AT&T Asked FCC to Increase Spectrum Screen Standards, Record Shows
AT&T asked the FCC to increase the amount of spectrum used for its screen of the proposed Qualcomm deal, the company’s initial application shows. AT&T has cried foul about the changed spectrum screen standards in the review of its proposed takeover of T-Mobile, but the company itself urged the commission to expand the standards and appeared to at least acknowledge tacitly that the FCC had the authority to change the screen standards, its Qualcomm application shows. “If the FCC were to revise its screen to include all spectrum available for mobile wireless services, it is clear that there are no areas where this transaction would require further analysis to conclude that no competitive harms were likely,” the company said on page 21 of its Qualcomm application.
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"Recent developments in the market for the provision of mobile telephony/broadband services make clear that all 194 MHz of the BRS/EBS band can be used -- not just the 55.5 MHz previously considered by the Commission,” the Qualcomm application said. “Given recent developments in satellite carriers’ plans to use MSS/ATC spectrum to provide mobile broadband service, AT&T believes that the Commission also should include MSS/ATC spectrum in the spectrum screen.”
The FCC ended up lowering the amount of spectrum that would trigger a competitive analysis and used those lowered standards in its review of AT&T’s proposed acquisition of T-Mobile. FCC officials have defended their actions, saying spectrum screen standards have never been subject to rulemakings (CD Dec 6 p1).
One former commission official said companies routinely ask the commission to expand the spectrum screen -- as AT&T did in the Qualcomm case -- but it was “unprecedented” for the FCC to shrink it. Two telecom officials said the problem for companies as they approach the spectrum screen standards is that they are already supplicants to the FCC when they ask for transaction reviews and they simply can’t risk alienating the FCC by asking for a public proceeding on spectrum screen standards.
The screen has always evolved as new spectrum reaches the market, a wireless industry attorney said. Likewise, FCC staff can discount some available spectrum in its screen calculations if the spectrum is poorly suited to be deployed for new services, the attorney said. “Different factors may come into play so that some spectrum may be considered particularly valuable” because it could be cheaper to deploy or more readily used, the attorney said. And the screen is used to trigger a closer review of a transaction, the attorney said. “It’s not the same as a statutory or regulatory cap, which you could then ask the FCC to waive in a given transaction,” the attorney said. “The FCC will review it either way, whether it’s under the screen or over the screen, but they might review it in a more deliberative manner if it’s over their informal screen."
Though the line between what constitutes a “binding legislative rule" and a policy statement and interpretive rule is sometimes murky, a tool such as the spectrum screen “is more likely than not to be considered by the courts a rule that must be subject to public comment before being applied in a way that adversely impacts regulated parties because the screen is likely to be some outcome-determinative,” said Randolph May, president of the Free State Foundation and former chair of the American Bar Association’s Section of Administrative Law and Regulatory Practice. “Even if not legally required, it is now generally accepted by OMB’s Office of Information Policy and Regulatory Affairs, as well as by most academic experts, that agency guidance documents significantly impacting interested parties should be the subject of public comment,” he said.