FCC to Seek Public Input on Changing Rules For Spectrum Holdings, Agency Official Says

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By Paul Barbagallo  

The chairman of the Federal Communications Commission Sept. 7 will formally propose that the agency seek public comment on changing its current framework for measuring spectrum holdings by commercial companies, a high-ranking agency official told BNA Aug. 30.

The full, five-member FCC will have three weeks to consider the proposal before the commission's next open meeting Sept. 28, at which point they will vote on it, the official said. Customary FCC procedure calls for the chairman to deliver proposals he intends to bring up for vote at a meeting exactly three weeks prior to the actual meeting date.

The issue of spectrum holdings has emerged as one of the most controversial within the wireless industry and at the FCC.

Currently, the agency applies its so-called “spectrum screen” on a case-by-case basis during reviews of transactions between companies. If one company ends up with more than one-third of the available spectrum for mobile services in any geographic market, the screen is triggered, and the FCC could then decide to take action, such as rejecting the deal or requesting divestitures.

Last year, House Republicans raised sharp questions about the FCC's use of its spectrum screen following the release of a staff report on AT&T Inc.'s proposed $39 billion acquisition of T-Mobile. The deal, the FCC found, triggered the screen in 274 cellular market areas--or 71 of the top 100 markets, representing 66 percent of the U.S. population. The previous highest spectrum screen trigger in a FCC merger review was 80 cellular market areas in the AT&T/Cingular Wireless LLC merger.

In a letter to the FCC, Reps. Fred Upton (R-Mich.) and Greg Walden (R-Ore.), the respective ranking members of the House Energy and Commerce Committee and its Communications and Technology Subcommittee said it was “not entirely clear whether and how the FCC conducts an analysis of the marketplace to establish the spectrum screen, nor precisely how it uses that screen in review of a transaction.” Historically, the FCC has never adopted formal rules or a process to govern use of the spectrum screen, which Upton and Walden say has resulted in “uncertainty as to the FCC's process, reasoning, and rationale.”

The FCC official told BNA that the notice of proposed rulemaking will ask a series of questions, including whether the agency should continue the current case-by-case analytical framework.

Before the screen, there was a cap. The FCC first implemented a 45 MHz spectrum cap in 1994 during the Clinton administration. The agency later raised the cap to 55 megahertz before eliminating it entirely in 2003 under Republican Chairman Michael Powell. That decision ultimately led to a 70 MHz spectrum screen. Under Republican Chairman Kevin Martin, however, the screen ranged from between 95 MHz and 145 MHz per market in merger reviews.

As part of the Temporary Payroll Tax Cut Continuation Act of 2012 (Pub. L. No. 112-78) approved in February, the FCC is required to launch a formal rulemaking proceeding to make any changes to the screen.