The Federal Communications Commission attracted intense public attention Thursday for a controversial vote on a new net-neutrality proposal.
But the FCC also voted on another important issue that will shape the future of the telecommunications and broadcast TV industries. The agency enacted rules for a plan that would provide more airwaves for cell-phone carriers, which would allow for smoother Web browsing, higher-quality videos, and fewer dropped calls.
Under the plan, the FCC will buy back broadcast licenses from TV stations and auction them to the cell-phone industry. The program is voluntary, but some local TV stations around the country are expected to take the payout and go off the air.
In an attempt to boost competition in the wireless industry, the FCC will curb the ability of Verizon and AT&T to bid for spectrum—the frequencies that carry all wireless signals. The rules are a big leg up for Sprint and T-Mobile, the smaller of the four national carriers.
The commission Democrats argued that the limits are necessary to keep the industry's two giants from dominating the auction and accumulating enough spectrum to kill off competition and raise prices. Without enough spectrum, a carrier's network would become congested, leading customers to flee to competitors.
Before the vote, Democratic Commissioner Jessica Rosenworcel expressed concern to FCC Chairman Tom Wheeler about the planned limits, according to FCC aides. Last-minute negotiations forced Wheeler to loosen the caps on Verizon and AT&T.
But the commission's two Republicans still voted against the caps, arguing that the agency shouldn't manipulate the auction to benefit favored competitors.
Republican Commissioner Michael O'Rielly said the FCC is putting an "enormous thumb" on the scale and providing "corporate welfare for certain multinational companies." He noted that some of "the companies also have strong backing by foreign governments." Sprint is owned by Japan's SoftBank, and Germany's Deutsche Telekom owns T-Mobile.
"Rather than embracing the free market, which has sparked constant innovation in wireless services over the last two decades, the commission places its faith in centralized economic planning," Republican Commissioner Ajit Pai said.
But Wheeler argued that the limits are necessary to promote competition—especially for consumers in rural areas. The TV airwaves set for auction are low-frequency, meaning they can travel over greater distances and penetrate buildings.
Technically, the limits apply to any nationwide carrier with more than one-third of the low-frequency spectrum in a market. But that condition essentially only clamps down Verizon and AT&T.
An opening stage of the auction would be open to all companies, but once the bidding hits a predetermined threshold, the caps would kick in. In that second stage, up to 30 megahertz of spectrum in a market would be off-limits to the two largest carriers. The total amount of spectrum available in a market will depend on how many TV broadcasters decide to go off the air.
The auction is set to take place in the middle of next year. The government plans to use the billions of dollars in revenue from the auction to pay for a nationwide high-speed communications network for first responders and to pay down the deficit.