FCC reconsiders caps on cell carriers

Currently, the FCC sets the limit, called a "spectrum screen," on a case-by-case basis. Although it relies on general guidelines, the specific rules are unique to each transaction.

The proposal asks for input on whether the FCC should develop a single formula that could be applied universally.

Consumer advocacy groups and small carriers argue that the FCC's limits are too lax. The groups note that spectrum is a finite resource and worry that the commission is allowing the most valuable spectrum to accumulate in the hands of AT&T and Verizon, the two largest carriers.

Without access to spectrum, smaller carriers would be unable to compete, the groups argue, leading to fewer choices and higher prices for consumers.

Supporters of looser restrictions argue that regulators should allow spectrum to be used by the company that can put it to the best use.

The commission voted to review its spectrum screen on the same day it moved ahead with an ambitious plan to encourage television broadcasters to give up their spectrum licenses for auction to wireless carriers.

The spectrum screen could shape the outcome of the auctions, determining which carriers are able to bid for licenses.

Ajit Pai, a Republican commissioner, said he is skeptical of any proposal to tighten the spectrum screen because it could depress participation in the auction.

"It is critical that the incentive auction be a success, and that, in turn, requires vigorous participation and competition for spectrum in the forward auction," he said, noting that lower bids in the auction would mean less revenue for the government.

Robert McDowell, the other Republican commissioner, said he is willing to listen to feedback from the public, but he expressed skepticism that the commission should adopt a "one-size-fits-all cap."

Chairman Julius Genachowski said the commission's goals of protecting competition and encouraging efficient uses of spectrum have not changed. The purpose is to keep the spectrum screen up-to-date and to ensure that the commission provides predictable rules for the wireless marketplace.

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. AT&T ultimately abandoned the merger in the face of regulatory opposition.

"With today’s FCC action, spectrum policy can now be taken out of merger-specific proceedings, placed in an industry-wide, open and transparent proceeding, and ultimately subjected to judicial review," Joan Marsh, AT&T's vice president, said in a statement.

Genachowski emphasized that he is committed to protecting competition.

"Competition is the lifeblood of our free market economy. Indifference to competition is not good for innovation, investment or economic growth. And when we concluded that a proposed transaction simply didn’t serve the public interest, we said so," he said, in an implicit swipe at the AT&T deal.