Spectrum cap gets a 10 MHz boost, for now

As the majority of the wireless industry had expected, the FCC today decided to raise the commercial mobile radio services (CMRS) spectrum cap from 45 MHz to 55 MHz in all markets and then eliminate it entirely by Jan. 1, 2003.

Raising the spectrum cap to 55 MHz in all markets during the transition period was the FCC’s way to address certain carriers’ concerns that near-term spectrum capacity constraints might limit their ability to offer advanced wireless services. The FCC claims that the transition period will let the markets prepare for the shift and allow the FCC to consider what guidelines, procedures and resources may be necessary for it to perform case-by-case review of transactions involving control of CMRS spectrum transfers or future mergers.

The spectrum-cap rule, which restricts the amount of broadband CMRS spectrum an entity can hold in a particular geographic area, applies to licensed broadband Personal Communications Service (PCS), cellular, or Specialized Mobile Radio (SMR) spectrum, which is what Nextel uses. While the ruling was widely anticipated, not all of the commissioners agreed with it.

“Because I believe that the cap is necessary in the public interest and especially because I am troubled by the prospect of dangerous concentration through mergers, I support continuation of the cap,” said Commissioner Michael Copps, the lone Democrat on the commission. “I must, therefore, respectfully dissent, because I believe that eliminating the cap is contrary to the public interest.”

Copps also noted there is no record of evidence that companies have reached the current spectrum cap. Copps said the spectrum cap has helped make wireless market competitive and that it is in the public interest for the FCC to determine whether the cap supports competition, efficiency, diversity, simplicity, and certainty in the market.

“We have not performed the extensive public-interest evaluation required by statute and expected by Congress and which would include impacts upon small business, rural consumers, ownership diversity, efficient use of the spectrum and the encouragement of new technologies,” Copps said. “Instead, we simply remove the cap. And while we are encouraged to think of this as a measured action--raising the cap now and repealing it completely in 2003--today’s action is, in reality, tantamount to immediate repeal.”

But at least one wireless-industry leader expressed disappointment that the cap was not eliminated in its entirety immediately.

“The decision to eliminate the spectrum cap is an important down payment on overcoming the current spectrum shortage,” said Tom Wheeler, president and CEO of the Cellular Telecommunications & Internet Association. “Unfortunately, the decision delays that down payment by thirteen months.”