| Re: | 1998 Biennial Regulatory Review — Spectrum Aggregation Limits for Wireless Telecommunications Carriers, WT Docket No. 98-205, WT Docket No. 96-59, GN Docket No. 93-252, Report and Order |
When we commenced this proceeding in November of last year, I thought it was an excellent opportunity for the Commission to review whether market conditions justify continued prospective, prophylactic regulation of the wireless telecommunications industry. Here, we carry out part of the mandate from the 1996 Telecommunications Act to review our ownership rules every two years.
The Act, in section 11, further mandates that we repeal or modify any regulation that is "no longer necessary in the public interest as the result of meaningful economic competition." 47 U.S.C. §161 (emphasis added). At the time we adopted the Notice of Proposed Rulemaking, I applauded this effort to take a sober and realistic look at the CMRS ownership limitations in light of the current and foreseeable competitive environment in the wireless market.1 I was expecting – in view of the public interest guidance in section 11 and the optimistic outlook for competition in the CMRS industry – a repeal or significant modification of the spectrum cap; at least a sunset. Truthfully, this item before us today is not what I expected.
I cannot imagine any other industry segment that can better laud their state of economic competition as "meaningful." Prices are down and falling. Innovation, churn and penetration are up and still climbing. And, as this item points out, the newer PCS licensees are adding more new customers than the incumbent cellular carriers. All of this seems pretty "meaningful" to me. Yet, as the record in this proceeding reveals, there are still some lingering concerns left over from the vestiges of the original cellular duopoly, which – if you measure market share in terms of subscribers – still has the lion’s share. So, despite the positive state of competition in this segment, I had thought back when we started this review that, if we can meet the burden of showing that the cap is still necessary in the public interest, then we may keep it. I also said that this cap should not last forever, but if we do nothing this time, we would have to review it again.
Well, this time we are not doing much to modify or eliminate the rule and I do not necessarily agree with all of the findings and competitive analysis in the item. For example, I think that the barriers to "reconsolidation" (including searching for and finding a willing seller, capital constraints, technical compatibility issues, and FCC and antitrust review) are pretty high. Thus, I do not think that elimination of the cap will result in massive consolidation at the local level immediately. However, I believe that the Wireless Bureau has presented an economic analysis that does the best job possible of explaining why the rule should stay in place for the time being. The item meets the burden by clearly recognizing that, "at this time," there are a few good reasons left for leaving the cap in place at least a little longer, including our continued, important role as the public’s spectrum manager.
Most importantly, in the spirit of compromise, the item recognizes three things that I find somewhat comforting in my decision today to support this item:
First, we expect to make available "in the near future" additional spectrum for the provision of third generation (3G) wireless services and other advanced mobile wireless services. I strongly encourage the prompt completion of any allocation and licensing proceedings, in coordination with international developments, so that carriers in the U.S. may offer our citizens such advanced, whiz-bang services very soon.
Second, since some carriers are likely to have spectrum needs that cannot wait for additional allocations, I am also encouraged by this Order’s invitation to carriers that are spectrum-constrained to seek waivers of the cap. Such waivers must be processed quickly and granted when carriers show that the spectrum cap adversely affects their ability to provide 3G or other advanced services. While this process may tend to make our bright line a little blurry, it is important to give carriers the opportunity to make their case for more spectrum immediately.
Third, I am pleased that our re-evaluation of this ownership rule will once again commence next year as part of the year 2000 biennial review. I hope that we can coordinate this review with our spectrum allocation activities and related proceedings, as well as next year’s report to Congress on CMRS competition. I also hope we can explore a little better the meaning of "meaningful competition," which Congress intended to replace regulation.