|Re||Rulemaking to Amend Parts 1,2 21, and 25 of the Commission's Rules to Redesignate the 27.5-29.5 GHz Frequency Band, to Reallocate the 29.5-30.0 GHz Frequency Band, to Establish Rules and Policies for Local Multipoint Distribution Service and for Fixed Satellite Services, Third Report and Order and Memorandum Opinion and Order, CC Docket No. 92-297 (rel. June 26, 2000)|
Finally, the end.
Today the Commission will finally allow the LMDS ownership restrictions on LECs and cable operators to sunset. After years of wrangling, after countless filings, and after virtually no offering of service, the Commission is willing to let the LMDS eligibility restriction fade into the sunset on June 30, 2000. On July 1, 2000 I am happy to report, the American people will finally have their first opportunity to see the full potential of the LMDS market. After years of fighting to have these restrictions lifted, I welcome today’s decision as a hopeful sign that such ownership rules will be relegated to the dustbin of history.
All of this, unfortunately, occurs far too late.
Three and a half years ago, the Commission adopted these ownership restrictions over the strong and prescient dissent of my colleague, Commissioner Chong. As she wrote, "by precluding the participation of incumbent LEC and cable operators, competition in those markets may well be harmed by arbitrarily denying some of the strongest potential competitors the ability to branch out into new markets."1 She described the majority as subscribing to the belief that "government must second guess the marketplace and impose heavy regulatory restrictions on the basis of sheer conjecture."2
Two and a half years ago, when the majority decided to initiate this proceeding to determine whether or not the eligibility restrictions should sunset, I dissented as well. In doing so, I stated my view that "[e]ligibility restrictions on an innovative new service are a draconian measure; such bans on competition should be used only to prevent a substantial competitive harm to a specific market. Here, the eligibility restrictions are imposed not to prevent a specific harm, but in an attempt to enhance the mere possibility of competition."3 Six months ago, as the Commission issued its Sixth Notice of Proposed Rulemaking, I once again called attention to the speculative basis and lack of record support for these ownership restrictions.4
Today’s Order comes to the same conclusions that Commissioner Chong and I have been advocating. Most fundamentally, today’s Order employs a different standard of review for these regulatory limitations. The original restriction was based on a substantial market power test, and allowed the speculative competitive fears of the majority to withstand scrutiny. Today’s Order evaluates the eligibility restriction based on the far more reasonable question of whether "open eligibility poses a significant likelihood of substantial competitive harm in specific markets, and, if so, whether eligibility restrictions are an effective way to address this harm."5 This standard reflects my reluctance to impose these types of restrictions.
Two other fundamental principles of Commissioner Chong’s and my dissents were (1) the flexibility afforded LMDS licensees undercut the need for predictive service-specific ownership limitations, and (2) the availability of other fixed wireless spectrum made it extremely difficult, if not impossible, for any provider to monopolize the market. Years later, today’s Order reaches the same conclusions. LMDS is "not being primarily used to provide local exchange or MVPD services" – the original theory for the imposition of the ownership rules. Therefore, the Order reaches the now obvious conclusion that "[w]e do not believe we should continue the LMDS restriction based on possible competitive effects in markets that LMDS licensees are not entering."6
Second, the Order also notes that there is "no reason here to treat LMDS differently from other substitutable spectrum", like MMDS, 24 GHz, 39 GHz and other fixed wireless services.7 The Order comes to the well-documented and widely accepted conclusion that "no group of firms or technology will likely be able to dominate the provision of broadband services" and that the possibility of monopolizing all of the spectrum available for broadband is "fairly remote."8 Moreover, the Order cites to a number of potential benefits of sunseting the rule – benefits also outlined by the dissenting statements of the past three years: increased access to capital, more rapid deployment, better equipment availability, etc.9
In short, while I endorse much of the reasoning of today’s order, I only lament that it did not hold sway with my colleagues sooner.
It is not clear whether the lackluster performance of LMDS to date is the result of the marketplace or our restrictive rules. That is one of the core problems with intrusive regulation – one never knows whether a service has failed or government policy has failed. But with today’s decision, we can finally be sure that LMDS will rise or fall on its own merits – not based on government fiat.
1. Statement of Commissioner Rachelle B. Chong, Dissenting in Part, Second Report and Order, Order on Reconsideration and Fifth Notice of Proposed Rulemaking, CC Docket No. 92-297 (March 11, 1997).
3. Separate Statement of Commissioner Harold Furchtgott-Roth, in Third Order on Reconsideration, CC Docket 92-297 (Feb. 3, 1998); see also Separate Statement of Commissioner Michael Powell, in Third Order on Reconsideration, CC Docket 92-297 (raising some of the same concerns).
4. Commissioner Powell raised similar concerns. See Dissenting Statement of Commissioner Michael Powell in Third Order on Reconsideration, Sixth Notice of Proposed Rulemaking, CC Docket 92-297 (Dec. 13, 1999).
5. Third Report and Order and Memorandum Opinion and Order, CC Docket No. 92-297 (rel. June 23, 2000), at ¶ 1.
6. Id. at ¶ 15.
7. See id. at ¶ 26.
8. Id. at ¶¶ 19, 21.
9. See Dissenting Statement of Commissioner Harold Furchtgott-Roth, in Third Order on Reconsideration, Sixth Notice of Proposed Rulemaking, CC Docket 92-297 (Dec. 13, 1999); Statement of Commissioner Rachelle B. Chong, Dissenting in Part, Second Report and Order, Order on Reconsideration and Fifth Notice of Proposed Rulemaking, CC Docket No. 92-297 (March 11, 1997).