Competitive Carriers Association

CCA is the leading organization for competitive mobile carriers and stakeholders, joining together to improve the lives of Americans through delivery of mobile communications.

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600 MHz Incentive Auction Reserve

By Rebecca Murphy Thompson, EVP & General Counsel, CCA & Courtney Neville, Policy Counsel, CCA

“If you build it, [they] will come.”  Anyone who loves baseball or movies or America knows that famous line from Field of Dreams, where an Iowa farmer is inspired to build a baseball field on his land.  The Federal Communications Commission’s (“FCC” or “Commission”) historic, first-of-its kind, 600 MHz incentive auction proves that this quote is more than just a Kevin Costner line from a movie.  An FCC spectrum auction may lack the drama associated with the first pitch of summer, but it certainly offers another type of excitement.

With $19,632,506,746 in gross bids, the 600 MHz incentive auction is already one of the highest-grossing auction the FCC has ever conducted, second only to the AWS-3 auction ($44,899,451,600 in gross bids).  And bidding in the incentive auction is still not over.  The assignment-round phase of bidding, which the FCC has just begun, promises to increase auction revenues even further. 

Next, the 600 MHz incentive auction used market forces to determine the right balance of broadcast to broadband spectrum.  Broadcasters had a unique financial opportunity to return some or all of their broadcast spectrum usage rights in exchange for payments, and broadband operators had the chance to acquire new “beachfront” spectrum that can provide better in-building and rural coverage than other higher-frequency bands.  This auction design can be credited to Professor John Forbes Nash, Jr., Nobel prize recipient and the father of game theory, who provided economists, baseball fans, and spectrum auction engineers with a precise mathematical approach to analyzing human behavior.  He elegantly characterized his strategic equilibriums in one simple phrase: “the best for the group comes when everyone in the group does what is best for himself, and the group.”  The FCC not only applied Professor Nash’s strategic equilibrium to its incentive auction design, but it also followed his policies about the greater good when creating a spectrum reserve.  Indeed, the FCC astutely designed the auction to account for a spectrum reserve, which was good for the larger group, for individual bidders, and for consumers.  

Finally, the spectrum reserve worked exactly as intended.  The market-based mechanism provided greater access to critical low-band resources for all, without the threat of market dominance thwarting competition.  By stimulating interest and increasing participation, the spectrum reserve arguably increased auction pricing above what it might otherwise have been.  But don’t take our word for it, look at the results:   

Congress directed the FCC to design spectrum auctions that incorporate “safeguards to protect the public interest in the use of the spectrum,” including the objectives to disseminate licenses “among a wide variety of applicants” and to promote deployment of new technologies, products, and services to “those residing in rural areas.”  By following Congress’ mandate and creating a spectrum reserve, the FCC rightly recognized that wireless carriers, large and small, need access to low-band spectrum to deploy in rural areas and provide premium in-building coverage throughout the country.  Consumers benefit when multiple carriers compete.  And a failure to adopt any competitive safeguards could have allowed the two dominant service providers to raise their rivals’ costs, foreclose competition and limit consumer choice.  The spectrum reserve properly balanced each of these goals and may very well have increased total auction revenues as a result.  The auction is a win, win, win for consumers (and taxpayers), carriers, and competition.  Learning lessons from this experience, the Commission recently noted that incentive auctions could continue to be a valuable tool for policymakers to repurpose spectrum and generate revenue for the federal budget.  

Until then, increasing the number of providers with access to low-band spectrum will increase the number of competitive offerings of mobile wireless service available to consumers, especially in rural areas.  The spectrum reserve worked as intended to protect competition and consumers and may have increased auction revenues in the process, for individual companies and the greater wireless ecosystem.  The FCC built it, competitive carriers showed up, and now new technologies, innovative services, and economic growth will come too.

Image Sources:

Image 1: Film still, Field of Dreams, Universal Studios

Image 2: http://www.upsesc.com/john-nash--game-theory.html 

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A Game of Monopoly: Mobility Fund II & Infrastructure

By Tim Donovan, SVP of Legislative Affairs, CCA and Rebecca Murphy Thompson, EVP & General Counsel, CCA 

February 24, 2017 - In a game of Monopoly, whatever the dice roll, eventually someone picks up that fateful card: “Do not pass Go.  Do not collect $200.” Although some carriers treat the United States like the Monopoly game board - seeking to control as many properties as possible to “win” the game - the mobile ecosystem works best when there are many players competing within one “square.”  Competitive carriers often must contend with some element of chance in the broadband marketplace but ultimately look to the Federal Communications Commission (“FCC” or “Commission”) to provide certainty. Yesterday, at the FCC’s Open Meeting, the Commission provided opportunity to advance their tokens across the board.  Thanks to a Mobility Fund II item adopted during the Open Meeting, we are hopeful that competitive carriers are able to continue deploying, maintaining and improving networks throughout the United States.  Dominant carriers may have already scooped up Park Place and Boardwalk, but competitive carriers have made investments to build innovative, far-reaching networks serving Indiana Avenue, Kentucky Avenue, Tennessee Avenue, and Pennsylvania Railroad. With the help of Universal Service funding and smart infrastructure policies, carriers can continue to expand to areas where the business case for doing so is absent, either because private investment does not suffice or a dominant carrier has asserted their market power to lock other players in “jail.”   

