FCC to review how it measures competition

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The FCC uses the rules, known as a "spectrum screen," when deciding whether to approve mergers and spectrum purchases. Deals that violate the spectrum screen are flagged for closer scrutiny.

The agency plans to review the rules before it auctions off broadcaster airwaves to cellular carriers. Congress authorized the FCC to conduct the auctions as part of tax-cut-extension legislation approved earlier this year.

The bill also encouraged the FCC to re-assess its spectrum screen.

Currently, the FCC creates a new screen for each deal on a case-by-case basis. Although it relies on general guidelines, the specific rules are unique to each transaction.

The order would ask companies and the public for input on whether the FCC should develop a single formula that could be applied universally.

The FCC official explained that a single standard for all deals could provide "clarity and predictability" to the FCC's review process. But the official emphasized that the FCC is only seeking input and could ultimately leave its current process unchanged.

AT&T blasted the FCC earlier this year for its handling of the company's bid to buy T-Mobile. AT&T claimed that the FCC's use of a new screen changed the rules in the middle of the game.

The company applauded news that the FCC would take a look at its process.  

“AT&T has long advocated that the FCC should conduct its review of the spectrum screen in an industry-wide rulemaking where all can participate and a full factual record can be developed," an AT&T spokesman said. "We appreciate this important step, which should eliminate protracted battles about these issues in individual license transfer proceedings.”

Smaller carriers and consumer advocacy groups also welcomed the news.

They argue that the current screen doesn't properly account for the fact that not all frequencies are equal. Lower frequencies, for example, are better at penetrating walls. A company should trigger the screen, they argue, if it collects all of the most valuable spectrum.

“The current spectrum screen fails to distinguish between the utility of different spectrum bands for wireless broadband communications," said John Taylor, a spokesman for Sprint, which is much smaller than AT&T and Verizon. "We are pleased that the Commission plans to consider improvements to its spectrum aggregation regulations and we look forward to participating in these discussions.”

John Bergmayer, a lawyer for consumer group Public Knowledge, said the current screen is too lax and that the FCC is allowing the most valuable spectrum to accumulate in the hands of AT&T and Verizon, the two largest carriers.

He argued that preventing monopolization of spectrum is critical because smaller companies would be unable to compete without it. 

Rebecca Murphy Thompson, general counsel for the Rural Carrier Association, said her group is pleased with the move.

"While that proceeding is pending, the FCC should ensure careful scrutiny of all secondary market transactions that raise such spectrum aggregation concerns," she said. "It should consider more broadly the competitive implications of spectrum aggregation and revise or replace its spectrum screen and other analytical tools used to evaluate spectrum-related transactions.”

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