote. Congress allocated $2 billion to FirstNet up front and as much as $5 billion from FCC spectrum auctions, assuming they earn that much.
The White House waded into one of the biggest issues facing the FCC and Chairman Tom Wheeler as it finalizes rules for the incentive TV auction -- whether the FCC should impose restrictions limiting bidding by Verizon Wireless and AT&T. Tom Power, deputy chief technology officer for telecommunications, said the whole administration supports a controversial April filing at the commission on spectrum aggregation and competition (CD April 15 p7) by the Department of Justice’s Antitrust Division. But Power also indicated that the White House wasn’t trying to tell the FCC what to do. Power spoke at a forum sponsored by the New America Foundation.
The top FirstNet official defended the progress the public national network team has made despite doubts and uncertainty. Sam Ginn became FirstNet board chairman in August 2012 and acknowledged the many challenges since then, speaking Thursday before the House Communications Subcommittee. Money is a constant consideration, as is outreach, Ginn said, cautioning that expectations can’t always be met.
While the IP transition could see action first, the incentive auction of broadcast TV spectrum remains one of the highest priorities for FCC Chairman Tom Wheeler, a senior commission official said Wednesday. The auction remains the single issue on which Wheeler is spending the most time, the official said. Some industry observers feared a slight pivot on Wheeler’s part in recent days, highlighted by last Thursday’s blog post promising action in January on the transition (CD Nov 30 p1).
The House Communications Subcommittee is inviting all five FCC members for a December hearing, said Chairman Greg Walden, R-Ore. He hasn’t met FCC Chairman Tom Wheeler or Republican Commissioner Mike O'Rielly, both confirmed earlier this month, he told reporters Thursday night. Walden emphasized the changes to the video market and an upcoming hearing on FirstNet, touching on a wide range of topics during the news briefing. Also of concern are the FCC’s spectrum auctions and the agency’s operations under Wheeler. The hearings on FCC oversight and FirstNet were expected (CD Oct 18 p3).