Gara Consulting and Capital met with the Wireless Bureau staff of the Federal Communications Commission back on 10 August 2012 to raise a few points on the broadband market. Specifically, Gara recommended to the FCC that it encourage new entrants into the broadband market. Gara would also like the FCC to mandate that incumbent carriers divest themselves of spectrum as a condition of approval for significant license transfers. Gara also highlighted the lack of device and service interoperability in the 700 MHz band due to the existence of carrier specific band classes.

Gara lost me at encouraging new entrants into the broadband market. No one denies the excitement and innovation new players can bring to any market, but should it be at the price of consumer welfare? Why should the FCC intervene in the market by mandating a transfer of an asset in order to generate false competition? Wouldn’t it be more efficient to focus on getting spectrum into the hands of companies that are ready to deliver services to the most customers quicker than an upstart company?

If the financial markets, specifically investors, see an opportunity for new entrants to compete for customers, they will provide the capital necessary to purchase spectrum either during an auction or in the secondary markets. This traditional approach will also send more accurate signals as to the value of spectrum, versus a forced divestiture of the resource from carriers who are prepared to use it, whether in current operations or as part of their long term planning horizon.