In 2001, as mobile data services were being launched, the Commission adopted a forward-looking spectrum policy framework that has facilitated the growth of one of the most successful and competitive marketplaces in the world. Recognizing that competitive bidding and freely-functioning secondary markets allow spectrum to flow to its best and highest uses, the Commission abandoned rigid “bright-line” spectrum aggregation caps and replaced them with a safe harbor screen and flexible, case-by-case consideration of proposals that exceed the screen. This basic framework – as originally conceived – strikes the appropriate balance between regulatory certainty, by assuring licensees that spectrum accumulations within the safe harbor will be approved, and regulatory flexibility, by giving the Commission a focused tool to assess whether proposals exceeding the safe harbor screen would foreclose competition.
The benefits of this balanced, consumer-focused policy have been obvious and dramatic. A decade after the Commission abandoned spectrum caps in favor of a safe harbor regime, the U.S. wireless industry is far more competitive than when the caps were lifted. This competition has enabled the U.S. to become the world leader in deploying the next generation 4G LTE wireless broadband networks, and the U.S. is the global test bed for LTE apps and services. Mobile innovation is estimated to have created 1.6 million U.S. jobs over the past five years alone.
Yet many proponents now seek to dramatically change the way the screen is applied in ways that would create marketplace uncertainty and lead to arbitrary results that threaten to reduce competition, investment, and innovation. It is not radical change in the essential workings of the spectrum screen that is necessary. Instead, the Commission should take more modest steps to update the screen and ensure that it is applied in a way that best promotes competition, innovation, and investment.
Most notably, the screen continues to exclude a substantial amount of spectrum that the Commission’s own Report to Congress recognizes as usable for mobile wireless service. The predictability of the Commission’s framework has been further undermined by the fact that the safe harbor is no longer “safe.” Recent orders have suggested that the Commission may consider “special circumstances” for challenging even spectrum aggregations that do not exceed the screen. Fortunately, only a few simple adjustments are required to restore predictability and rationality to the Commission’s framework.
First, the Commission should update the screen to include all of the available spectrum that is “suitable” for mobile wireless services. Most prominently, the Commission should correct a current glaring omission by including in the screen the entire 194 MHz of BRS and EBS spectrum held almost entirely by Sprint/Clearwire, rather than the mere 55.5 MHz the Commission has included to date. That spectrum is in use today and there is no principled basis upon which it can continue to be excluded from the screen. The Commission should also conduct annual rulemakings to update the spectrum screen inventory as new allocations are brought online.
Second, the Commission should reaffirm that the “safe harbor” provided by the screen is truly safe – i.e., that the Commission will not entertain spectrum aggregation-related challenges to any proposed spectrum acquisition that does not exceed the safe harbor level. This step is necessary to restore predictability to the workings of the screen, which the Commission has long recognized promotes innovation and investment.
Third, the Commission should make clear that its case-by-case analysis of proposals to exceed the safe harbor level in any local market will remain tightly focused on whether the spectrum available to competitors and potential competitors remains sufficient to enable robust facilities-based competition to continue. This analyses should be informed by the reality that today’s screen, which is set at one third of suitable and available spectrum, is almost certainly too low and holdings in excess of the screen in some markets may promote the public interest by putting fallow or under-deployed spectrum to its best and most valuable uses.
Unfortunately, numerous parties will argue for radical forms of re-regulation which seek to put every aspect of the current spectrum aggregation framework into play. One such proposal is to reinstate spectrum caps that were abandoned by the Commission 11 years ago. Some also will urge the Commission to weight spectrum differently within the spectrum screen or to create new band-specific limits. All of these proposals have one thing in common: they are not designed to promote competition, innovation, and investment. By intent and effect, they would do the opposite.
The Commission has long recognized that its policies should carefully distinguish between protecting competition and protecting individual competitors. Those who seek radical changes in the Commission’s spectrum screen are asking the Commission to obfuscate that distinction, to the harm of consumers and our economy. There is no reason for the Commission to abandon spectrum policies proven to promote competition and innovation when a few, simple adjustments are all that is necessary to restore predictability and rationality to the Commission’s framework.