Bringing the cap back?: Rural providers petition to reinstate spectrum cap

An association of rural wireless providers petitioned the Federal Communications Commission to re-impose a spectrum cap in light of the growing market presence of AT&T Mobility and Verizon Wireless in the mobile phone industry.
“In the absence of a spectrum cap, Verizon and AT&T will continue to grow unchecked and rural and regional wireless carriers will be adversely affected as they attempt to obtain spectrum and compete against consolidated nationwide wireless carriers who possess greater resources and economies of scale,” said Michael Higgins Jr., president of the Rural Telecommunications Group.
The RTG, whose members include independent mobile carriers and those affiliated with rural telephone companies, want the FCC to prohibit a wireless operator from controlling more than 110 megahertz (below the 2.3 GHz band) in any one market.
The FCC enacted a 45-megahertz spectrum cap in 1994 during the Clinton administration. The cap was later raised to 55 megahertz before being eliminated in 2003. Telecom regulators later moved to a 70-megahertz ‘spectrum screen’ in analyzing proposed mergers. The screen – an internal benchmark designed to trigger closer scrutiny of markets involved in wireless mergers – was subsequently raised to 95 megahertz because the agency wanted to factor 700 MHz spectrum into the equation.
Yet it was the results of the 700 MHz auction earlier this year, dominated by Verizon Wireless and AT&T Mobility, that prompted House telecom subcommittee Chairman Edward Markey (D-Mass.) and other Democratic policymakers to renew criticism of the decision to eliminate the spectrum cap. There are indications that as a result of the 700 MHz auction, Verizon Wireless and AT&T Mobility exceed the 95-megahertz spectrum screen in at least a dozen markets between them.
“Many small and/or rural carriers can no longer compete with such large players,” said Carri Bennet, general counsel of the RTG. “Not only are these smaller players harmed, consumers living in rural America or traveling through rural America are harmed. Without the rural wireless network that was built on the backs of the rural companies, all of us will suffer. A cap on the amount of spectrum that any single carrier can hold will ensure that diversity and innovation will be allowed to flourish.”
The RTG’s push for the spectrum cap’s return comes as the FCC crafts rules to auction advanced wireless services-3 spectrum at 2.1 GHz and the D Block left stranded in 700 MHz bidding. Moreover, the agency is considering Verizon Wireless’ proposed $28 billion acquisition of the No. 5 wireless provider, Alltel Communications L.L.C. The deal, if approved by the FCC and Justice Department, would enable Verizon Wireless to regain the No. 1 standing in the wireless space.
CTIA, the cellular industry association that represent the nation’s top wireless providers, declined to comment.