Leap views spectrum caps

Somewhere in the clamor of voices calling for an end to spectrum caps, there’s a voice speaking to the contrary. Leap Wireless (www.leapwireless.com) stands among the few arguing that spectrum caps should remain in place. Innovators of the Cricket (www.cricketcommunications.com) service, Leap fears for its ability to enter new markets should the caps be raised or removed.

“We view the cap as protection from those who came to the wireless industry from monopoly organizations and would like to get back to that kind of environment by gobbling up all that’s in their way to controlling the markets,” said Dan Pegg, Leap Wireless senior vice president of public affairs.

Without the spectrum caps, large carriers could stonewall competition by buying up a given market’s spectrum and doing nothing with it, Pegg added.

The standard arguments for eliminating the caps are that the industry has robust competition and that carriers face spectrum starvation. With these points, Pegg believes it’s a matter of perception vs. reality. He believes only affluent consumers benefit from adequate competition.

“The reality is there no competition below the top third of the market,” Pegg said. “The top third of the socio-economic scale of the entire U.S. population can afford to do business with these five or six carriers, the rest of the population has economic limitations that don’t allow them the freedom of mobility.”

The notion that wireless carriers face a critical need for spectrum is “nonsense” pushed on the public by CTIA (www.wow-com.com) and its carrier members, according to Pegg.

“The reality is nobody is using what they’ve got and they could easily improve the efficiency of what they’ve got prior to needing more,” Pegg said. “In no cases is anybody using 45MHz, not even in New York.”

Leap isn’t in need of more spectrum, the carrier even recently sold a 15MHz chunk in Salt Lake City to Cingular (www.cingular.com).

“With today’s technology we can do anything we want for the consumer with 15MHz,” Pegg said.

Pegg pointed to other carriers’ actions as contrary evidence to their need-spectrum-now arguments.

“If you look in New York, Verizon (Wireless) wholesales minutes to resellers, Sprint (PCS) is wholesaling minutes to Virgin,” he said. “If there is such a tremendous shortage of spectrum, why would they allow a middleman to make a margin off of the end consumer using their spectrum?”

Pegg believes the FCC (www.fcc.gov) is rightfully looking to remove unnecessary regulation. The spectrum cap, though, is one regulation that needs to stay for its benefits to competition and the consumer.

Leap realizes, though, that it’s going up against major heavy-hitters, including CTIA and the U.S. Commerce Department ( home.doc.gov/who). Pegg characterized Leap’s battle to retain spectrum caps as “David and Goliath and David doesn’t have any rocks.”