FCC Puts an End To Wireless Caps

Regulators at the Federal Communications Commission voted 3-1 to eliminate
the spectrum allocation cap in a meeting Thursday morning.

Striking the spectrum allocation cap, which puts a limit of 45MHz on every
wireless digital telephone carrier in U.S. markets, opens the door to
consolidation and acquisitions among the many wireless phone companies in
the U.S., many who hover at the cap limit in the major U.S. markets.

The FCC has decided to immediately bump the allocation to 55MHz and
completely eliminate the cap on Jan. 1, 2003, a move that has major
wireless carriers rejoicing.

Ritch Blasi, AT&T Wireless spokesperson, said the spectrum
cap was an outdated measure in today’s economy.

“Obviously, we applaud the FCC for recognizing the current spectrum cap is
outmoded and inefficient in today’s competitive wireless marketplace,” he
said. “Raising the cap to 55MHz is a good start, and gives wireless
carriers enough leeway to tailor our existing holdings to offer new
services to our customers.”

It’s a move that is good news for the major wireless carriers, many who
will now be looking to snatch up smaller companies that give them an added
wireless footprint in major cities throughout the country.

FCC Commissioner Michael Copps, the lone dissenter, called the ruling a
“ready, fire, aim” approach to regulation that lacks foresight and by
passes Congressional expectations of the FCC.

“We have not adequately evaluated the prospects for economic concentration
and the potential for wireless monopolies,” Copps said. “We have not
performed the extensive public interest evaluation required by statute and
expected by Congress and which would include impacts upon small business,
rural consumers, ownership diversity, efficient use of the spectrum and the
encouragement of new technologies.

“Let’s not kid ourselves — this is, for some, more about corporate mergers
than it is about anything else,” he added.

Jeffrey Nelson, Verizon Wireless spokesperson, said the new rule opens up
the industry and gives them more room to breathe in an industry that has a
lot of competition.

“Spectrum is the lifeblood of the wireless industry,” he said. “To be
artificially capped at a certain point, even the 55MHz cap, really does
mean that companies like Verizon Wireless would eventually not be able to
pursue additional growth opportunities.

A recent report from The Strategis Group shows that while eliminating the
cap might be good business for wireless carriers trying to make more
headway in larger markets, it might hinder future growth in newer
technologies and rural deployment

“It seems like the whole industry has been clamoring for the past several
years for the cap to be removed,” said Adam Guy, a senior analyst in
Strategis’ mobile wireless research division. “There are several
supporters of the cap who advocate that the cap is still necessary to
ensure sufficient competition, especially in more rural areas. There are
also those advocates who believe that allowing larger carriers to aggregate
spectrum when they aren’t using it efficiently enables prolonged

Rural deployment has been a been a rallying cry to acquisition advocates
and certain members of the U.S. Senate for many years now. “Bridging the
Digital Divide,” a catchphrase coined during the Clinton administration,
was supposed to increase telecommunications (i.e., broadband Internet
access) deployment in our nation’s countrysides.

It’s a measure that’s largely failed, as data competitive local exchange
carriers (DLECs) go out of business and telephone companies like Verizon
Communications and SBC Communications slow
down their high-speed deployment to a trickle.

Nelson, who’s Verizon Wireless is a subsidiary of parent company Verizon,
said that wireless telephones are a completely different breed of animal
from land-based broadband Internet initiatives, and that competition

Removing the cap, he said, doesn’t affect his company or any others from
their efforts to deploy in sparcely populated areas.

“It doesn’t do anything at all and we’re working to deploy out there,”
Nelson said. “That has been going on, obviously, for years now. There is
already competition between carriers in the rural areas.”

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