The nation’s top wireless and high-tech companies appear poised to be big winners Nov. 4, with Federal Communications Commission Chairman Kevin Martin seemingly on track to secure votes that will result in further industry consolidation, create a super-size WiMAX service provider, expand Wi-Fi and reform the universal service fund and intercarrier compensation regimes.
When the dust settles, the big losers likely will be small, rural and regional wireless carriers. Those entities have been scrambling to win roaming conditions on major wireless mergers and to salvage hundreds of millions of dollars in government subsidies destined to disappear in five years without a replacement mechanism to foster wireless deployment in less-populated areas of the country. Given the big money involved in the measures and their controversial nature, litigation following the Nov. 4 meeting is a virtual certainty. That will be a matter for the FCC chairman that succeeds Martin, on course to leave the agency when a new administration takes over early next year.
As heavy lobbying and congressional letter-writing subsided somewhat late last week on agenda items, major stakeholders concentrated efforts on trying to cut deals with Martin. Indeed, the lead-up to the Nov. 4 meeting has entered a new phase dominated by horse trading among telecom sectors and, very likely, FCC commissioners. While negotiations remain fluid and details uncertain, the broad outlines of major decisions have begun to emerge.
Blessings with conditions
The FCC is expected to approve the Verizon Wireless-Alltel Communications L.L.C. and Sprint Nextel Corp.-Clearwire Corp. mergers. The Department of Justice last Thursday approved Verizon Wireless’ $28 billion purchase of Alltel, subject to required divestitures of overlapping wireless assets in 100 markets encompassing 22 states.
“The divestitures required are necessary to protect wireless customers and are among the most extensive required by the department in a wireless case,” said Thomas O. Barnett, assistant attorney general in charge of the antitrust division.
DoJ said the divestitures, included in a settlement requiring court approval, cover the entire states of North Dakota and South Dakota as well as sections of Colorado, Georgia, Kansas, Montana, South Carolina, Utah and Wyoming, Alabama, Arizona, California, Idaho, Illinois, Iowa, Minnesota, Nebraska, Nevada, New Mexico, North Carolina, Ohio and Virginia. As such, there’s apt to be a feeding frenzy among other wireless carriers interested in buying available mobile properties in those markets.
Verizon Wireless, with more than 70 million subscribers and $43 billion in revenues last year, would jump ahead of AT&T Mobility as the nation’s largest mobile operator if the deal is approved.
MetroPCS Communications Inc., Leap Wireless International Inc., NTELOS Communications, the Rural Cellular Association and the Rural Telecommunications Group urged that stronger roaming conditions be attached to the Verizon Wireless-Alltel merger. The parties asked the FCC to extend Alltel and Verizon roaming agreements to either seven years or the term of any existing accord between the parties, whichever is longer. They also want the FCC to confirm that Verizon Wireless roaming commitments apply to all non-national carriers and to require that Alltel’s GSM networks be supported for seven years.
In addition to giving rise to a new No. 1 mobile-phone operator, the FCC is expected to pave the way for a national WiMAX operator in Sprint Nextel-Clearwire. The new Clearwire, bolstered by $2.3 billion in investment commitments from Google Inc., Intel Corp. and others, would compete against the telephone-cable TV broadband duopoly as well as other cellular operators that are a couple years away from deploying wireless services using LTE technology.
White-spaces ruling
The FCC also is likely to approve the operation of unlicensed devices in vacant TV spectrum known as white spaces, despite protests by broadcasters, lawmakers and others. It would be more good news for Google and Intel as well as for Motorola Inc., Microsoft Corp., Dell Inc. and other tech heavyweights.
Broadcasters, lawmakers and an eclectic group of wireless microphone users – musicians, professional sports leagues, Broadway theaters and religious groups – repeatedly have asked the FCC to seek public comment on an agency report that concluded unlicensed devices can operate in TV white spaces without causing interference to others. Broadcasters and other white spaces opponents read the report differently.
“I understand that legitimate questions have been raised about the conclusions drawn from the report issued by the FCC’s Office of Engineering and Technology, which is the basis for the FCC’s draft order,” Sen. Hillary Rodham Clinton (D-N.Y.) said in a letter to Martin. “Given the indispensable role that wireless technologies have for New York’s industries – whether they are wireless microphones for our Broadway performers or for the players and coaches of the Buffalo Bills, New York Jets and Super Bowl Champion New York Giants – I believe that these interference questions should be addressed first.”
Martin’s plan includes provisions to protect high-profile wireless microphone users cited by Clinton, as well as rank-and-file users.
Others urged the FCC to move forward quickly. “The broadband potential offered by the white spaces remains too great an opportunity for there to be any further delay in concluding the proceeding and allocating the spectrum for unlicensed broadband uses,” stated Reps. Jay Inslee (D-Wash.), Nathan Deal (R-Ga.), Tammy Baldwin (D-Wis.), Marsha Blackburn (R-Tenn.), Mike Rogers (R-Mich.) and Anna Eshoo (D-Calif.). “We are simply at a point in time in which we can no longer squander any available broadband opportunities. The commission must take the next steps to make this spectrum available to our innovators to deliver new and interesting broadband opportunities to all consumers including those that live in underserved and rural areas.”
Microsoft Chairman Bill Gates, Google Chairman Eric Schmidt, Dell Chairman Michael Dell and the Technology CEO Council also weighed in to push for adoption of final white-spaces guidelines.
Martin’s plan would allow higher power limits for devices employing spectrum-sensing and geo-location/database technologies than for those with only spectrum-sensing capabilities. In addition, Martin would require FCC certification of devices.
Industry association CTIA, Qualcomm Inc., Aloha Partners and others urged the FCC on Friday to set aside a portion of TV white spaces for licensed operations. “This approach will promote broadband deployment in the newly available spectrum bands – which are uniquely suited to broadband service – while simultaneously protecting against harmful interference,” the parties stated in an FCC filing. The FCC’s Martin was due to report back Friday to House Commerce Committee Chairman John Dingell (D-Mich.) with answers to questions on why a licensing approach was discarded and on the regulatory process used to arrive at the TV white spaces draft order.