Now, rural America is one-step closer to passing “Go.”  CCA is pleased that the adopted Mobility Fund II item is significantly improved from our understanding of previous drafts.  The FCC has rightly chosen to implement a program that will offer predictable support for the preservation and deployment of wireless networks.  Wireless carriers, and more importantly their consumers, depend on USF in addition to carriers’ own capital resources to provide comparable mobile broadband service in rural areas.  If the FCC got it right, the Mobility Fund II program will provide carriers the certainty needed to make future business decisions, including budgeting for operations, upgrades, and expansion of the latest mobile technologies for consumers over the next several years.   

CCA congratulates Chairman Pai on completing the first initiative to promote his Digital Empowerment Agenda.  CCA likewise thanks Commissioner Clyburn for continuing to champion issues that affect competitive carriers, and Commissioner O’Rielly for the important work on Universal Service policy. Specifically, CCA applauds the FCC’s plan to revise its Mobility Fund II program to account for overstated coverage data, which will determine the areas where support is most needed and ultimately benefit the consumers for which these funds are intended.  Even more laudable, the FCC has recognized that rural areas are some of the most difficult to serve, and has adopted what we hope is an equitable and predictable phase-down for legacy funds.  

CCA likewise recognizes Congress’ efforts, including Senators Roger Wicker (R-MS), Joe Manchin (D-WV), and their colleagues, for encouraging the Commission to adopt a Mobility Fund II program that provides sufficient and predictable support for carriers.  Yesterday’s vote supports Chairman Blackburn’s (R-TN) focus on expanding rural broadband.  CCA also thanks Congress for providing certainty of USF support for wireless carriers through language in the current FCC Appropriations, which prevents a phase-out of legacy support until there is an operational Mobility Fund II program in place, and applauds the FCC’s work to align the current item with this mandate.  While all parties involved should be pleased with yesterday’s actions, consumers are the real winners, as the FCC has aided competitive carriers’ abilities to expand their service portfolios across myriad areas of the United States.  This means economic growth, new jobs and better educational opportunities for rural areas and economically challenged consumers.  

But work to bridge the digital divide is not over.  After all, you can’t play the game without the board, just as carriers can’t make promises about 5G and next-generation services - even with the best spectrum - without streamlined infrastructure processes and procedures.  While critical to our 5G future, these challenges also impact carriers working to provide today’s mobile services.  Deploying broadband infrastructure is a necessary, yet resource-heavy endeavor: the fruitful cross-section of engineering expertise, capital investment and strategic spectrum acquisition.  Unfortunately, the siting process is mummified in red tape.  Competitive carriers, whether siting the smallest antenna or the tallest tower, must secure permission from:

state and local government authorities;

the FCC, which is responsible for implementing the National Environmental Protection Act, the Endangered Species Act, and the National Historic Preservation Act;

State Historic Preservation Offices or Tribal Historic Preservation Offices; and

Federally-recognized Tribes. 

Not to mention, if the siting project is on federally-owned land or property, additional federal agency permissions are needed.  It takes an infinite amount of time and resources to complete, and much like the game of Monopoly, it involves risks, many of which are unnecessary. 

To check all these boxes, competitive carriers must navigate kaleidoscopic federal, state, and local law and policy as well as informal practices that can vary dramatically from county to county, and state to state.  Uncertainty regarding timing and cost reigns.  For example, under current practices, there is no limit on what Tribes can charge a carrier for a given siting project, even outside Tribal lands, and no limit on the areas within which a Tribe can assert an historic or cultural interest.  If the carrier pays those fees, a Tribe is still empowered to stall a project without justification.  And Tribal fees have dramatically increased in recent years.  One CCA member reports that rooftop macrocell collocations in Chicago have generated between $11,000 -12,000 per site in Tribal fees, and that does not even account for the necessary expenses to collocate on a site.  While we have a duty to protect Tribal ancestral lands and properties, we must work collaboratively with Tribes to more clearly define the pre-consultation process and cost.  Local governments and federal agencies, too, can delay projects for years without penalty, and charge exorbitant fees rendering siting projects uneconomic.  With these types of unreasonable policies in place, it will be a long, hard road to 5G, and the digital divide will become an even wider chasm across America’s heartland.  

The FCC and Congress can and should introduce commonsense solutions to these problems.  The MOBILE NOW Act, currently under consideration in the Senate, contains several provisions that will improve the siting process if enacted, and Congress should move forward on MOBILE NOW and similar legislation as part of continued work to streamline these processes with reasonable solutions.  Project delays will decrease if the Commission or Congress shortens application review “shot clocks,” and musters the regulatory or legal grit to create a “deemed granted” provision where state and local authorities fail to timely complete review.  By clarifying the definition of practices that “prohibit or have the effect of prohibiting” broadband service, the Commission can ensure major siting roadblocks - like endless moratorium, or arbitrarily costly application requirements - are preempted from the start.  As the Commission has acknowledged, it’s impossible to ignore the astronomical uptick in consumer demand for mobile data services, and that future 4G and 5G services will require “significant densification of small wireless facilities, including small cells and DAS.”  It makes sense, then, to revisit overarching federally-sponsored siting agreements to more roundly exclude small wireless facilities from the rigors and expenses of federal statutory review.  The Commission or Congress also could explore redefining a “federal undertaking” to exclude small wireless facilities entirely.  Some of these ideas appear in Chairman Pai’s Digital Empowerment Agenda and are discussed in a recent Public Notice, signaling to competitive carriers that the Commission is ready to tackle these infrastructure problems.  CCA urges the Commission to act sooner rather than later. 

