Mergers and acquisitions and spectrum auctions. What do they have in common? They’re ways in which large telecoms can create an even bigger footprint in the most attractive markets. Yet, when do we consider “too much spectrum in one market” a monopoly? The Rural Telecommunications Group wants to define that. They’re looking to reinstate a spectrum cap so that the playing field can be leveled, and other competitors can get a piece of the cellular pie.
“In the absence of a spectrum cap, Verizon and AT&T will continue to grow unchecked and rural and regional wireless carriers will be adversely affected as they attempt to obtain spectrum and compete against consolidated nationwide wireless carriers who possess greater resources and economies of scale,” said Michael Higgins Jr., president of the Rural Telecommunications Group.
The 700 MHz spectrum auction was intended to help bring a new competitor to the table, but that’s not how things panned out. AT&T ended up buying a swath of 700 MHz spectrum from Aloha holdings. This kept them out of the C Block — you know, the one with the open access provisions which were supposed to help consumers. They instead bought up larger than expected slice of the A and B Blocks. This was to the detriment of smaller carriers. There is precedent to a spectrum cap. In 1994, the FCC imposed a 45 megahertz cap, which was eventually raised to 55. It was eliminated in 2003. Federal regulators use 70 megahertz as a red flag for investigative purposes in proposed merger deals. That has been upped to 95 megahertz since the 700 MHz auction.The RTG is seeking a cap of 110 megahertz, which reflects the current cellular environment. This is a tough issue. On one hand, you don’t want regulation to in any way stifle innovation. On the other hand, competition spurs innovation, and we’re seeing less and less competition in the cellular industry.