Copps Backed Open Process on Spectrum Screen in Verizon-Alltel Review, Records Show

"The Commission has a statutory duty to prevent undue consolidation in the wireless marketplace,” Copps said then. “A spectrum cap -- or the far less robust ’spectrum screen’ that the Commission, over my objection, uses instead -- is a critical tool to enforcing this policy. As I have stated before, I believe the right way to account for new bands that have been made available for advanced wireless services would be through a comprehensive, industry-wide proceeding that would establish appropriate rules for valuing the relative desirability of different spectrum. But we have not conducted such a proceeding. Instead, we simply raise the spectrum screen in an ad hoc fashion merger-by-merger. While I appreciate the willingness of my colleagues to fashion a spectrum screen for this transaction that somewhat reasonably (but far from perfectly) reflects the current marketplace, I think that a general rulemaking is still necessary and desirable.”

Copps’s spokesman said the commissioner stands by his call for an open process, but added that he had bigger problems with the proposed AT&T/T-Mobile deal than just spectrum screen standards. “This is a staff report and not a Commission action,” the spokesman said, referring to the FCC’s review of AT&T/T-Mobile. “Second, Commissioner Copps’ competitive concerns about AT&T/T-Mobile are broader than spectrum concentration, which is the subject of the screen. As he noted in his statement on withdrawal of the application, the merger would vest about 75 percent of the market, as measured by subscribers (not spectrum), in two hands. Commissioner Copps continues to believe that the spectrum screen should be handled in an open, transparent process, but his concerns about the AT&T/T-Mobile merger went well beyond control of spectrum and the screens the FCC uses."

Copps was an early critic of AT&T’s proposed acquisition of T-Mobile (CD April 1 p2), but AT&T has spent much of the last two weeks trying to turn its conflict with the FCC into a matter of process reform. On Tuesday, AT&T Vice President Joan Marsh talked with FCC Wireless Bureau Chief Rick Kaplan and made her company’s case on the spectrum screen, an ex parte notice filed on docket 11-18 showed. Marsh reiterated her company’s position that “the Commission should make adjustments to its screen in an open rulemaking, conducted and concluded annually, allowing party participants to file comments on what is appropriate for inclusion in the screen and subjecting the Commission’s decisions on the screen to judicial review,” the ex parte showed (http://xrl.us/bmkhqz).

Public Knowledge, which sought an open process on spectrum screens several years ago, doesn’t think AT&T is arguing in good faith, group spokesman Art Brodsky told us in an email. “The bottom line is that AT&T has benefited from the spectrum screen in the past without complaining about process,” Brodsky said. Besides, in 2007, when it bought Dobson, AT&T argued against making the spectrum screen a public matter, Brodsky said.

At the time, AT&T said “the Commission’s definition of the spectrum input market for purposes of the initial spectrum screen is not a ‘rule’ subject to the APA ‘notice and comment’ procedures. Rather, the Commission’s screen is simply one analytical tool used by the Commission to evaluate the competitive effects of an application proposing a merger of regulated carriers. ... It is well established that administrative agencies have the right to develop decisional standards in adjudicatory proceedings on a case-by-case basis, and a case-by-case approach is particularly appropriate in merger proceedings given the fact-intensive nature of the competitive analysis required.” Brodsky said: “AT&T knew from the start of the Qualcomm proceeding that the spectrum screen was in play. They introduced the issue and can’t now say they are surprised or claim some sort of unfairness.”