The Mobility Fund II item is not a “Get Out of Jail Free” card by any means. Rather, it’s an important federal program ensuring hard-to-reach consumers have the ability to participate in modern-day, constantly-connected life with advanced mobile services.  While yesterday’s actions move competitive carriers one step closer to passing “Go,” the FCC must continue to revise its strategy for administering the rules when it comes to allocation and contribution of funds and infrastructure deployment.  Scarce USF dollars go further when costs associated with unnecessary regulatory burdens to deploy are minimized.  At the end of the day, the FCC has done its job correctly if consumers win the game.  And consumers win when they have a choice between competing wireless providers offering next-generation service, no matter where they reside.

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Consumer Protection or Protectionism?  The FCC’s Privacy Rules Might Provide Less Choice, and More Confusion, Than Consumers Expect

By Steven K. Berry, President & CEO, CCA

Consumer protection is a tricky thing.  Of course all consumers deserve adequate information and transparent practices, but consumer choice doesn’t have to come at the expense of receiving better broadband service, lower prices, or new and innovative technologies.  So when policymakers embark on a consumer protection mission, it seems only reasonable for the regulators to listen to what consumers want and need, and they should make sure protections are consistent across all platforms.  Federal Communications Commission (FCC) Chairman Tom Wheeler’s proposed privacy protections are a good example of how important it is to consider consumer expectations.  If you ask consumers whether they think all Internet companies, including ISPs like mobile carriers, should operate under the same set of privacy rules, over 90% would agree.  Further, 83% of all consumers agree that online privacy should be based on the sensitivity of their online data, rather than the type of company collecting that data.  In other words, consumers want one set of transparent and easy-to-understand rules. These statistics come from the Progressive Policy Institute’s recently-released survey of consumers’ privacy protection desires.  Hence, this survey should resonate with the FCC and should take heed that its current proposal will likely cause consumer confusion and result in less consumer protection.

The FCC’s proposed privacy rules—most recently outlined in a Fact Sheet released by the Commission—would require a mobile carrier to obtain customers’ express permission, or “opt-in,” to use, share, or permit access to categories of sensitive information like geolocation, children’s information, health information, financial information, social security numbers, the content of communications, but also all web browsing and app usage history.  The FCC regime also may require a carrier to allow a customer to “opt out” of first-party marketing based on non-sensitive information for any service not in the same category of “core” services ordered by the customer.  This means more administrative red tape for carriers with innovative service offerings—like “Internet of Things” products, or mobile device offerings—and existing partnerships that largely exist to provide consumers expanded services.  This will lead to more notifications that consumers will likely ignore or miss, and more lost opportunities to provide added value to existing services.  Do you really want the government to regulate whether you receive information, or a special discount, on the new iPhone or virtual reality equipment?  This consumer doesn’t.

Competitive mobile carriers—those outside the AT&T and Verizon “duopoly,” which commands more than 70% of all service revenue in the wireless market—would suffer the most if the FCC moves forward with its proposed rules.  Consumers want more content, smarter and cheaper devices, and opportunity for savings.  As such, carriers compete with edge providers like Amazon or Facebook, with broad access to consumer data under the FTC’s regime.  For example, imagine a consumer wants to buy a new tablet and their competitive mobile carrier offers tablets at 20% off sticker price.  Google might know that particular consumer wants to buy a tablet, based on their web browsing history, and would accordingly place targeted ads in the customer’s search results.  But under the FCC’s proposed rules, a carrier would likely have to get the consumer’s express permission to offer the same 20% tablet discount.  This does not foster competition; in fact, it provides consumers with fewer choices.

Competitive carriers should be able to explore new revenue streams by offering innovative and consumer-friendly products, services, and features to consumers, as long as a carrier does not use content of communications, web browsing history, or app use history data if it includes truly sensitive data such as precise geolocation, and information related to health, children, or finances.  This would align the FCC’s privacy framework with the principles applied by the FTC to the other actors in today’s data-rich Internet ecosystem.  The FCC also should follow the FTC’s lead and allow companies even more flexibility to market products and services to their customers, which is critical to an ISPs ability to compete.  After all, “competition, competition, competition” is Chairman Wheeler’s mantra.  A more flexible privacy protection regime will benefit carriers and consumers alike, giving both what they want and need.  I fear the FCC has forgotten that “an informed consumer is the best customer” and the FCC is making it difficult for consumers to be “informed.”

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CCA Supports Lifeline Reform that Puts Consumers First

By: Steven K. Berry, President & CEO, CCA

Today the House of Representatives will consider H.R. 5525, the “End Taxpayer Funded Cell Phones Act,” which aims to prevent consumers from receiving Universal Service Fund (USF) Lifeline program resources for mobile services.  While CCA supports appropriate USF reform, this legislation fundamentally misses the mark regarding the Lifeline program.  The Federal Communications Commission (FCC or Commission) recently implemented new program reforms to remove waste, fraud, and abuse from the program and Congress is working on productive reform efforts as well.  What’s more concerning, H.R. 5525 would put vulnerable Americans at risk of losing the ability to connect.  Further, this bill would create a new tax on telecommunications consumers.  It is for these reasons that CCA opposes this legislation.

