The separate statement by embattled FCC Commissioner Rachelle Chong on the 2.3 GHz (auction it till it hertz) ruling last week helps explain why President Clinton should reappoint her for a second term.
Chong, expressing her support of the agency’s decision not to apply the Commercial Mobile Radio Services spectrum cap to the new Wireless Communications Service, suggested the commission should rethink “whether the CMRS spectrum cap should be retained at all, given the increased competition in the wireless marketplace.”
Don’t know whether she’s on the right track or not, but at least she’s thinking about things. A healthy debate on the spectrum cap might be just what the doctor ordered. For sure, the spectrum cap is a key-albeit sometimes overlooked-wireless telecom policy.
It’s hard to tell how Chong’s idea will be received among her colleagues, particularly by FCC Chairman Reed Hundt, an antitrust litigation lawyer in his previous life. Some say he still wears that hat some days.
The 40 megahertz spectrum cap is an antitrust tool, a darn good one for the purpose for which it was conceived. The idea was too keep the cellular oligopoly of the seven Baby Bells, GTE and AT&T from become a personal communications services oligopoly as well. That it accomplished in the PCS auctions, which produced new young bloods like NextWave, Pocket Communications and Omnipoint as well as the usual suspects. But at least the usual suspects will be fighting each other in markets without the young bloods.
On the surface, Chong’s argument makes good sense. With so much new competition via auction licenses, what’s the point of the spectrum cap? So what if a big carrier, like AT&T needs a few megs here or there to shore up its nationwide coverage?
Well, for one thing, it’s AT&T. Money is not an object. There are others in that category. If the A-, B-, C-, D-, E- & F-block PCS licensees can ride out the competitive storm, I take off my cap to Chong.
But that won’t happen. And not because of shakey technology and hype a la Interactive Video and Data Services. Sure, hyperbole won out over risk warnings in PCS. That contributed plenty to digital paging and pocket phone auction fever. Witness the $22 billion in auction pledges that may or may not materialize. Market forces will command a 50 percent correction in the PCS market. That’s code for belly up. It’s not necessarily the FCC’s fault and I hope I’m wrong. But Darwinian economics are at work.
If things run that course, gobs of spectrum will become available. Big companies won’t be able to touch it because of the cap and small/medium-size firms will be justifiably gun shy, even with spectrum going for 50 cents on the dollar.
