Monday, March 26, 2012

Repurposing the FCC

Pardon my French, but it's de rigueur these days to talk about "repurposing" spectrum to address what Federal Communications Commission Chairman Julius Genachowski calls the coming "spectrum crunch" for wireless operators.

The need for more spectrum capacity for mobile broadband operators is real. Hence, the need for repurposing spectrum is real.
So here's an idea: The FCC should repurpose itself institutionally in order to more effectively accomplish repurposing of spectrum.
Repurposing spectrum refers to the FCC (or some other entity such as Congress or NTIA) taking action to allow spectrum currently used for one purpose, say, broadcasting, to be used for another purpose, say, wireless mobile. The spectrum incentive auctions Congress just authorized, and which the FCC must now implement, are intended to repurpose spectrum currently used for broadcast TV to use for mobile services.
Without belaboring the point, this statement on repurposing spectrum is straight out of the FCC's recently released Strategic Plan:
"The Commission’s allocation and assignment of spectrum must continue to evolve towards more flexible, market-oriented approaches to increase the opportunity for technologically innovative and efficient spectrum use and to ensure adequate spectrum is available for broadband, and other purposes. Rulemaking proceedings will be conducted to enable more flexible operations, and allow for repurposing of spectrum."
Another point that does not need belaboring is that the spectrum crunch is real. Cisco's respected tracking forecast projects that "global mobile data traffic will increase 18-fold between 2011 and 2016." And mobile data traffic is projected to grow at a compound annual growth rate of 78 percent from 2011 to 2016, reaching 10.8 exabytes per month by 2016. You can find many other forecasts to the same effect. Enough said.
Repurposing the FCC would mean the agency, as an institution, would refocus itself in a serious way to be able to accomplish, more effectively and more promptly than it does now, the repurposing of spectrum that all agree is needed.
What would this repurposing of the FCC entail? In the main, simply this: The Commission should substantially reduce the resources it has been devoting for the past several years to considering the competitiveness of the wireless market, and redirect those resources to implementing actions that will increase the amount of spectrum available for use by wireless operators.
I want to make it clear I am not suggesting the competitiveness of the wireless marketplace is not a legitimate government concern, even if I and many other observers assert the market is presently competitive. I am suggesting, however, that any such competitive concerns ought to be left primarily in the hands of the antitrust authorities for resolution under antitrust jurisprudential principles rather than under the FCC's indeterminate public interest standard.
At FSF's Fourth Annual Telecom Policy Conference last week, there was a broad consensus (with the exception of the FCC officials, whose participation I appreciate) that a substantial overlap exists in the competition examinations of the FCC and the Department of Justice. There was consensus that, in light of this overlap, the FCC should rely more heavily on DOJ to carry out this work, especially with respect to the evaluation of proposed transactions. If the FCC, in an exercise of regulatory modesty that I have urged for years, would follow this self-restraining approach, it could devote the freed-up staff time and other resources to focusing much more single-mindedly on repurposing spectrum.
In his March 21 statement accompanying release of the rulemaking notice regarding flexible use of spectrum for mobile broadband in the 2 GHz band, Chairman Genachowski noted a number of different actions the Commission has taken to "address the spectrum crunch, and to enable the continued acceleration of the mobile revolution that is driving economic growth, investment, and valuable new services for consumers and businesses."
I don't want to look backwards in this piece and criticize what might have been done differently. So I am happy here to credit Chairman Genachowski for the actions of which he takes note, and for his action last week creating an Incentive Auction Task Force to coordinate the agency's work implementing the newly-authorized incentive auctions. Regarding the task force announcement, as reported in Communications Daily, I said: "I am not as concerned, though, with putting names and boxes on a new organizational chart as I am with active, ongoing leadership to get the job done."
Repurposing the FCC so the agency can more effectively, more speedily repurpose spectrum will require active, ongoing leadership on Chairman Genachowski's part.
There is much work to do. At the top of the action list certainly should be the speedy processing of the applications for assignment of licenses resulting from Verizon Wireless's proposed acquisition of spectrum from SpectrumCo and Cox Communications. The spectrum that Verizon seeks to acquire currently lies unused. Verizon is not proposing to acquire a competitor. If the transaction is approved, there will be no fewer competitors than before approval.
While I believe the commercial agreements associated with the Verizon – SpectrumCo transaction are likely to benefit consumers by making available additional options in a convenient consumer-friendly way, I understand that concerns have been raised by some regarding the potential competitive impact of the commercial side agreements. To the extent these concerns have any merit at all, this is a perfect example of a case in which the FCC ought to defer to the antitrust authorities. The Department of Justice is fully capable of examining the merit of the claims concerning competitive impact. The FCC traditionally has not even reviewed these types of commercial sales and agency agreements.
So, if the FCC is as serious about repurposing spectrum as it claims to be – and as it should be -- it should repurpose itself to get the job done. An important element of such repurposing is reorienting itself, institutionally, so that it relies primarily on the antitrust authorities to address supposed competitive concerns regarding the wireless marketplace. Then, the Commission will be in a position to devote the freed-up resources – and its full attention – to taking further actions that will actually free up additional spectrum for mobile broadband.
And, after all, that's the whole purpose of repurposing.