FCC Puts an End to Wireless Caps

In a move that has big wireless carriers cheering, regulators voted to bump up the cap immediately and eliminate it at the end of 2002. The lone dissenter said the ruling's purpose was partly to enable big corporate mergers.

by Jim Wagner of internetnews.com [November 9, 2001]

Regulators at the Federal Communications Commission voted 3-1 to eliminate the spectrum allocation cap in a meeting Thursday morning.

Striking the spectrum allocation cap, which puts a limit of 45 MHz on every wireless digital telephone carrier in U.S. markets, opens the door to consolidation and acquisitions among the many wireless phone companies in the U.S., many who hover at the cap limit in the major U.S. markets.

The FCC has decided to immediately bump the allocation to 55MHz and completely eliminate the cap on Jan. 1, 2003, a move that has major wireless carriers rejoicing.

Ritch Blasi, AT&T Wireless spokesperson, said the spectrum cap was an outdated measure in today's economy.

"Obviously, we applaud the FCC for recognizing the current spectrum cap is outmoded and inefficient in today's competitive wireless marketplace," he said. "Raising the cap to 55MHz is a good start, and gives wireless carriers enough leeway to tailor our existing holdings to offer new services to our customers."

It's a move that is good news for the major wireless carriers, many who will now be looking to snatch up smaller companies that give them an added wireless footprint in major cities throughout the country.

Dissenter asks for aim
FCC Commissioner Michael Copps, the lone dissenter, called the ruling a "ready, fire, aim" approach to regulation that lacks foresight and bypasses Congressional expectations of the FCC.

"We have not adequately evaluated the prospects for economic concentration and the potential for wireless monopolies," Copps said. "We have not performed the extensive public interest evaluation required by statute and expected by Congress and which would include impacts upon small business, rural consumers, ownership diversity, efficient use of the spectrum, and the encouragement of new technologies."

"Let's not kid ourselves—this is, for some, more about corporate mergers than it is about anything else," he added.

Jeffrey Nelson, Verizon Wireless spokesperson, said the new rule opens up the industry and gives them more room to breathe in an industry that has a lot of competition.

"Spectrum is the lifeblood of the wireless industry," he said. "To be artificially capped at a certain point, even the 55MHz cap, really does mean that companies like Verizon Wireless would eventually not be able to pursue additional growth opportunities.

A recent report from The Strategis Group shows that while eliminating the cap might be good business for wireless carriers trying to make more headway in larger markets, it might hinder future growth in newer technologies and rural deployment

"It seems like the whole industry has been clamoring for the past several years for the cap to be removed," said Adam Guy, a senior analyst in Strategis' mobile wireless research division. "There are several supporters of the cap who advocate that the cap is still necessary to ensure sufficient competition, especially in more rural areas. There are also those advocates who believe that allowing larger carriers to aggregate spectrum when they aren't using it efficiently enables prolonged inefficiencies."

Rural deployment has been a been a rallying cry to acquisition advocates and certain members of the U.S. Senate for many years now. "Bridging the Digital Divide," a catchphrase coined during the Clinton administration, was supposed to increase telecommunications (i.e., broadband Internet access) deployment in our nation's countrysides.

It's a measure that's largely failed, as data competitive local exchange carriers (DLECs) go out of business and telephone companies like Verizon Communications and SBC Communications slow down their high-speed deployment to a trickle—even though some specifically promised not to do so as a condition of previous mergers and acquisitions.

—End