• Mobile Broadband: Competition, Spectrum, and Consumers

    Policies governing competition and spectrum management are vitally important to multiple stakeholders in the wireless sector.

    Consumers are spending more time on smartphones and tablets, downloading more mobile video and data over faster wireless networks. Wireless carriers need additional spectrum to meet the rapidly growing demand for mobile broadband services. However, the supply of spectrum is currently fixed by Federal Communications Commission (FCC) policy. U.S. carriers have historically pursued two strategies to resolve spectrum constraints: consolidation, and advocacy for an increase in supply.

    For two decades, the FCC and the U.S. Department of Justice allowed substantial consolidation among wireless carriers. In 2011, however, the agencies opposed the AT&T and T-Mobile merger, rejecting the claimed efficiencies from consolidating the companies’ operations and spectrum holdings. More recently, however, regulators approved Verizon Wireless’s acquisition of spectrum (see related case below), and AT&T moved ahead with a series of smaller spectrum acquisitions. In reviewing these transactions, regulators likely concluded that the consolidation of spectrum would facilitate the deployment of mobile broadband without reducing competition.

    Under industry pressure, the government recently proposed to repurpose 500 MHz of underused spectrum for mobile broadband. There has been little progress toward this target, however. The industry has also petitioned the FCC to relax or modify license terms in order to free up spectrum; several carriers recently petitioned the FCC to modify license terms to open up more of the airwaves for terrestrial mobile broadband. However, the regulatory review of license terms is long and costly, and the outcome is far from certain.

    Are inconsistent spectrum and competition policies sending mixed signals about how regulators expect the wireless industry to evolve? Allowing carriers to rationalize current spectrum holdings through market transactions and increasing spectrum supply would generally be pro-competitive. Conversely, if substantial new spectrum is not released and secondary market transactions and new entry are not allowed, regulators may end up inadvertently designating the winners and losers in the mobile broadband market – in which case one likely loser will be the consumer. ■

  • Harold W. Furchtgott-Roth, an Analysis Group affiliate, is a former commissioner of the FCC and has testified in a number of high-profile telecommunications matters.

  • Case in Point: T-Mobile and Verizon Wireless Spectrum License Swap
    Case in Point:
    T-Mobile, Verizon Wireless Swap Spectrum Licenses

    In December 2011, Verizon Wireless proposed to acquire Advanced Wireless Spectrum (AWS) licenses held by SpectrumCo, a joint venture of several cable TV companies, and Cox TMI Wireless.