Just a few months ago, the FCC adopted significant reforms to the Lifeline program to address perceived and actual waste, fraud, and abuse, and the Commission refocused the program via the Lifeline Modernization Order of 2016.  These changes reflect the continued increase in American consumers’ choice of mobile services to access voice and data products and services.  Ownership of a cell phone is no longer considered a luxury – it is a necessity for today’s on-the-go society, and smartphones can provide consumers with access to broadband without the need for an additional (and often costly) computer to use with a fixed connection.

H.R. 5525 not only ignores the exponential rate of mobile broadband adoption in recent years, but it also creates an undue new tax on American telecommunications consumers. By requiring providers to continue to contribute to USF and diverting funds to the U.S. Treasury for deficit reduction, the bill would take an existing user fee and convert it into an arbitrary new tax on telecommunications services.  Wireless consumers already contribute almost half of all contributions that make up the support for USF programs, more than any other telecommunications service, and placing a tax on-top of the user fee would serve to further diminish the vast benefits of USF for mobile services.

CCA fully supports efforts to root out waste, fraud, and abuse in the Lifeline program where appropriate, but this legislative approach uses a machete where a scalpel will do.  USF, including the Lifeline program, must support mobile broadband services to ensure that all American consumers have access to the latest technologies and services.  USF contribution reform efforts must equitably address the ongoing needs of the Fund, not create a new tax that will undermine the benefits of the USF program.

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Without the required physical infrastructure, there can be no mobile broadband service.

By: Tim Donovan, VP of Legislative Affairs, CCA

Americans today depend on reliable mobile broadband services not only to connect with each other, but also for critical public safety, economic, and educational needs.  As consumers increasingly demand mobile broadband services for everyday life, our infrastructure policies must be consistent with the important goal of providing robust mobile services nationwide.

Wireless carriers desperately want to give consumers what they want – what they need, including providing necessary coverage for emergency services.  But there are often obstacles to overcome, including delays or other barriers when attempting to deploy, upgrade, maintain, or expand their networks.  To fill the broadband gap, policymakers have long looked to federal lands, facilities, and other assets as potential locations to site services, yet challenges remain as carriers try to work through myriad federal agencies and processes.

Below is a non-exhaustive list of challenges CCA members encountered when applying through federal agencies to deploy facilities on federal lands.

·       Lost or missing tower siting applications

·       Tower siting applications that languish for unreasonably long periods of time without a determination for approval or denial

·       Tower siting applications or projects that have been submitted but the relevant agency has not provided primary point of contact for communication

·       Initial tower site locations are rejected, only to be determined months (and sometimes years) later as the most reasonable site for that facility – or vice versa

·       Lack of application standardization and/or streamlined processes across agencies

·       Inconsistent or undisclosed rules across agencies or even within the same agency

·       Requiring new permits to upgrade existing facilities

·       Denied projects  due to concerns of disturbing “protected” lands or environments, even when the “disturbance” would occur along recently constructed roadways or other already disturbed environments

·       Redundant historical or environmental reviews causing unnecessary delays and increased costs

·       Potential fines, forfeitures, defaults, or foregoing deployments – even when deployment of services is required by one federal agency, through buildout deadlines or broadband deployment support programs – because another federal agency is unable or unwilling to provide a determination on an application within a reasonable timeframe

Congress, the FCC and the current Administration all share the laudable goal of ubiquitous mobile broadband service, but this cannot be accomplished without a reasonable process and certainty regarding deployment on federal lands.  Did you know that, according to the Congressional Research Service, roughly 635-640 million acres of land – 28% of the United States – are owned or managed by the federal government?  That’s a lot of real estate.  Further, significant swaths of this geography are located in rural and remote areas, where wireless service may otherwise be unavailable and needed for safety concerns.

CCA members are ready and willing to bring wireless services to these unserved or underserved areas.  And yet, it is the rural and regional carriers that often have experienced challenges working with the Forest Service in the Department of Agriculture, the National Park Service, the Bureau of Land Management, the Fish and Wildlife Service, the Department of the Interior, and other agencies as they work to deploy mobile broadband services.  Several agencies have recently collaborated on ways the Executive Branch can support broadband investment.  This is a good first step.  Now, we need additional guidance from Congress to help speed deployment by harmonizing and streamlining processes across agencies.

So what specifically can be done?

Both the House Committee on Energy and Commerce and the Senate Committee on Commerce, Science, and Technology currently are considering a range of legislative solutions to solve these infrastructure challenges, and CCA supports moving forward on these solutions to support deployment, particularly on federal lands and facilities.  

Shot Clocks

Enacting, implementing and enforcing shot clocks for applications with federal agencies increases certainty and allows carriers to plan their deployment.  Importantly, should an application be denied for a valid reason, carriers should be notified within a reasonable timeframe as directed by the Supreme Court.  While reasonable applications should be approved, any denial should take place within a set timeframe, and include written evidence and an explanation at the time of the determination.  These policies are already required and upheld by the courts with state and local authorities, and should be in place at the federal level.

Master Applications

As required by the Middle Class Tax Relief and Job Creation Act of 2012, the Government Service Administration recently released master standard forms, contracts, and fee schedules for siting wireless facilities.  Federal agencies should be required to utilize these forms, which will standardize and streamline processes for carriers that must work within and across several agencies.

