Arbitrary spectrum policy

Scott Cleland Contributor
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The FCC is picking market winners and losers again.

It is arbitrary for the FCC to not apply its spectrum screen/cap policy to Softbank’s acquisition of Sprint-Clearwire when it did apply its policy to both Verizon and AT&T’s recent spectrum acquisitions.

Let me be clear, I support the FCC’s approval of the SoftBank-Sprint-Clearwire transaction.

It is more obvious proof of a vibrantly competitive U.S. wireless marketplace that the FCC does not need to micromanage or regulate.

What I oppose — and spotlight as arbitrary, capricious and hypocritical — is the FCC is obviously applying wireless industry rules arbitrarily in violation of law and the Constitution’s equal protection clause.

The FCC’s application of its spectrum screen/cap policy is so egregiously arbitrary and capricious it does not pass the laugh test.

Let’s review the facts and laugh – or weep depending on your sense of humor.

Sprint just outbid Dish to acquire 100% control of Clearwire.

Sprint now owns Clearwire’s 125 MHz of 2.5 GHz spectrum which is valued at $7 billion.

Clearwire expands Sprint’s spectrum holdings 236% from 53 MHz to 178 MHz per the FCC’s numbers.

In approving SoftBank-Sprint-Clearwire, the FCC’s is not fully applying Clearwire’s 2.5 MHz spectrum to Sprint’s spectrum holdings, implying it is not “mobile services” spectrum.

In applying for FCC approval, Sprint told the FCC that Clearwire’s 2.5 GHz spectrum was available, suitable, and already in use for “mobile services.”

An FCC White Paper released in February, included Clearwire’s 125 MHz of spectrum in a public accounting of America’s “mobile broadband” spectrum.

Last fall the FCC required Verizon’s acquisition of 1.7-2.1 GHz spectrum to apply to Verizon’s spectrum holdings, and AT&T’s acquisition of 2.3 GHz spectrum to apply to AT&T’s spectrum holdings as well.

So here’s the FCC punch line.

The FCC exempted Sprint-Clearwire from its rules while applying them to Verizon and AT&T.

One FCC spectrum screen/cap policy, two obviously different outcomes.

This strongly indicates arbitrary and capricious treatment under the law.

What makes this even more troubling is that this latest arbitrary incident is just more evidence of a pattern of arbitrary and capricious behavior by the FCC in picking market winners and losers.

Currently, the FCC and DOJ are signaling they will exclude Verizon and AT&T from bidding in the upcoming FCC “incentive” auction for 600 MHz TV broadcast spectrum.

The supposed reason is that Verizon and AT&T own more spectrum below 1 GHz than Sprint and T-Mobile do. Tellingly, Sprint and T-Mobile did not bid for sub-1GHz spectrum last time they could.

Presently, Verizon is also suing the FCC for being arbitrary and capricious in its FCC Open Internet order that mandated net neutrality.

The FCC’s stated purpose for regulating the Internet — to preserve “openness” and net neutrality — are terms, goals and authority not found in law.

Moreover, the FCC presented no significant evidence that the broadband companies being regulated had done anything wrong to warrant preemptive price regulation.

Even the new Presidential Memorandum on spectrum — that recently was issued without warning and effectively reversed U.S. spectrum policy — is arbitrary.

It revoked the 2004 Presidential memorandum that spawned all the wireless broadband auctions to date, and replaced it with one that favors Government-commercial spectrum “sharing” over auctions.

This policy reversal is arbitrary because it puts the cart-before-the-horse.

It established a de facto new spectrum policy before any of the data collection, spectrum inventory or utilization analysis that the Memorandum ordered was even started.

Overall the policy reversal is an arbitrary whipsawing of a critical industry without effective public warning, consultation or due process, and without any evidence that it is a superior approach.

For two decades the American wireless industry has been built upon a successful foundation and trajectory of free markets, competition, auctions and private property ownership.

Apparently the new unformed wireless policy trajectory of “sharing” presages years of spectrum supply pipeline uncertainty.

To add insult to injury, the new policy expects businesses to “share” spectrum with government agencies that don’t want to share their spectrum.

The growing arbitrariness of the Government’s approach to spectrum policy and regulation has become exceptionally troubling and profoundly counterproductive.

If the government is not careful, and respectful of the rule of law and due process, the government could quickly and severely screw up a critical and successful American industry — for no good reason.

Scott Cleland is Chairman of NetCompetition a pro-competition e-forum supported by broadband interests and President of Precursor LLC, a research consultancy for Fortune 500 companies. Cleland served as Deputy U.S. Coordinator for International Communications & Information Policy in the George H. W. Bush Administration.