WASHINGTON-As the Federal Communications Commission tries to encourage a secondary market for spectrum, Europe is also trying to figure out how to have the market-not government-manage spectrum use by discussing license transfers and spectrum flexibility, said Gerry Oberst, a lawyer with Hogan & Hartson L.L.P.
“We can see that a lot of the discussion in Europe probably mirrors what is happening here,” said Oberst recently at a seminar sponsored by his law firm.
While the issues may be similar, the structures between the two continents are different so the approach has been different.
In the U.S., there has always been an assumption that when a merger or acquisition takes place, spectrum licenses transfer to the new entity. In Europe, there are more legal hoops necessary to ensure the spectrum follows the new owner.
Oberst showed a slide demonstrating the convoluted process for spectrum policy in Europe and while it seemed much more complicated than simply going to the FCC, David Furth, associate bureau chief and counsel of the FCC’s Wireless Telecommunications Bureau, cautioned that the process was just more external.
“We simply internalized the spectrum complexities where the Europeans have not,” said Furth.
The United States probably grants more spectrum flexibility within bands because one entity oversees spectrum in the United States, rather than the multiple jurisdictions involved in Europe simply due to the fact that Europe is a continent with many countries.
“Allowing spectrum trading with change of use may require a high level of international coordination since the change of use may require accommodation with international rules and recommendations,” said Oberst. Spectrum trading involving flexibility “may change the interference landscape by changing the assumptions on which all other uses are coordinated,” he added.
In the U.S., spectrum flexibility has allowed carriers to consider using spectrum in ways in which it was not originally intended as long as no harmful interference is created to other users including those in Canada and Mexico.
Spectrum flexibility, which is at the core of what the Europeans are discussing, is not really an issue here anymore, said Furth because it has been granted.
The FCC, through its secondary-markets initiative, is trying to “push the envelope toward greater use of spectrum resources.”
But spectrum flexibility does not yet seem to be driving the market toward spectrum leasing since no one has taken advantage of the much-hailed secondary-market rules in their first month of effectiveness, said Katherine Harris of the wireless bureau.
“Thirty days and no applications yet,” said Harris.
“Which in a sense doesn’t surprise us,” continued Furth. “I think there is a fair amount of interest but we were never anticipating when these rules went into effect there would be a flood tide of requests. I think what is happening is that the market, the industry and the communications lawyers are looking at the rules, looking at the process and trying to figure out how it fits in; how it adds to the existing secondary-markets regime. I think there are other factors including the condition of the telecom market that may also have an impact on what we might see over the course of the next few months. We certainly anticipate that there will be these transactions, but the question still is what the volume or the nature of those will be. We really do see this as an evolutionary process.”
The FCC has touted its secondary-markets rules as a way to better let the market decide the best use of spectrum. Furth said that the rules were a first step in a process to streamline regulatory review of spectrum usage that has gone on for 40 years.
“We also had an incremental approach to leasing,” said Furth in his opening comments at the seminar on spectrum-use rules in Europe and the United States. “Ultimately it took a very long time.”
The FCC is not done with its secondary-market rules. After adopting these rules, it asked other questions about how to make the process even better and whether certain entities like public safety could lease spectrum for short periods of time with contracts that would give them immediate access to spectrum if needed.
If the current trend of not using the secondary-market rules continues, said Furth, the agency will be forced to look at what else it can do.
“What potential do the users have at getting access to spectrum?” asked Furth. “From our point of view they represent an integrated whole. What we really need to look at is the entire package of options that are available to spectrum users and spectrum rights holders that allows them to give up some or all of those rights. It would be a mistake to look at these rules in isolation.”