Database of Federal Lands and Assets

In some areas, towers and infrastructure may be utilized for other purposes, but are not currently accessible for carriers to deploy mobile broadband services.  Providing carriers with information that these tower siting facilities exist and may be available for mobile broadband deployment would prove efficient and cost effective in using existing infrastructure and rights-of-way.  Opening up these assets for deployment will not only increase wireless coverage, but can open new economic opportunities.  For example, accessing a tower at a national park would help to connect Americans visiting the parkland, while allowing the park to connect with those visitors, and also allow Americans to reach 911 in case of an emergency.   Importantly, a database of federal lands and assets is only as valuable as the accuracy and comprehensiveness of its inputs – such a database must be maintained and updated as appropriate.  

Point of contact

Upon filing an application, a carrier might not be given a contact for navigation within the agency as the process moves forward.  Establishing responsive points of contact can support cooperation between the carrier and an agency, and also ensure that applications do not languish.

Streamlining Historical and Environmental Reviews

In instances where ground already has been disturbed, or when tower siting applicants are seeking merely to upgrade or collocate on another tower, there may be opportunities to streamline historic and environmental reviews.  An efficient application review process will protect important goals while using resources to effectively expand services.

Dig Once

Where federal infrastructure projects are underway, such as highway construction, it only makes sense to take advantage of the opportunity to deploy broadband infrastructure.  Not to mention, dig once also saves time, and reduces costs and expenses to build out information access as well.

CCA supports pending legislative efforts to ease broadband deployment challenges.  As the House Energy and Commerce Committee Subcommittee on Communications and Technology marks up legislation this week and the Senate Commerce, Science, and Transportation Committee continues its consideration of the MOBILE NOW Act, CCA stands ready to assist and support enacting solutions.

CCA encourages its own members to TAKE ACTION and urge their Members of Congress to move forward on legislative solutions to ease broadband deployment on federal lands and facilities. 

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CCA 2015 Drives Home the Importance of Access to Information Superhighway

Convention Caffeinates with Competify

By: Steven K. Berry, President & CEO, CCA

Earlier this month at CCA’s Annual Convention in Fort Lauderdale, CCA brought together key policymakers including FCC Commissioners Mignon Clyburn and Michael O’Rielly and industry thought leaders for robust discussions on the future of the competitive mobile ecosystem.  

Throughout the 3-day event, the conversation centered on the critical policies needed to create a competitive broadband economy, specifically: the 600 MHz incentive auction, Universal Service Fund reform, roaming and FirstNet, as well as the transition to 4G and looking ahead to 5G.

We also were joined by Competify — a coalition launched earlier this year by CCA and other trade associations and service providers— who hosted a coffee bar that was hard to miss thanks to the light-hearted, medically-inspired campaign signage.   While the ads are light-hearted, the campaign is centered around a serious issue: urging the FCC to address the scourge of high broadband prices and anticompetitive behavior by advancing meaningful broadband competition.

As we all know, ensuring Americans have access to robust broadband services is critical; however, a powerful few incumbents control the high-capacity pipelines that are the base of a wired economy. These access lines connect everything from local ATMs to schools and libraries.  They also play a vital role in connecting cell towers.  These dedicated lines are basic building blocks for any competitive carrier that wants to connect their customers to that “last mile” of service.

Many of the discussions at the Convention also included small cell deployment and infrastructure updates, which require access to high-capacity broadband lines to be successful.  As deployments are increased to handle exponential growth in data traffic, backhaul takes on an even more important role.

Competitive carriers face a number of obstacles trying to compete with the largest national carriers, and with the upcoming incentive auction around the corner, carriers are monitoring their resources more closely than ever before.  Competitive carriers should not have to face monopoly rents for necessary inputs purchased from competitors.  Limited resources are better directed toward providing the most robust service possible to their customers rather than paid to affiliates of the largest wireless carriers.

The FCC has the power to stop these dominant companies from using their market power to extract unjust and unreasonable rates to access the information superhighway, and has taken the first steps to addressing the issue.  The FCC has completed a robust data collection and has the information needed to thoroughly review the marketplace.  It has launched an investigation into the terms and conditions that may further lock up the market.  These are strong steps forward, but we need your help to get the job done.  

Join our campaign to ensure the Commission fixes this broken marketplace once and for all.  Let’s keep the momentum from the Convention going and keep pushing forward to ensure all competitive carriers have a meaningful opportunity to compete and thrive in the ever-growing mobile industry.

To learn more about Competify and what you can do to help, visit www.TryCompetify.com.

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Fact-Checking the Duopoly

By: Steven K. Berry, President & CEO, CCA and Rebecca Murphy Thompson, General Counsel, CCA | July 2, 2015

It should come as no surprise that AT&T and Verizon released interchangeable blog posts on the same day promoting anticompetitive myths and asserting false facts regarding the history-in the-making 600 MHz broadcast incentive auction.  It’s clear the duopoly is working in coordination to thwart competitive policies that provide consumers more broadband choice with increased competition, lower prices, and more innovative services from smaller, regional and rural carriers.  Interestingly, while the duopoly throws around phrases like ‘unmitigated gaul’ and ‘magenta herring,’ the truth of the matter is that AT&T and Verizon are attempting to deflect consumers’ attention from the true facts.  Particularly:

FACT: AT&T and Verizon together control 73% of all low-band spectrum in this country.

