FEDERAL COMMUNICATIONS COMMISSION CHAIRMAN KEVIN MARTIN is coming under mounting pressure to postpone votes on major wireless items scheduled for Nov. 4.
As Martin tries to round up support for the Verizon Wireless-Alltel Communications L.L.C. and Sprint Nextel Corp.-Clearwire Corp. deals and unleashing Wi-Fi and other unlicensed wireless devices in TV white spaces, opponents of those measures have aggressively stepped up lobbying and public relations campaigns to stop the FCC chairman in his tracks.
Lawmakers otherwise wrapped up in re-election campaigns are writing brow-beating letters to Martin. One wireless group even attacked Martin for holding the high-stakes FCC meeting the same day as the presidential election. The FCC’s Nov. 4 meeting could be a big one, possibly producing a new No. 1 mobile phone carrier in Verizon Wireless and the country’s dominant WiMAX provider in what would be called New Clearwire. When the dust settles, according to one estimate, the top four wireless carriers could control more that 90% of the wireless market.
But Martin shows little sign of backing down. There is little downside for Martin staying the course and much to gain in terms of overseeing major wireless decisions in his waning months as chairman. Martin is putting the finishing touches on his legacy. The Democratic-controlled Congress has investigated Martin’s management of the agency and has generally kept the heat on the past three and a half years. But lawmakers really have little leverage at this point in light of the fact that Martin likely will be gone early next year when a new administration takes charge.
Still, the next couple months promise to be rocky for Martin.
VZW-Alltel tightrope
Small, rural and regional wireless carriers and trade groups don’t believe the FCC should act on Verizon Wireless’ pending $28.1 billion acquisition of Alltel without addressing roaming, handset exclusivity, spectrum concentration and other issues.
“Each small and rural carrier is aware of the damage to its own roaming relationships from losing Alltel, and each has received a glimpse of the situation faced by others through the filings in this proceeding,” MetroPCS Communications Inc., NTELOS Inc. and the Rural Cellular Association told the FCC. “The amount of opposition to the Verizon-Alltel merger is different in magnitude from the oppositions to earlier mergers because of the large number of objectors and the intensity of the opposition. This evidences the seriousness of the problem. The outlook for the industry is especially grim, particularly given the current economy and paucity of funds available in the capital markets. Now is not the time to have the competitive landscape shift so dramatically.”
As such, Martin is being urged to attach roaming conditions to any approval of the Verizon Wireless-Alltel deal.
“Approving this merger without debating and addressing those critical issues is not in the public interest and will be anti-competitive and anti-consumer,” stated another group of industry players in a different letter to Martin. “It is equally unacceptable to schedule a vote on the merger and simply defer to a future date the resolution of these critical issues.”
The letter was signed by CEOs of NTELOS, Leap Wireless International Inc., SouthernLINC Wireless, LCW Wireless, Mobi PCS, and Revol Wireless and the heads of the National Telecommunications Cooperative Association, the Organization for the Promotion and Advancement of Small Telecommunications Companies and the Rural Telecommunications Group.
Martin previously said the Verizon Wireless-Alltel merger should be subject to the merged entity divesting assets in about 100 markets and honoring roaming agreements between Alltel and other wireless providers. The Verizon Wireless-Alltel and Sprint Nextel-Clearwire deals are also under review by the Department of Justice.
The FCC chief has blamed other commissioners for being unwilling to modify agency’s in-market exception roaming rule. Many small and mid-size carriers, however, want Martin to go even further insofar as extending the automatic roaming mandate to data.
Broad range of concerns
Meantime, the FCC recently asked for public comment on rural cellular carriers’ petition to investigate alleged anticompetitive effects of exclusivity arrangements between national mobile-phone carriers and handset manufacturers. In a separate proceeding, the agency is seeking input on a rural telecom group’s request that no wireless carrier be permitted to hold interest in more than 110 megahertz of spectrum below the 2.3 GHz band in a given market. Martin is apt to be gone from the FCC before either rulemaking is completed.
There is another major flashpoint in the FCC’s consideration of the two wireless mergers as well.
The group Free Press called on the FCC to impose open access conditions on the pending Verizon Wireless-Alltel and Sprint NextelClearwire transactions.
“Merger conditions provide an essential consumer protection in an increasingly consolidated wireless industry. Openness should not be a privilege that a lucky few customers enjoy on the wireless Internet – it should be backed up with guarantees of user choice for everyone,” said Ben Scott, policy director of Free Press. “We commend wireless carriers for supporting open-network principles. But we’re concerned that these companies still reserve the right to block applications and devices in the fine print. As wireless competition dwindles, the FCC must adopt policies that put more choices and greater innovation in the hands of mobile users. Open-network conditions ensure that wireless companies walk the walk, not just talk the talk.”
