WASHINGTON-The battle over whether major local telephone companies will be allowed to merge-expected to be debated again today at the Federal Communications Commission-is tied to spectrum caps more than most people realize, said Motorola Inc.’s Michael D. Kennedy.
The Practicing Law Institute’s 16th Annual Telecommunications Conference seemed to have an underlying theme of what impact the proposed mergers of SBC Communications Inc. with Ameritech Corp., and GTE Corp. with Bell Atlantic Corp. would have on local exchange competition.
The PLI conference started a day after a Wall Street Journal story stated the FCC may not approve the mergers.
FCC Commissioner Michael Powell seemed to refute the story, saying the public interest standard, cited as the reason for the possible denials, is “extraordinarily vague and facile.”
Powell, who gave the FCC keynote at the PLI conference, likened the commission to parents teaching a child to ride a bicycle. The public interest, he said, is “too easy a basis to reach out and grab the brakes of competition.”
FCC Chairman William Kennard has a different view of what the FCC’s duties are concerning mergers.
Kennard’s “view is grounded in the fact that we can’t ignore the competition concerns.” Since the FCC can’t ignore these concerns, “We either issue conditions or deny the merger. I don’t think the companies want us to deny” their specific mergers, said Ari Fitzgerald, Kennard’s wireless legal adviser.
The FCC-scheduled to be reviewed by Congress next year-is expected to hear from one powerful lawmaker about the FCC’s duties on mergers. Sen. John McCain (R-Ariz.), chairman of the Commerce Committee, was poised Friday to send a letter to the FCC. McCain generally is in favor of deregulation and has been highly critical of the FCC.
But, while the rest of Washington policy makers focus on what impact the proposed mergers would have on local competition and the explosion of data communications, the mergers could reduce the number of players in the wireless marketplace. This is especially true if the FCC lifts the spectrum cap, which limits any particular company to control no more than 45 megahertz in any geographic area.
The Personal Communications Industry Association is fighting to keep the spectrum cap. “There are big powerful guys out there,” said PCIA’s Mary McDermott, referring to cellular incumbents. “Most people forget that the PCS industry is only three years old … We don’t think it is time to lift the spectrum cap.”
The FCC last month adopted a notice of proposed rule making that deals with spectrum caps but only last week released the text of the item, so it is unclear whether the commission will make a final decision on the spectrum-cap issue before it makes a final decision on the pending mergers.