FACT: The upcoming incentive auction is the last near-term opportunity to gain access to low band spectrum. 

FACT: AT&T and Verizon together spent two out of every three dollars bid in the last spectrum auction, for a combined $28 billion dollars.  AT&T and Verizon foreclosed any meaningful competition from direct competitors in the AWS-3 auction by outspending all other facilities-based wireless carries by more than 10-to-1.  

FACT: The U.S. Department of Justice—for the third time—has gone on the record warning the FCC that AT&T and Verizon have the incentive to, and given the opportunity, will foreclose smaller carriers from getting access to low-band spectrum in the upcoming auction.

FACT: Studies have shown that competition can be a downward driver of consumer retail prices by 10-20%.  Studies estimate that mobile competition generates consumer benefits of $20 billion per year, worth over $200 billion in total.

FACT: AT&T or Verizon—and in some markets both—are eligible to bid on reserve spectrum covering 74% of the geography of the United States, and 40% of the population.

FACT: AT&T and Verizon are each eligible to bid on their desired 10x10 (20 MHz) block in every single market in the United States.

FACT: Many, many other reserve-eligible entities besides AT&T and Verizon (and T-Mobile) will likely bid on spectrum in this upcoming auction, from current operators to potential new entrants.  CCA represents more than 100 competitive carriers, all of which need access to low-band spectrum.  The upcoming incentive auction presents the last, best opportunity for carriers to get access to this much needed low-band spectrum.  And the market-based spectrum reserve is the only competitive safeguard in the auction that can prevent AT&T and Verizon from walking away with all of this critical resource.

FACT: AT&T and Verizon have claimed that a 10x10 MHz channel (or 20 MHz of spectrum total) is ‘table stakes’ for an LTE deployment.

Don’t be distracted by AT&T and Verizon’s shiny new hashtag.  Under the Commission’s current incentive auction proposal, the maximum size of the spectrum reserve—should it come into existence at all—is 30 MHz, which means that only one reserve-eligible bidder at most will get access to enough 600 MHz spectrum to deploy a robust LTE network.  Because AT&T and Verizon are reserve-eligible in so many parts of the country, and have the incentive to foreclose competitive carriers from getting access to this spectrum in the first place, the Commission should take action to increase the size of the reserve and make sure that AT&T and Verizon aren’t able to game the auction so that it is never triggered at all.

Competitive carriers aren’t asking for a hand-out, they’re asking for a fair shot. The spectrum to be offered in the incentive auction is expected to be some of the best spectrum in the world, and CCA’s members want a fighting chance to win some of it in the auction so that they can provide 4G LTE service to consumers and take part in the growing Internet of Things, which will improve everything from education and healthcare to agriculture and commerce.  Our members aren’t afraid of a little competition – after all they are the ones offering better prices and more innovative services.  And competition is the whole point of the FCC’s framework for this auction, answering clear Congressional directives.  It is plain and simple – AT&T and Verizon can squeeze out the competition by buying all the spectrum. The Commission should stick to its goals of promoting competition by non-nationwide providers, avoiding excessive concentration of licenses, disseminating licenses among a wide variety of applicants, and encouraging rapid deployment of new wireless broadband technologies to all Americans, including those residing in rural areas, by building on its framework with targeted improvements to prevent foreclosure from the duopoly.

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Incentive Auction Reserve Has the Potential to Produce a “Wide Spectrum” of Benefits

By: Steven K. Berry, President & CEO, CCA

AT&T’s chokehold on low-band spectrum resources prevents competitors from offering service in urban and rural areas alike.  Low-band spectrum travels farther and is less costly to deploy and operate, which is necessary to deploy cost-efficient mobile broadband in high-cost, low-density rural areas.  Low-band spectrum also penetrates obstacles better than higher-band spectrum, which allows service to reach inside buildings where 80% of all wireless data consumption occurs.  In the words of AT&T’s CEO Randall Stephenson, low-band spectrum “propagates like a bandit.” Together with Verizon, AT&T controls 73% of all low-band spectrum on a nationwide average basis and an even larger share in urban areas – a number that cannot and should not be ignored.

Despite these facts, in a (repetitive) blog AT&T says the way to improve consumer choice is by eliminating the market-based, pro-competitive spectrum reserve. Because the reserve is one of the most important consumer safeguards left against a single company acquiring all of the available resources needed to provide cost-effective wireless broadband service, AT&T is simply wrong.  

Most of Competitive Carriers Association’s (CCA) members are smaller wireless operators that serve rural markets.  As a group of our members explained in a recent letter to Chairman Wheeler, non-nationwide carriers strongly support the market-based spectrum reserve precisely because AT&T or Verizon are eligible to purchase reserve blocks of spectrum in the auction in most of the country. The map provided here shows that AT&T and/or Verizon can bid on reserve spectrum in markets covering almost three-quarters of the United States.

AT&T or Verizon Reserve Eligibility

AT&T attempts to turn this generally-applicable low-band spectrum reserve rule on its head, arguing that because it has only focused on deploying service in densely populated, high-revenue generating areas, and is therefore reserve eligible in certain rural markets, the spectrum reserve is no good. This argument fails for several reasons. First and foremost, AT&T conveniently forgets to mention that its duopoly partner, Verizon, is reserve eligible in many markets as well, making foreclosure a certainty without a larger reserve.

