In the midst of a prolonged and deep national recession, the U.S. wireless industry has generated billions of dollars of investment capital, produced millions of jobs, and spawned a breathtaking array of innovative new consumer products and services.  This wireless success story is due in no small measure to the Commission’s longstanding recognition that a light touch approach to wireless regulation best promotes competition, innovation and investment.

Not surprisingly, however, some wireless providers urge the Commission to abandon that approach in favor of blatantly skewed spectrum policies that are designed to tip the competitive scales in their own favor.  For example, Sprint/Clearwire, which controls double the spectrum of any other carrier, contends that most of its own spectrum should continue to be excluded from the spectrum screen, while much of the spectrum held by Verizon and AT&T should be double-counted.  T-Mobile, which chose to sit out the Commission’s 700 MHz auction entirely and to forego low band secondary market spectrum opportunities, now wants the Commission to adopt spectrum rules designed to guarantee its ability to catch up on the cheap. And the Rural Telecommunications Group (“RTG”) has asked for spectrum caps so draconian they would require AT&T and Verizon to undertake immediate divestitures – unless, of course, AT&T and Verizon “volunteer” to be yoked with RTG’s entire wish list of regulatory obligations that have no connection whatsoever to spectrum policy.

None of these proposals has the slightest merit.  For example, while Sprint and Clearwire weakly argue that the bulk of Clearwire’s 2.5 GHz spectrum should continue to be excluded from the spectrum screen, these arguments are flatly inconsistent with these carriers’ claims regarding the value and utility of its spectrum in every venue but the FCC.  And, even more importantly, they cannot be reconciled with the undeniable reality that the spectrum they want to exclude from the screen is today being used for mobile broadband services.  Indeed, Sprint has made quite clear that it is buying the rest of Clearwire “to maximize the value of Clearwire’s 2.5 GHz spectrum and use it to increase Sprint’s network capacity.”  These are inconvenient facts for Sprint and Clearwire which they blithely ignore in their comments.

Equally meritless are proposals by Sprint, Public Knowledge and others to weight sub-1 GHz “low band” spectrum more heavily in the spectrum screen or to apply a separate screen to such spectrum.  There is no economic or policy basis for either of these schemes.  The entire premise of these proposals is that low band spectrum has superior propagation properties, which can, in some areas, decrease the deployment costs of a network.  But in areas and in circumstances where the propagation properties of a given spectrum band decrease deployment costs, that spectrum will command a correspondingly higher price in the marketplace, thus offsetting any deployment cost advantage that might exist.

Equally important, the only expert to file anything that purports to support these proposals actually undercuts his own case by demonstrating that low band spectrum does not provide any deployment-related cost advantages in the only areas where the spectrum screen actually matters because of spectrum constraints.  Indeed, he concedes that low-band spectrum’s cost advantages disappear entirely in urban areas where most people live, because in those areas, dense network grids are necessary to meet exploding capacity needs, regardless of the spectrum being deployed.

Notably, there was almost no support in the record for replacing the spectrum screen with rigid spectrum caps, and for good reason.  Spectrum caps would deny the Commission the flexibility to approve spectrum holdings that would present no risk of aggregation, but that would allow for the more efficient use of spectrum resources.  Although Free Press and RTG dissent, they offer nothing but wild hyperbole to support their call for a return to rigid caps that would create disincentives for needed investment and innovation.

AT&T demonstrated in its opening comments that there is no reason for the Commission to abandon spectrum policies proven to promote competition, investment and innovation when a few simple adjustments are all that is necessary to restore predictability and rationality to the Commission’s framework.  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 that exceed the safe harbor screen would threaten to foreclose competition.  That framework is the key to effective spectrum policy for continued U.S. wireless leadership.

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