The following is an excerpt from an article written by me and published in Politic365.com. With the presidential elections only nine hours away, I shared a little forecast on where the Federal Communications Commission may go on the issue of spectrum management.
Nine hours before the election and possibly a new chairman of the Federal Communications Commission, the issue of how best the FCC provides access to the airwaves by wireless communications companies may be approached differently depending on which party takes control of the FCC. Two commission members, Mignon Clyburn and Ajit Pai, are placing themselves in the thick of spectrum issues and their articulations on the issue of spectrum management reflect their divergent positions on the issue.
Specifically, although Ms. Clyburn would like to see the FCC ensure that spectrum is put to its highest and best use, she would like to see regulation act as the mechanism of distribution. “Regulations must adopt spectrum policies that encourage this process”, according to Ms. Clyburn. Clearing and reallocating spectrum may not be enough under the Clyburn school of thought. The FCC may have to implement policies addressing the structure of the economy, including the promotion of competition; encouraging investment; and deploying infrastructure.
Mr. Pai takes the overall view that today’s telecommunications industry should not be subject to the 20th century framework reflected in the current Communications Act. He wants to remove the uncertainty that eliminates the incentive of businesses to take on risk.
Unlike Ms. Clyburn, Mr. Pai places a greater emphasis on spectrum clearing versus spectrum sharing. Spectrum clearing sees a spectrum license holder, i.e. a television station, giving up all of its use of a frequency band so that another provider, i.e. a wireless telecommunications company, can exclusively use the band. Spectrum sharing occurs whenever multiple wireless systems operate in the same frequency band. Mr. Pai believes that spectrum clearing encourages more competition during the auctioning for licenses and that wireless carriers will have an incentive to invest more in infrastructure.
From a market perspective, Ms. Clyburn’s approach is intrusive relative to Mr. Pai’s approach. There is a difference between ensuring that spectrum is being put to its best use versus getting spectrum into the hands of carriers who value it the most.
Ensuring that spectrum is being put to its best use means that government will continue to influence the business judgment of a carrier beyond granting the carrier access to the airwaves. This approach would keep the cloud of regulatory uncertainty hanging over the heads of carriers who would remain in a near perpetual state determining whether their decisions on investment and infrastructure deployment pass the FCC’s test for best use.
On the other hand, getting spectrum into the hands of carriers that value the resource the most is not only less intrusive but measurable. The FCC can identify the carriers that value spectrum the most primarily by observing the bids carriers make and noting the premium that carriers are including in those bids. The lighter touch regulatory approach advocated by Mr. Pai should mitigate concerns about regulatory uncertainty held by wireless carriers.
Given the current makeup of the FCC, with three Democratic commissioners and two Republicans, the intrusive approach as espoused by Ms, Clyburn is prevailing. Which school of thought prevails between 2013 and 2017 all depends on what happens at the ballot box on November 6.