A post in the Motley Fool describes AT&T management as “bullish” when it comes to spectrum. The post uses AT&T’s attempts at acquiring T-Mobile last year (Wow, has it been a year?) as an example. Another example includes buying smaller companies in order to obtain more spectrum. AT&T’s two-year data plan package for 3G and 4G tablets is expected to eat into Sprint’s reputation as the cheapest provider of data, according to Motley Fool.

The bullishness appears like the appropriate strategy in my opinion. Sprint has made 70% of itself available for purchase by Japan’s Softbank and is also considering buying out the remaining investors in Clearwire. While Sprint’s pending moves won’t be enough to knock AT&T or Sprint from their industry leading positions, Sprint can become a stiffer competitor in the wireless market.

Hopefully the Federal Communications Commission continues to play observer this time around. A facilitating regulator the FCC was not as it signaled to the industry and the U.S. Department of Justice its lack of support for last year’s proposed takeover of T-Mobile by AT&T. By rule, the FCC must approve the transfer of licenses from Clearwire to Sprint assuming Clearwire no longer operates as a separate entity if Sprint goes ahead with a buy. I would not be surprised if Sprint goes ahead with a complete acquisition that sends Clearwire into spectrum heaven. It would probably make the company more valuable to Softbank if Sprint actually has its name on those licenses.

Either way, the FCC should, to use a sports term, let them play. If any regulatory approvals are needed, they should be granted with haste. A minimalist regulatory approach is what’s needed right now.

Yesterday the U.S. Court of Appeals for the District of Columbia Circuit held that the Federal Communications Commission was empowered under Title III of the Communications Act to promulgate its data roaming rule. The rule, however, does not impose any common carrier obligations on mobile Internet providers.

In 2007, the FCC mandated that mobile voice carriers offer roaming agreements to other carriers on a just, reasonable, and non-discriminatory basis. The FCC invoked Title II of the Communications Act reasoning that mobile voice providers have a common carrier obligation to provide roaming.

The 2007 mandate did not extend to mobile Internet or mobile data carriers that entered voluntarily into roaming agreements with other carriers for mobile data.

The FCC’s rationale for its rule was:

1. The mandate would promote access to seamless mobile data coverage nationwide;
2. The mandate balances incentives for new entrants and incumbents to deploy advanced networks across the country; and
3. The mandate would foster competition among multiple wireless providers

Verizon and AT&T opposed the rule, arguing that the rule was unnecessary given that carriers were already entering voluntary agreements for data roaming and that smaller carriers would have reduced incentive to build their own networks.

On the surface, investors in large carriers such as AT&T and Sprint should not see any additional losses from the ruling. The data roaming rule has been in place from 2007 and given that no new rules or divestitures resulted from the ruling, I see no additional costs of compliance to AT&T or Verizon due to this legal proceeding.

I don’t see how in the long run the ruling would benefit smaller carriers. If anything they may see increases in whatever charges they are assessed by the larger carriers as a result of negotiations in for future agreements, and they can thank the FCC’s competition posture for this.

As spectrum becomes harder to come by, larger carriers may feel compelled to pass on higher costs of handling additional traffic from smaller carriers. Delays by the FCC in releasing spectrum compounded by burdensome and lengthy scrutiny of license transfers will make a scarce resource more expensive. Smaller carriers will not be able to have their cake and eat it too.

For example, smaller carriers will argue that they do not have the capital to expand their networks on the one hand while on the other criticize any attempts by the FCC to ensure that spectrum goes to the carriers with the greatest economies of scale and the larger client base that would be negative impacted by a lack of sufficient spectrum. Either way, smaller carriers are going to have to absorb the costs of expanding traffic on the network either through sucking it up and deploying their own networks or paying increasing costs for roaming.

Smaller carriers may find themselves being more of a price taker in negotiations for roaming because all a larger carrier has to show is that the roaming charge being negotiated is commercially reasonable, a lower standard than the classic just and reasonable standard.