But more egregious is AT&T’s singular focus on T-Mobile, which ignores the more than 100 competitive wireless providers that operate today throughout the United States. In addition to current providers, there are potential new entrants interested in the adoption of pro-competitive rules for the incentive auction, such as cable provider Charter Communications. The fact is CCA expects robust participation in the forward auction, and if AT&T is permitted to bid on reserve spectrum in large parts of rural America, this makes increasing the size of the reserve all the more important.

Additionally, AT&T claims bidding eligibility throughout all or most of many states. While that’s generally true as indicated in the above map, AT&T in its blog conveniently ignores areas where they are ineligible due to significant low-band spectrum holdings.

AT&T also has touted the benefits of partnership opportunities with Verizon. But they conveniently forgot to mention CCA’s nationwide members’ partnering programs. Sprint and T-Mobile are partnering with smaller carriers in more equitable ways, providing greater access to spectrum, devices, and roaming that will allow competitive carriers to control their own destiny. But for these new and improved partnerships to continue, all competitive carriers need to be able to access critical low-band spectrum.

Our members are willing and able to compete head-to-head with AT&T and Verizon in the market; in fact, most do today. Any statements that suggest competitive carriers want to prevent AT&T and Verizon from acquiring additional spectrum are simply untrue. CCA members want AT&T and Verizon in the same competitive ecosystem that supports all wireless carriers. But our members are rightly concerned about the Big Two’s ability to foreclose competition by acquiring all or most of the available low-band spectrum or to prevent competitive carriers from acquiring anything other than the most impaired license blocks during the auction’s assignment round.  

If the spectrum reserve is not large enough to allow for more than one carrier to acquire enough spectrum to compete, AT&T or Verizon have the resources to acquire reserve spectrum in rural markets to prevent would-be rivals from competing.  This is a serious concern. Expanding the reserve from three to at least four blocks of spectrum while capping reserve purchases at two blocks per carrier does not harm AT&T, which concedes it can purchase reserve spectrum in the vast majority of the country.  Bottom line: an expanded reserve will provide enough headroom for competitive carriers to acquire the “table stakes” two-blocks of spectrum necessary to provide broadband service for consumers.

AT&T has a track-record of using its dominant position in the market to limit the utility of spectrum acquired by competitive carriers. In Auction 73, AT&T drove smaller carriers out of the smaller license-sized 700 MHz B Block into the more impaired larger license-sized A Block, and then carved up the band with false claims about risks of interference. As a result, handsets largely did not support 700 MHz A Block spectrum, which limited the utility and value of those licenses, and is still impeding robust LTE deployments in rural areas.

AT&T’s statements are particularly ironic in light of its history of broken promises to provide service in rural America. As a condition to the AT&T/BellSouth merger, for example, AT&T committed to provide broadband service to 100 percent of the residences living in the new company’s combined territory, most of which was rural. But AT&T now admits that it never lived up to its assurances of rural deployment. As another example, during AT&T’s failed attempt to buy T-Mobile USA, AT&T claimed the merger would benefit rural America when, actually, the proposed merger would have added less than 1% of new rural coverage area post-merger.

Rural consumers deserve better than AT&T’s unreliable statements and rock-bottom customer service.  A spectrum reserve of at least four blocks of spectrum – combined with a two-block limit on how much reserve spectrum any one carrier can purchase – will help offer rural Americans the same competitive choices and values that urban consumers enjoy.  Dozens of competitive carriers stand ready to offer alternatives to AT&T.  But first these providers must fight AT&T’s misinformation campaign to gain access the low-band spectrum resources they need to compete.  The Commission can improve consumer choice, encourage investment and accelerate wireless innovation in rural and urban areas alike by adopting a robust spectrum reserve of at least four blocks of spectrum, so that all carriers – even AT&T – can access this valuable, limited resource.

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The Earth is Flat?

By Steven K. Berry & Rebecca Murphy Thompson | April 20, 2015 

The Flat Earth Society insists the earth is not a sphere, but a flat disc. It writes passionately and at length to convince remaining skeptics that the “round Earth doctrine is little more than an elaborate hoax.” Mobile Future may not believe our planet is flat, but one should certainly question its knowledge on the laws of physics and economics. According to Mobile Future, the travel distance of different radiofrequency signals has no influence on the economics of deploying wireless services in less populated areas.

The reality is that rural and regional wireless carriers face unique challenges in providing coverage in remote, rural and regional areas because the population density is often insufficient to allow for economically sustainable deployment. It requires as many as three to thirteen times the number of base stations to construct a network with higher band spectrum as compared to deploying on low-band spectrum. Constructing all those additional towers gets very expensive, and there are simply too few potential users in many areas to cover the substantial cost of building so much additional infrastructure. Rural and regional carriers are keenly aware of this, as many of them have constructed USF-enabled, cost-efficient networks over low-band spectrum, providing rural consumers access to broadband that they would not otherwise have.

Low-band spectrum, such as the 600 megahertz band that the FCC will auction in early 2016, is therefore critical to allowing wireless carriers to build-out in rural areas. The FCC, the U.S. Department of Justice, noted engineers, and even Verizon and AT&T, have recognized that low-band frequencies travel longer distances and penetrate buildings and other obstacles far more readily than higher-band spectrum. The FCC and DoJ, in particular, also have found that expanding access to low-band spectrum can promote wireless broadband competition by helping to ensure more wireless operators have the resources necessary to offer reliable, cost-effective broadband service.

