Innovation Policy Post

As the FCC develops ground rules for Incentive Auctions, in which spectrum relinquished voluntarily by TV broadcasters will “go on the market” and be auctioned, the two prospective bidders already holding the largest amount of spectrum, including what’s considered the “best” spectrum below 1 GHz, naturally argue for a “free market” approach with no restrictions on the amount of spectrum that can be licensed to any one corporation.   But is that approach truly a “free market” one?   Not if you consider the marketplace headstart  and continuing advantages enjoyed by these two dominant carriers,  AT&T and Verizon, both legacies of monopoly Ma Bell.   CCIA detailed this phenomenon in an FCC filing at the end of November.  For example, AT&T and Verizon today control 86% of mobile spectrum below 1 GHz in the top 10 U.S. markets and 80% in the top 50 markets.

The starting gun for the debate on immigration reform went off with the unveiling of a reform framework by a bipartisan group of eight Senators on January 28, the introduction of the Immigration Innovation (I-Squared) Act on January 29, and the President’s outlining of his own reform plan also on January 29. This past week saw developments further illuminating the prospects for immigration reform with statements from multiple members of Congress at various events. On February 5, the House Judiciary Committee held a hearing on “America’s Immigration System: Opportunities for Legal Immigration and Enforcement of Laws Against Illegal Immigration”, while House Majority Leader Eric Cantor gave a policy speech at the American Enterprise Institute touching on immigration. On February 7, Senators Bennet, McCain and Klobuchar were interviewed on immigration as part of the Atlantic’s “Manufacturing’s Next Chapter” event. The overall effect was to underscore the broad consensus among lawmakers on the need for skilled immigration reform, even as they disagreed on other aspects.

Less than two months have passed since the World Conference on International Telecommunication (WCIT) in Dubai came to a halt over a controversial vote that would have extended a UN treaty largely centered around voice telecommunications to the Internet. Critics of the proposed revisions to the International Telecommunication Regulations breathed a bit easier as 55 of the 144 eligible delegations at the UN-sponsored conference failed to endorse Quality-of-Service rules, access fees and other strictures on the open Internet. Even with the remaining 89 member delegations as signatories, the treaty is mostly inert without participation by the US, Japan, European Union members and other nations that demurred.

Last year, CCIA consistently opposed efforts to pass legislation that would force online retailers to collect sales and use taxes regardless of physical presence.  Last month, we opposed an attempt in the lame duck session to attach such a bill to the defense authorization bill.  In light of such back door efforts, as well as the stated determination by proponents in Congress to continue to push for legislation in the new Congress, we remain vigilant against any further attempts to misleadingly frame the issue as one of fairness and leveling the playing field.  One Reuters article in the aftermath of the holiday shopping season caused us concern by seeming to conflate Amazon.com, which is a retailer with both physical and online operations (“click and mortar”), and Internet retailers with no physical presence.  

The FCC’s Incentive Auctions rulemaking docket is titled: “Expanding Economic and Innovation Opportunities of Spectrum…”   With an increasing majority of the American TV audience choosing to consume their video programming via wired or wireless broadband,  rather than over the air broadcast signals, new spectrum to be voluntarily relinquished by TV broadcasters will become available to the highest bidders in the mobile broadband business, hopefully to boost coverage and capacity. The public safety network and the U.S. Treasury also stand to gain something in the bargain.   Not end of story.   Spectrum holdings limits currently under consideration by the FCC in a separate parallel proceeding should prevent further concentration in the amount of spectrum controlled by the mobile wireless duopoly, thereby leaving some chance of winning bids by smaller carriers.   And some of the available spectrum should not be auctioned or licensed at all.