Will the FCC Exclude Bidders from the Upcoming Voluntary Incentive Auction?

April 4th, 2013 | Posted by Larry Spiwak in Federal Communications Commission | Incentive Auctions | Incumbent Exclusion Rules | Spectrum | Spectrum Caps | Spectrum Exhaust | Spectrum Screen | Wireless - (Comments Off)
Spectrum Caps 01

Last year, when Congress was debating the voluntary incentive auction provisions of the Middle Class Tax Relief and Jobs Creation Act, many argued—including FCC outgoing Chairman Julius Genachowski—that the Commission should have the authority to adopt auction participation rules so that it could prevent an “excessive concentration of licenses” under Section 309(j)(3)(B) of te Communications Act.  While Congress did not include any specific auction participation rules in the Middle Class Tax Relief and Jobs Creation Act, Section 6404 of the new legislation states that “Nothing … affects any authority the Commission has to adopt and enforce rules of general applicability, including rules concerning spectrum aggregation …
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Spectrum Exhaust and the Monopolization Narrative…

April 3rd, 2013 | Posted by George Ford in Federal Communications Commission | Incumbent Exclusion Rules | Industry Structure and Market Performance | Merger Review | Mobile Broadband | Spectrum Caps | Spectrum Exhaust | Spectrum Screen | Wireless - (Comments Off)

In a recent speech, outgoing FCC Chairman Julius Genachowski once again reiterated the critical importance of spectrum policy “breakthroughs” to address the “tremendous stress” on the capacity of the nation’s wireless networks “from growing digital demand.”  While Congress and regulators are doing what they can, including addressing tower siting (here and here), reallocating and sharing government spectrum (here and here), and moving forward with the voluntary incentive auctions for broadcast spectrum, these actions represent only partial (and possibly untimely) solutions to spectrum exhaust.  Addressing the problem in the near term will require secondary market transactions for spectrum, where spectrum is reassigned from lower to higher …
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The Curious Case of the FCC’s Spectrum Screen NPRM…

October 9th, 2012 | Posted by Larry Spiwak in Federal Communications Commission | Incumbent Exclusion Rules | Mobile Broadband | Regulation | Regulatory Reform | Spectrum | Spectrum Caps | Spectrum Exhaust | Spectrum Screen | Wireless - (Comments Off)

With the ever-present specter of spectrum exhaust hanging over the wireless industry, policymakers are constantly faced with the corresponding question of how to allocate spectrum among competing providers to ensure that market does not devolve into one with “excessive” concentration under Section 309(j)(3)(B) of the Communications Act.  Since the 1990’s, the FCC has tried a variety of approaches—from outright spectrum caps to the current and more flexible case-by-case “spectrum screen”—to try to manage its statutory charge.  As to be expected given the huge stakes at hand, stakeholders vehemently disagree as to the best approach moving forward (particularly with the new voluntary incentive auctions for broadcast …
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Susan Crawford and the Economics of the Wireless Industry…

August 10th, 2012 | Posted by Larry Spiwak in "Over the Top" Services | Federal Communications Commission | Incentive Auctions | Incumbent Exclusion Rules | Industry Structure and Market Performance | Law and Economics | Mobile Broadband | Net Neutrality | Regulation | Spectrum | Spectrum Caps | Spectrum Exhaust | Susan Crawford | Wireless - (Comments Off)

Last week, Professor Susan Crawford authored an op-ed entitled What’s Good for Verizon and AT&T Is Terrible for American Consumers.  While Professor Crawford’s emotional argument is a bit scattered, her depiction of an industry in transition provides a useful foundation for discussing the future of broadband in the United States. First, Professor Crawford argues that wireless broadband is a “commodity,” and one that consumers are increasingly using as a substitute for traditional “voice” and “texting” services.  This substitution is arguably true and, as such, we should therefore expect to see broadband providers increasingly employing and experimenting with a variety of pricing plans in an effort …
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What the United States Can Learn From OFCOM’s Olympic Spectrum Plan…

July 27th, 2012 | Posted by Larry Spiwak in Broadband Credibility Gap | Federal Communications Commission | Government Spectrum | Incentive Auctions | Incumbent Exclusion Rules | Mobile Broadband | Regulation | Spectrum | Spectrum Caps | Spectrum Exhaust | Wireless - (Comments Off)

With the Olympic Games opening tonight, it doesn’t take a PhD in electrical engineering to recognize that the broadband infrastructure in the United Kingdom will be stretched to its limits.  According to a recent article, in order to accommodate the huge spike in expected traffic, the Olympics network will span 30,000 connections across 94 locations and will include: 5,500 kilometres of new fiber optic cables; 2,200 switches; 1,800 wireless access points; 7,000 cable TV sockets; 16,500 telephones; and 65,000 active network ports (active connections). But with nearly a million people expected to attend the Games—nearly all of which will be calling, tweeting, photo sharing, updating …
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Senator Kohl, Wireless Economics and the “Public Interest” Standard…