In the immediate term, the ruling may be deemed by Verizon and AT&T as a loss, but in the longer term, smaller carriers may have simply delayed the inevitable.

The Wireless Telecommunications Bureau of the Federal Communications Commission today announced that it would allow winners of its Mobility Fund Auction (Phase I) to obtain and submit to the FCC letters of credit issued by CoBank.

CoBank does not meet all of the FCC’s criteria for an eligible letter of credit issuer. Specifically, according to FCC rules, issuers of letters of credit must be insured by the Federal Deposit Insurance Corporation. CoBank is not a depository bank, but an agricultural credit bank and as such is insured as a part of the U.S. Farm Credit System. The FCC decided that the system under which CoBank is insured would suffice and that the public interest would not be negatively impacted by a waiver of its rules.

The Phase I auction is designed to provide high-cost support to carriers as incentive to deploy voice and broadband services into geographical areas carriers would otherwise not deploy facilities. The intent of the auction is to raise and target an additional $300 million in support to carriers, including Bell Operating Companies, other large carriers, and smaller mid-sized carriers so that hundreds of thousands of unserved potential customers would receive voice and broadband services.

Universal service is usually listed among risk factors that may impact a telecommunications carrier. Bell Operating Companies and other large carriers, such as Verizon and AT&T, are no exception. Changes in universal support mechanisms can have an impact on a company’s cost of doing business leading to impacts on company profits. Today’s ruling does not appear to cause any such threat.

The United States Court of Appeals-Eleventh Circuit held today that MCI Communications Services, Inc., could not recover loss-of-use damages absent some showing of monetary loss apart from costs of repairs. MCI initially brought a claim that it could recover such damages after having its cable severed during some excavation work being done by CMES. The cut resulted in 568,263 calls being blocked in addition to a number of customer complaints.

Fortunately for the company, the blocked calls did not result in a loss of customers or loss of profits. Also, the company did not issue any customer refunds or credits as a result of the event.

The court of appeals noted in its opinion that there were no cases on point that it could rely on as precedence and also noted that the Georgia Supreme Court had also ruled that as a matter of law in Georgia, there should be a showing of damages if you are going to recover for loss-of-damages.

I think what is also important is what the court of appeals did not say. It did not throw out the loss recovery standard of rental value of substitute cable. This standard was offered by MCI as a basis of recovery.

I have some preliminary thoughts on additional transparency at the Federal Communications Commission. During my heyday at the Florida Public Service Commission, no major rule or other policy change was implemented without an evidentiary hearing. This type of openness provided both investors and consumers the ability to weigh in on an issue and helped ensure that the PSC met its duty to balance the interests of consumers and investors alike.

Not only did the PSC balance these interests by being open and transparent in their deliberations, but they also established a clearer record of precedent. This is the approach that the FCC needs to apply on a going forward basis in its decisions. Recent findings in the Commission’s special access ruling and the decision on the spectrum transaction between Verizon and SpectrumCo LLC provide examples on how a lack of an evidentiary hearing can send mixed signals about promotion of competition and free markets.

For example, the FCC concluded that it should suspend its special access rules that granted pricing flexibility to carriers facing competition. The FCC believes now that there is evidence the rules are not reflecting competition for special access.

However, in its review of the Verizon-SpectrumCo LLC license acquisition, the FCC concluded that the cable companies do not have the ability, at least in the near term, to cause anti-competitive harm in broadband services. In addition, a significant increase in backhaul rates is unlikely to impact subscribers.

So in special access, an important component of backhaul, the FCC doesn’t know whether there is competition, but in a spectrum docket, the FCC concludes in effect that there will be no anti competitive or anti consumer impact resulting from an increase in backhaul rates.

There has to be some reconciliation of the special access market with pricing impacts in the backhaul market and only a precedent setting evidentiary hearing can do this.