FCC Acts to Make Smartphones Faster”“Especially for Sprint and T-Mobile

The agency plans to auction TV airwaves to cell-phone carriers.

A man talks on a mobile phone at the T-Mobile stand at the CeBIT technology fair March 15, 2007 in Hanover, Germany. CeBIT, the world's largest tech fair, will run from March 15-21. (Photo by Sean Gallup/Getty Images)
National Journal
May 15, 2014, 10:29 a.m.

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.

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