Verizon Wireless paid $4.7 billion for a nationwide collection of regional open-access licenses at the 700 MHz auction earlier this year, and the No. 2 carrier is pursuing an open-development initiative to allow third-party devices and applications throughout its national network.
Sprint Nextel, for its part, said it is using the open Internet model for WiMAX service recently launched in Baltimore and planned for nationwide deployment.
Date questioned
On top of all the controversy over planned Nov. 4 votes on the two wireless mergers, there is anger over the timing of the FCC meeting itself.
“Review of such major transactions when the nation and its watchdog institutions are preoccupied with a presidential election is unprecedented and unjustified,” stated Part-15.org, which represents wireless Internet service providers worldwide.
Part-15.org Chairman Michael Anderson called for a congressional probe of the matter. “These kinds of historic transformations of the U.S. competitive landscape do not have to be completed on short notice and on election day,” he said. “Like the Wall Street bailout, this smacks of closed-door, special help for the most powerful.”
White-space battle
No less controversial is the white spaces debate, which has turned white hot in recent days.
Republican and Democratic lawmakers have written Martin to urge him to delay action on authorizing unlicensed wireless devices in TV white spaces, saying the agency should solicit public comment on an agency report that concluded Wi-Fi can expand into broadcast airwaves without causing interference to television signals.
“To justify a major spectrum policy decision on a 400-page technical report without a formal open comment period appears to violate this very basic premise of good government,” stated Reps. Carolyn Maloney (D-N.Y.), Shelley Berkley (D-Nev.), Mark Steven Kirk (R-Ill.), Jon Porter (R-Nev.), Jerrold Nadler (D-N.Y.), William Lacy Clay (D-Mo.), Jim Cooper (D-Tenn.) and Robert Brady (D-Pa.).
Sen. Mel Martinez (R-Fla.) expressed similar concerns in a separate a letter to Martin.
“I know that companies and th
e FCC have been experimenting for some time now on devices that work under controlled conditions, but to date none have succeeded on a consistent basis,” Martinez stated. “The commission’s usual practice of seeking public comment prior to adopting a major rule should not be disregarded on an issue of this magnitude.”
The National Association of Broadcasters, with its considerable lobbying clout, appears to be pulling out all the stops to sidetrack the white spaces proceeding. Joining NAB in calling for public comment on the FCC’s white spaces report are professional sports leagues, Broadway theater groups, cable TV operators, wireless microphone manufacturers and religious groups.
House Commerce Committee Chairman John Dingell (D-Mich.) did more than simply express views on the upcoming whites spaces vote, however. The powerful lawmaker sent Martin a letter last Friday, asking for responses by Oct. 31 to a series of questions about the regulatory process used to develop the draft order. Dingell also asked Martin why he declined to adopt a licensing approach for TV white spaces as the lawmaker previously suggested. Wireless carriers favor a licensing scheme rather than an unlicensed regime for TV white spaces.
Last Thursday, the New York City Council passed a resolution calling on the FCC to get feedback on its white spaces test report and to set aside a sufficient number of broadcast channels for the exclusive use of wireless microphones in order to protect all current wireless microphone users.
Sen. John Kerry (D-Mass.), a long-time backer of opening up TV whites spaces for unlicensed and fixed applications, said FCC test results justify going forward with the Nov. 4 vote.
“I have stated throughout the testing process that politics should not interfere with the expert analysis of the FCC’s top engineers,” said Kerry in a letter to Martin. “The purpose of these tests was not to determine whether these specific prototypes were ready to be certified for use, but whether the technology should be permitted to move forward given concerns that have been raised with respect to interference. After a thorough and extensive testing process, the engineers have determined that the prototypes successfully resolved these concerns.”
Proponents of making fallow TV frequencies available for Wi-Fi include Google Inc., Motorola Inc., Microsoft Corp., Phillips Electronics and other high-tech companies large and small. The New America Foundation, a think tank, also has been an influential voice in pushing for unlicensed wireless operations in TV white spaces.
The FCC does not appear to be swayed by the broadcasting industry’s public relations surge to take the white spaces item off the Nov. 4 agenda.
“We’ve not rushed this proceeding at all. . It’s been very comprehensive,” said Matthew Nodine, an FCC spokesman.
