The Federal Communications Commission is experiencing a metamorphosis: Established as a custodian of the public airwaves in the interest of the public, it has become a cash cow for the U.S. treasury.
The FCC is on the brink of going auction mad, with seemingly little regard for the wireless communications industry.
Chairman Reed Hundt is an enigma. Since taking the reins as head of the FCC less than a year ago, he and his commissioners have raised hundreds of millions of dollars through the auction of interactive video and data services and narrowband personal communications services licenses. The FCC will raise hundreds of millions more when it auctions off broadband PCS licenses. The Hundt Commission is making a lot of money for the federal government, which is in dire need of raising some cash. Could there be a better Friend of Bill’s?
But is Hundt a friend or foe of the wireless industry? The answer to that question may lie, in part, in decisions the Hundt Commission is expected to make shortly concerning “regulatory parity” among wireless services and the subsequent freeze it imposed on processing 800 MHz specialized mobile radio applications. The FCC chairman also may be looking to auction every bit of spectrum he can.
Word has it that the freeze is the direct result of Hundt’s desire to auction all remaining spectrum in the 800 MHz band. That would be a mistake.
For one, there isn’t that much spectrum available in the 800 SMR band. The band is becoming overcrowded in many of the major markets and would not be as desirable as would existing spectrum for new services such as narrowband or broadband PCS. Initiating an expensive auction proceeding would not be worth the money it raises.
Putting the 800 MHz frequencies up for bid also would blindside SMR operators, who have had no expectations of needing to raise the kind of money required to compete in such a proceeding. Potential PCS licensees were able to plan for such expenditures, but that is not the case for SMRs.
The FCC already has demonstrated its inability to distinguish between large SMR operators like Nextel Communications Inc. and the smaller, conventional dispatch operators. Auctions would devastate the SMR industry that, although has experienced tremendous growth in the past several years and captured a lot of attention, is still comprised mostly of small businesses that in no way have the kind of financial muscle to flex in a bidding situation.
If auctions are implemented for 800 MHz SMR frequencies, businesses would likely be lost, and the FCC seems slow to recognize this.
Rumor is Hundt may not stop with 800 MHz SMR frequencies. Plans may be underway to auction existing 220 MHz licenses as well.
The FCC chairman appears to be fixated on spectrum, or more precisely, he is fixated on making money from selling it. His myopic approach to spectrum auctions likely will have a devastating effect on the industry, particularly on small wireless businesses.
The FCC is definitely undergoing a transformation, moving further away from its role of serving the public interest and closer to becoming a puppet of the government and filling the coffers of the U. S. treasury.-Bill Maguire
