Democrats Fire Back at GOP Spectrum Aggregation Letter
Top minority members of the House Commerce Committee objected, in a letter sent to FCC commissioners Thursday, to a recent Republican letter urging the FCC to reject the Justice Department’s advice to implement spectrum aggregation rules or caps. Democrats said (http://1.usa.gov/16CnoJ1) the GOP letter is another example of Republicans seeking to “advance a one-sided re-interpretation of the goals and meaning” of the Middle Class Tax Relief and Job Creation Act in an “attempt to spin the legislative history in a way that inaccurately reflects the intent of Congress in adopting these provisions.” Top Republican members of the House Commerce Committee had previously told FCC commissioners that the Justice filing wasn’t consistent with the Spectrum Act and could lead to a failed auction (CD April 23 p1).
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Republicans are ignoring a “key section” of the act that makes it clear that Congress expects the commission to both protect wireless competition and generate sufficient revenue for the construction of FirstNet, according to the Democratic letter. “Section 6404 was a carefully negotiated provision designed to address the issue of auction participation while preserving the FCC’s authority to protect against undue concentration of spectrum holdings,” the letter said. It would be “permissible” under the law for the FCC to “set aside blocks of licenses within an auction on which particular bidders may not bid as long as those bidders were eligible for other blocks or licenses being auctioned,” the Democrats said.
What “should be clear” is that the act “confirms that the agency has the power” to impose spectrum aggregation limits “if it determines that these policies are important for competition,” the minority letter said. Language in the act “explicitly preserves the FCC’s pre-existing authority to issue rules limiting the amount of spectrum that companies can bid for or own,” the letter said. The FCC could also implement spectrum aggregation rules “by requiring the post-auction divesture of specific spectrum ... in order to promote competition,” it said. The letter was signed by House Commerce Committee Ranking Member Henry Waxman, of California, Communications Subcommittee Ranking Member Anna Eshoo of California, and Reps. Ed Markey of Massachusetts, Diana DeGette of Colorado, Mike Doyle of Pennsylvania, and Doris Matsui of California.
DOJ had previously raised its concerns about spectrum aggregation in an April 11 letter (CD April 15 p7). Justice urged the FCC to design auction “rules, weights or caps” that would “ensure the smaller nationwide carriers ... have an opportunity to acquire” spectrum, according to the ex-parte filing (http://bit.ly/16S6zag). AT&T and Verizon Wireless have battled with smaller U.S. carriers over restrictions that would limit how much spectrum they could purchase in the auction (CD Jan 29 p1). Democrats said in the letter Thursday they believe Justice is “entitled to “serious consideration on such core antitrust principles as market foreclosure and the relative competitive value of various spectrum bands.”
Justice’s letter “fails to acknowledge or appreciate” the “complexity” inherent in the incentive auction, the Republicans said in last month’s letter to the FCC. It’s “absurd” for Justice to claim that the “highest use value” for spectrum collected in the auction is selling it to competitors of the biggest carriers. “The Commission itself has repeatedly identified the spectrum crunch faced by all wireless carriers.” That letter was signed by committee Chairman Fred Upton, R-Mich., Vice Chairman Marsha Blackburn, R-Tenn., Communications Subcommittee Chairman Greg Walden, R-Ore., and other members of the committee.
The letter “and the DOJ analysis it supports paint a much more accurate picture of market realities and the incentive auction statute,” said Free Press Policy Director Matt Wood. “The FCC has all of the authority it needs to run an auction that will promote competition rather than prop up duopoly. Affordable choices in wireless service benefit consumers and businesses everywhere -- while letting AT&T and Verizon gobble up all of the new licenses would benefit those two companies alone.” Competitive Carriers Association President Steve Berry said the “two largest national carriers have the scope and scale to shut out other competitors at auction, and the FCC must ensure this does not happen,” in a news release. “The results would be absolutely devastating for consumers and competition. It is extremely important for the FCC to consider DOJ’s analysis, and we strongly urge the FCC to take this input into serious consideration.”
"The most important words in the Democratic letter are ‘carefully negotiated,'” said public interest lawyer Andrew Schwartzman. “The Republicans are seeking to reopen an issue that was considered and resolved in favor of giving the FCC discretion to impose spectrum caps or other methods to assure that the bidding process fulfills the broad goals of the Communications Act.”
Free State Foundation President Randolph May said: “On the merits, while I agree with the Democrats’ letter that DOJ’s views are entitled to ’serious’ consideration,’ in this instance I found DOJ’s suggestions concerning potential market foreclosure by Verizon and AT&T rather shallow and speculative. I just don’t understand how DOJ, or others, can discount the ability for Sprint and T-Mobile, with the financial backing they have from major world-class firms, to bid on the spectrum they think they want,” he said. “For purposes of determining legislative intent, if the matter ever reaches a judicial determination, I think these post-hoc letters from both the Republicans and Democrats are not likely to be very persuasive to a court. They are intended primarily to persuade the Commission.”