Questions Remain About FCC’s Enhanced Competition Incentive Program

It's unclear how much the FCC’s enhanced competition incentive program (ECIP) will influence the way industry does business, experts said. Commissioners approved ECIP in the summer of 2022. It's officially live as of last month (see 2402150043).

“The new program encourages licensees to partition, disaggregate, or lease spectrum to better match available spectrum resources with entities that seek to provide needed services to under-connected communities,” the FCC said in a news release announcing the program's approval. Congress encouraged launching ECIP as part of the Mobile Now Act, enacted in 2018. The FCC declined comment Friday.

ECIP could have impact “on the edges,” though the incentives don’t appear to be substantial enough to encourage participation, said former Commissioner Mike O’Rielly. “Real and meaningful incentives -- like significantly removing deployment barriers across the board and rebates on auction prices for nationwide providers for participants -- might be more helpful,” he said.

“It's unclear how much incentive larger carriers will have to cleave off some spectrum in rural areas unless they are under build-out pressure and concerned about not meeting a deadline,” said Cooley’s Robert McDowell, also a former FCC member.

The program is well-intentioned, said Recon Analytics’ Roger Entner. “I am not sure how much of an impact it will make based on the challenging economics of rural deployments.” Other analysts told us they have not focused on the program. Groups representing wireless carriers didn’t comment.

“Secondary market transactions are a staple of our business,” a spokesperson for the Wireless ISP Association said in an email. “ECIP is an important opportunity. There’s not so much activity/talk about it now, though we are hopeful and in a ‘we’ll have to wait and see’ mode.”

Kristian Stout, director-innovation policy at the International Center for Law & Economics, said it’s probably too early to tell if ECIP will have success, and he’s not hearing much so far. Success will depend on how attractive regulatory incentives and requirements are, as well as “market conditions, the interest and financial capability of smaller entities to acquire spectrum, the level of awareness and outreach about the program and the FCC's monitoring and adaptability to feedback,” Stout wrote in an email.

The success of ECIP “hinges on whether the incentives provided can sufficiently outweigh the costs and competitive risks for larger carriers, alongside market readiness for spectrum redistribution due to demands for wireless services or technological advancements like 5G,” Stout added.

Enabling secondary markets is “a key step in long-term spectrum efficiency,” but there hasn’t been much public interest expressed so far in EPIC by the major carriers, said Joe Kane, Information Technology and Innovation Foundation director-broadband and spectrum policy. That could be because big carriers “generally don't have too much excess capacity,” he said: “They seem to want to add more spectrum to their portfolios, not sell off what they already have.” But ECIP could change the calculus since it focuses on low-density areas where providers may not need all the spectrum they have to meet subscriber needs, he added.