CCA’s Steve Berry discusses competition in the wireless market, rules for the upcoming FCC auction and the duopolistiic nature of the space
WASHINGTON – The Competitive Carriers Association, a Washington, D.C.-based trade association, advocates for wireless regional and independent providers outside of the two largest carriers, AT&T and Verizon Communications, which between them control roughly 70% of the U.S. wireless market.
CCA’s President and CEO Steven Berry sat down with RCR Wireless News to talk about the Federal Communications Commission’s July 16 open meeting, which will decide the procedures for the 600 MHz incentive auction, among other issues.
The auction is scheduled to commence in the first quarter of next year. CCA pushed the FCC to ensure that the auction allows for meaningful participation by carriers of all sizes to support a more competitive U.S. wireless market. As Berry said, “The FCC should ask itself: What is the highest priority of this auction? Shouldn’t it be a more competitive wireless market? A more competitive market would benefit consumers greatly.”
Berry and CCA have strongly pushed for the FCC to expand the maximum size of the spectrum reserve to four blocks to better protect consumers and competition and to ensure all carriers have the opportunity to walk away with a piece of the highly desirable low-band spectrum.
“Smaller carriers should have the opportunity to bid on smaller areas of licenses, and the FCC’s compromise on partial economic area geographic license sizes will help make this possible. Even with PEAs, foreclosure remains a real possibility absent adequate safeguards. Spectrum is valuable and a finite resource; we should make sure multiple carriers have an opportunity to bid on spectrum and provide service following the close of the auction,” Berry said.
AT&T and Verizon have opposed the creation of a reserve, arguing it is unfair government interference. CCA takes issue with that viewpoint, as Berry noted, “AT&T and Verizon fail to recognize that access to finite low-band spectrum, such as through the reserve, is a way for competitive carriers to access spectrum to increase competition, as the DoJ has noted three times.”
Berry was also quick to point out that AT&T and Verizon have a vested interest in maintaining the status quo. Noting that data showed if AT&T and Verizon had to operate in a more competitive market, they may have to drop their prices to consumers in response to competitors – potentially reducing profit.
Berry pointed out that if spending more money now means a less competitive market later, AT&T and Verizon may be willing to spend more on spectrum to foreclose smaller carriers and competitors. Many small and regional carriers often have to rely on financing to participate in auctions, and access to capital may be limited by the ability to win spectrum in the auction itself.
CCA’s emphasis on restoring competition to an otherwise ineffectively competitive marketplace is not universally accepted or shared by other telecom trade groups.
Scott Bergmann, VP of regulatory affairs at CTIA, the nation’s largest telecom trade group, published a blog post on July 14 emphasizing the already competitive nature of the wireless market and subtly telling the FCC there was no need for it to try to “artificially” create more competition.
Berry briefly touched on CTIA’s position: “We’ve been pushing for a pro-competitive policy decision through FCC action, which AT&T and Verizon have opposed. We’ve asked for an increase in reserve – something that both of the largest carriers have continued to resist – and other policies to increase competition in the auction and the marketplace.”
The FCC, for its part, seems to lean more toward the CCA viewpoint and has emphasized the opportunity this auction creates to encourage more competition in what could be characterized as a duopolistic market dominated by AT&T and Verizon.
FCC Chairman Tom Wheeler said in a blog post, “This two-sided auction will use market forces to make available more low-band spectrum to meet the wireless broadband needs of consumers and businesses for the twenty-first century, and to promote a competitive wireless marketplace. More spectrum will spur innovation, economic growth and lead to greater consumer choice.”
When asked about the likelihood of the FCC adopting any of the procedures that CCA would favor, Berry was cautiously optimistic. “I am hopeful the FCC will adopt some of our suggestions. As Chairman Wheeler noted, we will continue to have a reserve and that’s a very positive thing. How competitive the auction will be all comes down to the nuance of the procedures as well as maximum participation by both broadcasters and carriers.”
Regardless of the outcome, CCA will find a way to help its members navigate the rules adopted, while urging the timeline to proceed on schedule without delay. Berry said, “You can consider an appeal, but everyone wants the auction to occur on time. Our carriers can’t wait much longer to access these spectrum resources if they want to be competitive and continue to expand their customer base.”
The FCC is cognizant of the likelihood of somebody or everybody being upset by the rules. As Wheeler wrote, “No single party will be happy with everything we’ve done. The final product is a balanced solution to a challenging situation with more moving parts than a Swiss watch. One message we heard loud and clear, however, was that the final rules must be as simple as possible.”