May 31st, 2012 | Posted by Larry Spiwak in Congressional Oversight | Federal Communications Commission | Incentive Auctions | Incumbent Exclusion Rules | Industry Structure and Market Performance | Law and Economics | Merger Review | Regulation | Spectrum | Spectrum Caps | Spectrum Exhaust | Wireless - (Comments Off)

Last week, Senator Herb Kohl, the powerful Chairman of the Antitrust, Competition Policy and Consumer Rights Sub-Committee of the Senate Judiciary Committee, wrote a letter to Attorney General Eric Holder and FCC Chairman Julius Genachowski informing them that he “believes” that the pending acquisition of unused spectrum by Verizon from a consortium of cable companies “presents serious competition concerns.”  In support of this position, Senator Kohl not only argues that there is excess concentration in the current wireless market (dominated by Verizon and AT&T), but that the transaction would allow a “dominant firm” to gain “access to essential inputs needed by a rival to compete.”  …
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Julius Genachowski’s Speech at CTIA…

May 22nd, 2012 | Posted by George Ford in Broadband Credibility Gap | Data Roaming | Federal Communications Commission | Incentive Auctions | Incumbent Exclusion Rules | Industry Structure and Market Performance | Interoperability | Law and Economics | Merger Review | Mobile Broadband | Net Neutrality | Regulation | Spectrum | Spectrum Caps | Spectrum Exhaust | Wireless - (Comments Off)

In his recent keynote speech at the CTIA show in New Orleans, Federal Communications Commission Chairman Julius Genachowski reiterated his (and the industry’s) concern that the “demand for mobile services is on pace to exceed the capacity of our mobile networks” and, therefore, we must “tackle the capacity challenge.” The Chairman has previously foretold of a future where spectrum exhaust could make “consumers [...] face slower speeds, more dropped connections, and higher prices.” Plainly, spectrum exhaust remains a key challenge for both mobile service providers and policymakers. The Chairman also took the chance in his CTIA speech to challenge what we and others have said …
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What is the Effect of Regulation on Investment?

May 8th, 2012 | Posted by George Ford in "Over the Top" Services | AllVid | Broadband Credibility Gap | Data Roaming | Employment | Federal Communications Commission | Industry Structure and Market Performance | Interoperability | Investment | Jobs | Law and Economics | Net Neutrality | Regulation | Regulatory Reform | Set-top Boxes | Spectrum | Spectrum Caps | Wireless - (Comments Off)

What is the effect of regulation on investment?  At a high level of abstraction, it is impossible to say.  Rate-of-return regulation, for example, is criticized by economists for possibly encouraging too much investment—a principle known as the Averch-Johnson Effect.  On the other hand, if a firm fears that the regulator will alter the rules in a way that reduces the ability to earn profits on large, long-term capital investments, then the incentive to make such investments is reduced.  Importantly, the issue is not, as some claim, just about “regulatory uncertainty.”  There could be great uncertainty about future rule changes, but if the expectation is that …
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Does Political “Kabuki Theater” Help or Hurt the Regulatory Review Process?

May 8th, 2012 | Posted by Larry Spiwak in Congressional Oversight | Federal Communications Commission | Law and Economics | Legislative Branch | Merger Review | Mobile Broadband | Regulation | Spectrum | Spectrum Caps | Spectrum Exhaust | Wireless - (Comments Off)

Recently, The Hill reported that Representatives Henry Waxman and Anna Eshoo—the ranking members of the House Energy and Commerce Committee and its Subcommittee on Communications and Technology, respectively—wrote a letter to Committee Chairman Fred Upton calling for a hearing to examine the proposed sale of wireless spectrum to Verizon by a consortium of cable companies.  Without question, Congress has the authority to hold a hearing on anything they deem relevant at any time they want.  That said, and with all due respect to the powers of the legislative branch, it is unclear what a politically-charged hearing would contribute at this late stage of the review …
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A Response to Steven Crowley at GigaOm…

March 29th, 2012 | Posted by George Ford in Federal Communications Commission | Incumbent Exclusion Rules | Industry Structure and Market Performance | Mobile Broadband | Regulation | Spectrum | Spectrum Caps | Spectrum Exhaust | Wireless - (Comments Off)

This past February, we released a paper entitled Wireless Competition After Spectrum Exhaust.  As far as we can tell, this paper was the first serious attempt to model the effect of spectrum exhaust on mobile wireless competition.  We found that the addition of a binding capacity constraint (i.e., spectrum exhaust) to the standard Cournot model of competition reveals that that fewer—not more—firms would lead to lower price, more investment, and more jobs.  Our paper, not unexpectedly, raised a few eyebrows.  (For a CliffsNotes summary of our paper, see my February 8, 2012 blog post.) This weekend, Steven Crowley at GigaOm, a consulting engineer, posted some …
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