Aggregation Limits Likely Point of 8th-Floor Contention on C Band

FCC Chairman Ajit Pai released a compilation of comments Wednesday supporting his proposal for converting 280 MHz of C band spectrum to 5G through an auction later this year. Whether the order will include aggregation limits is emerging as a key issue on the eighth floor at the FCC. FCC Democrats Jessica Rosenworcel and Geoffrey Starks both appear to favor some limits, while Commissioner Mike O’Rielly is a hard no, industry and FCC officials told us.

The FCC release offers comments from Vice President Mike Pence, White House National Economic Council Director Larry Kudlow, members of the House and Senate and various groups supporting the proposal. Pai released similar documents demonstrating support before votes on other major items.

The Competitive Carriers Association, NTCA, Incompas, the Wireless ISP Association and the Computer & Communications Industry Association jointly sought spectrum aggregation limits (see 2002180016) and those arguments are getting some traction at the FCC, said lawyers active in the proceeding. The FCC declined comment.

The Democrats likely will support aggregation limits, predicted Public Knowledge Senior Vice President Harold Feld. “Post T-Mobile/Sprint, taking affirmative steps to promote competition is even more urgent,” Feld told us. Pai and O'Rielly “have historically opposed any sort of aggregation limits,” but “in the interest of a 5-0 vote, Pai could easily defer decisions on license size and aggregation limits for a subsequent public notice on auction rules.”

Free State Foundation President Randolph May said he's skeptical of aggregation limits, which are “intended to restrict participation in the auction based on ex ante judgments about market competition or concentration.” As the New York court (see 2002110026) “just emphasized, repeatedly, in rejecting the states’ attempt to block the T-Mobile/Sprint merger, the wireless market is ‘complex and dynamic,’” May said: “It is generally preferable to leave any judgments regarding claimed market competition and composition to ex post determinations by the antitrust authorities, rather than skewing the auction, and suppressing bidding, by imposing conditions beforehand.”

“All carriers, both large and small, should have access to additional spectrum resources to better serve their customers,” CCA President Steve Berry said Wednesday. “Establishing aggregation limits not only will encourage participation, particularly among competitive carriers that serve some of the most rural and hard-to-reach parts of the country, but it will also promote competition and result in a more robust auction -- all objectives directed by Congress. Ultimately, consumers and the U.S. economy stand to benefit the most.”

PK officials told an aide to O’Rielly the FCC should impose spectrum caps in both the C band and the citizens broadband radio service auction. “The auction process should not be a tool used to keep new entrants away from the market, and competitors, like [Dish Network], need sufficient spectrum to compete in a much more concentrated spectrum marketplace,” said a filing posted Wednesday in docket 18-122: “New entrants into the market need access to sufficient greenfield spectrum in order to be competitive and have sufficient capacity to offer quality service to compete against rivals. The Commission has seen in numerous auctions the ability of the largest carriers to dominate spectrum auction, effectively foreclosing rivals from needed spectrum.”

May and Senior Fellow Andrew Long countered arguments by Senate Appropriations Financial Services Subcommittee Chairman John Kennedy, R-La., who said last week he hopes to raise concerns with President Donald Trump (see 2002130053). “A narrow focus on ‘taxpayer money’ is misplaced and unsound as a matter of public policy,” the FSF officials blogged Wednesday: “It misses the larger picture that properly takes into account not just auction revenues the federal government receives but also overall consumer welfare gains to the American public.” They cited the “overall consumer welfare gains” from making more mid-band available for 5G. It would be “difficult to overstate the national importance of the timely deployment of 5G,” they said.

ACA Connects met an O’Rielly aide to ask for changes to the draft order. The FCC should “clarify that reasonable relocation costs are those that are necessitated by the relocation in order to ensure that incumbent satellite operators continue to be able to provide substantially the same (or better) service to incumbent earth station operators,” the group said. The FCC should also clarify “the obligations for satellite operators that opt for the accelerated relocation” and “the meaning of a satellite operator ‘tak[ing] responsibility’ for an incumbent earth station.”

AT&T also sought clarity, in a meeting with staff from the Wireless Bureau and Office of Economics and Analytics. “If satellite operators representing more than 80 percent of the accelerated relocation payments elect to engage in accelerated relocation, all 3.7 GHz Service licensees would be obligated to pay a portion of those accelerated relocation payments,” AT&T said: “While the Draft … provides certainty regarding both the amount of the accelerated relocation payments and the circumstances under which 3.7 GHz Service licensees would be obligated to pay, there is insufficient certainty regarding what 3.7 GHz Service licensees would receive in return.”