We’ve all been there. You’re half-way through an important conversation with a loved one on your cell phone, step into an elevator inside a building, and your call drops. The explanation for why this happens can be traced back to your high school physics class. Specifically, lower frequency spectrum, like the broadcast 600 MHz spectrum, travels farther and deeper than higher spectrum frequencies. The vast majority of wireless service providers don’t have adequate access to this “low dial” spectrum.
The good news is the Federal Communications Commission (FCC) and its newly minted Chariman Tom Wheeler are in the midst of once-in-a-generation process to redo the public airwaves and help solve problems like a dropped call in an elevator. The FCC is conducting a one-time incentive auction, in which TV broadcasters will be able to sell their rights to the wireless airwaves, and cellphone providers will then purchase this converted spectrum. Not to overstate the importance of this incentive auction, but the future direction of the wireless industry is at stake.
TV Broadcasters happen to use radio frequencies that are ideal for cellphone service. Relying on the physical properties of this spectrum, wireless carriers can provide better quality coverage at lower cost both deep inside urban office buildings and over vast rural expanses. As AT&T’s CEO, Randall Stephenson, has perhaps best described, low-frequency spectrum “propagates like a bandit.” In other words, it goes anywhere and everywhere.
The problem is that AT&T and Verizon control over three-fourths of this “beachfront” spectrum (not to mention over two-thirds of industry revenues), and they want to keep other cellphone carriers from getting access. The U.S. Department of Justice has noted its concern to the FCC that these two dominant carriers have huge incentives to keep competitors from buying this spectrum – so much so that AT&T and Verizon would actually pay far more than the spectrum may otherwise be valued just to block competitors. The concept of foreclosing a competitor’s opportunity to enter into the market is not a new concept. Allowing a duopoly to dominate the acquisition of spectrum, a scarce national resource, would stifle wireless competition and harm the American public.
Competitive Carrier Association (CCA) member companies – companies like Bluegrass Cellular, Cellcom, Cellular One, and more than 100 other competitive carriers – are anxious to further expand in rural America, and they need low-frequency spectrum to do so. Providing coverage over these large and less-populated expanses is often only economically possible with spectrum that can traverse these great distances. With higher-frequency spectrum, carriers have to build many more base stations (three or more times as many as with low-frequency spectrum), and they struggle to provide adequate service at an affordable price.
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