Although we try not to play favorites, Headlines, like you, has sources and authors we love to turn to help make sense of the latest developments in communications and, especially, telecommunications policy. GigaOm's Stacey Higginbotham is one of those people for us. Our April 15 daily newsletter bore the title of one of Higginbotham's latest pieces -- "Everything You Need to Know About the Fight for TV Spectrum." This debate has been one of the hottest topics of late and this past week especially with the broadcast industry meeting in Las Vegas for its annual convention.
Higginbotham does a great job in her piece of identifying what the issue is, who the players are, and what's at stake. In addition, Higginbotham's colleague, Om Malik, sat down with Pradeep Sindhu, co-founder of Juniper Networks. Sindhu believes (and many agree) that the rise of mobility, or “anywhere computing,” is going to change the whole notion of information infrastructure. Most of us want “to consume information and information services anytime, anywhere, with no limitations, and preferably in the same way across all devices,” he points out. Sindhu argues that we shouldn't distinguish between a wired or a wireless network, for in the future the network traffic is going to be more unpredictable, with demand coming from any client device, from any app at anytime.
As our readers well know (we hope), the National Broadband Plan and President Barack Obama are strongly committed to identifying and freeing up more spectrum to provide mobile broadband services. The move is meant to provide some more competition both within the wireless industry and between wireless and wireline Internet service providers -- and reduce the cost of providing broadband services in rural areas. A big part of the debate is figuring out where the needed spectrum will come from.
In the National Broadband Plan, the Federal Communications Commission recommended that Congress allow the FCC to run what's called "incentive auctions" in which incumbent licensees -- mainly television broadcasters -- could relinquish rights in spectrum assignments to other parties or to the FCC. Incumbents would receive a portion of the proceeds realized by the auction of their spectrum licenses. In Las Vegas, FCC Chairman Julius Genachowski reiterated that broadcasters' participation in the auctions would be voluntary. But he warned that a part of the plan -- reallocating certain frequencies in local markets -- would not be voluntary: "voluntary can't mean undermining the potential effectiveness of an auction by giving every broadcaster a new and unprecedented right to keep their exact channel location. This would not only be unprecedented, it would give any one broadcaster veto power over the success of the auction -- and be neither good policy for the country, nor fair to the other participants."
The television broadcast industry is more than leery of the proposal; it is in full battle mode. CBS President and CEO Leslie Moonves told the National Association of Broadcasters convention that his network rejoined the organization, in part, because, given the issues facing the industry, such as the battle over broadcasters' spectrum, it was important for the industry to work together. NAB Board member and Post-Newsweek Stations CEO Alan Frank said of the auction proposal “To me, the whole thing feels like, ‘Let’s put Jay Leno in prime [time].” The NAB's chief executive, former senator Gordon Smith, said broadcasters are in the battle of their lives against forces of "new media" painting them as stuck in the Howdy Doody era, and government overreaching for the next broadband app. He said that forcibly repacking stations was not his idea of a voluntary spectrum reclamation plan.
Ultimately, Congress will decide what happens in this debate. On April 12, the House Communications Subcommittee held a hearing on the issue. The Subcommittee is chaired by a former broadcaster, Rep Greg Walden (R-OR), who said there's a variety of options to get the next wave of spectrum deployed. Later in the week, Chairman Walden said that despite a push from the Administration and the FCC, Congress would not be "rushed by arbitrary or historical timelines or deadlines," adding: "I want to make sure the subcommittee and the full committee have as solid an understanding of spectrum needs and demands and issues involved as possible before we legislate." He said he does plan to legislate, but that he "wants to get it right" the first time. FCC Chairman Genachowski said this week he's hopeful that Congress will pass spectrum auction legislation.
The NAB's Smith also linked incentive auctions to the other 800 pound gorilla in the wireless world -- AT&T's proposed acquisition of T-Mobile. The former senator from Oregon said the deal may force lawmakers to question the efficacy of a proposal to persuade broadcasters to give up some of their spectrum to meet the mobile broadband boom. "Were I still a member of the Commerce Committee," he said, "and looking at budgetary numbers of $30 billion that [incentive auctions are] supposed to provide, and the biggest bidder just walked out, two of them, I would wonder what the options are," Smith said. "So as you begin to start to say, ok, we can compensate broadcasters, we can build out a public safety network we can add to the Treasury, I'm telling you can't do all those things."
On April 8, AT&T filed its application for an antitrust review at the Justice Department and on April 14 the FCC officially launched a docket for its review of the deal. Apparently, Justice and the FCC will coordinate their reviews.
Many are questioning the benefits of the deal. Consumers Union sent a letter to members of Congress warning of the potential impact of AT&T’s proposed acquisition of T-Mobile. “It is critical to look at the effect this merger would have on consumers’ pocketbooks, choice and service,” said Parul P. Desai, policy counsel for Consumers Union. “Ultimately, it does not appear to be in their favor.” Concerns were raised even in the pages of the Wall Street Journal where Martin Peers wrote that what happens to those promises once a company has completed an acquisition? AT&T has claimed synergies from buying T-Mobile USA will more than offset the $39 billion purchase price. But AT&T has made similar promises alongside previous acquisitions, and it isn't clear it has achieved them.
Chief FCC economist Jonathan Baker said that the agency should determine whether the deal would leave wireless customers without viable alternatives. These concerns should be weighed against the possibility of technological breakthroughs and whether cost savings would be passed on to consumers. “It’s just a signal that the FCC is going to be examining these issues very carefully,” said Robert Lande, a University of Baltimore law professor who attended Baker’s speech and confirmed its content. He said Baker’s concerns are the basis of “a tough standard for approving a merger.” And this past week, when asked about the state of competition in the industry, FCC Chairman Genachowski pointed to an FCC report last May on the issue. Nowhere in that report did the FCC say the wireless industry is effectively competitive. That omission was significant, analysts say, because in all the reports before that the agency had concluded that there was enough competition. Specifically, the FCC report found: “There appears to be increasing concentration in the mobile wireless market. One widely-used measure of industry concentration indicates that concentration has increased 32 percent since 2003 and 6.5 percent in 2008.”
Penn State University Professor Rob Frieden also pointed out this week that the FCC's recent data roaming order offers two fascinating insights. One is that the FCC clearly identifies instances where the nature and type of wireless competition is inadequate to guarantee data roaming agreements between the major national carriers, such as AT&T and Verizon, and just about any other carrier. Only AT&T and Verizon opposed a data roaming obligation because, as noted by the FCC, these carriers have refused to deal -- and market consolidation “has reduced the number of potential roaming partners for some of the smaller, regional and rural providers” while also reducing the need for AT&T and Verizon to secure reciprocal roaming agreements. Such candor coming from an agency that never saw a wireless merger it could not approve and has never disputed industry claims regarding how tirelessly they have to compete.
Last weekend, at the National Conference for Media Reform, FCC Commissioner Mignon Clyburn pledged to be "super vigilant" of the wireless industry while discussing the importance of mobile broadband to low-income and minority communities. “In considering all of the factors relating to America’s minority and lower-income citizens, and realizing how hard people work to claw past their monthly bills only to immediately start fretting about next month, we must be vigilant -- super-vigilant -- about the direction the wireless industry is heading,” she said.
We'll be watching too. To track our coverage of all things wireless see http://benton.org/taxonomy/term/19; for spectrum issues see http://benton.org/taxonomy/term/26; and the AT&T|T-Mobile deal see http://benton.org/headlines/at-t-t-mobile
And we'll see you next week in the Headlines http://benton.org/headlines