“[O]ne of the beauties” of low-band spectrum, AT&T’s Chairman and CEO Randall Stephenson said, is that “it propagates like a bandit,” and “takes fewer cell sites to get a good quality signal, both voice and data to [customers].”

“We refer to [low-band spectrum] as ‘beachfront property,’” AT&T’s CEO added.

Low-band spectrum, in other words, is one of the essential components of building out competitive wireless broadband networks. Competitive carriers do not lack the will to build in rural areas; on the contrary, many smaller carriers are doing more than the largest two carriers for these hard to reach areas and have a vested interest in serving their local communities because it is their home too. But if competitive carriers do not have access to low-band spectrum and access to sufficient universal service funds in low population density areas, they cannot serve enough people to cover the costs of deploying service.

While it is easy to poke fun at the Flat Earth Society, even flat-Earthers are sometimes right. Mobile Future, for example, is correct in recognizing that universal service funding represents an extremely important component of deploying mobile broadband in rural areas. The FCC’s Mobility Fund, which provides financial support for the expansion of mobile broadband networks, is a strong, sensible policy approach to promoting wireless deployment in rural areas. Without a much-needed expansion of the Mobility Fund and access to low-band spectrum, the FCC will fail to promote broadband deployment in rural areas – an outcome no one wants.

Mobile Future also is correct that access to low-band spectrum is not always, in and of itself, an adequate incentive to attract investment capital to build-out high-speed, mobile broadband services in the most difficult to reach rural areas. A case in point is the network infrastructure of AT&T and Verizon; after all, they already hold 73% of all low-band spectrum and have not deployed in all rural areas. Mobile Future refuses to recognize that access to low-band spectrum is not just about the four largest carriers. Access to low-band spectrum helps the smallest carriers, new entrants, and the creation of an ecosystem that welcomes competitors with economical roaming agreements, devices and partnering relationships, and that allows new and innovative services in rural areas to flourish.

The challenge of rural broadband deployment has long defied easy solutions. But implementing a robust spectrum reserve in the incentive auction that has no less than 40 megahertz of lightly impaired spectrum and expanding the Mobility Fund offers competitors an opportunity to start making rural broadband deployment a sensible economic proposition.

The FCC must protect and promote the mechanisms that today provide critical support to our nation’s rural areas, schools, libraries, healthcare providers and low-income individuals. Allowing competitors greater access to low-band spectrum that is part of an interchangeable ecosystem with infrastructure and device availability, while improving mobile universal service support offers the best hope for expanded consumer choice, greater innovation and increased broadband investment in rural America. That prescription for success may not appeal to Mobile Future and its two largest mobile carrier members, but it is the flat out truth.

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Voters can Agree on Connecting all Americans

By: Tim Donovan, VP, Legislative Affairs, CCA 

As Americans head to the polls today, the Pew Research Center has again confirmed the growing importance of mobile broadband services. In a new report, Pew found that more than twice as many Americans are using their mobile devices to follow political and campaign news during this year’s election than during the last midterms – up from 13% in 2010 to 28% in 2014. The report finds that both “Republicans and Democrats engage in [tracking campaign coverage, political news, and following candidates and political figures] at similar rates,” which may be some of the only bipartisan news to come out of Washington at election time.

Additionally, the increase in mobile usage is not just millennials: voters aged 30-49 have used mobile devices to follow election coverage at around a 40% rate, nearly identical to 18-29 year olds.

Access to mobile services continues to be an increasingly important part of modern life, and not just for election updates. With innovative new apps and services, consumers are consulting physicians, connecting with public safety, and pursuing educational and employment opportunities. Yet, many Americans in rural areas, cannot access mHealth, mWallet, mCommerce, etc. because a key component is missing – ‘m’ – mobile coverage.

Fortunately, the FCC has taken steps to ensure that all Americans, rural, urban and suburban, have access to broadband. The Commission is considering rules for ongoing support to ensure the Mobility Fund delivers onCongress’s mandate for the Universal Service Fund and that the fund supports comparable services and rates in rural and urban areas. Without question, this includes support for deploying and maintaining ubiquitous mobile coverage.

While polls will not close for several hours, Americans have already spoken on one issue – the desire to access a robust mobile network no matter where they live, work or travel. The FCC must set policies to keep Americans in both urban and rural areas connected – it’s one policy we can all agree on.

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Remember Alltel? A Prime Example Why Competitive Auction Rules are Necessary

By: Tim Donovan, VP of Legislative Affairs, CCA | 5.14.14

AT&T and Verizon frequently point to Sprint’s and T-Mobile’s decisions not to participate in Auction 73 for lower 700 MHz spectrum as justification for the FCC not to advance pro-competitive rules for future auctions. Every carrier must weigh business needs when deciding whether or not to participate in an auction, just as Sprint and T-Mobile did prior to Auction 73, and AT&T and Verizon did prior to Auction 96 (for H Block spectrum). What AT&T and Verizon conveniently dismiss are real examples of foreclosure including carriers that have actively participated in spectrum auctions, but have left empty – handed because they are unable to compete with the nation’s dominant carriers without competitive auction policies.

Rather than point fingers, it is more productive to examine how participants fared in an auction with structured rules ensuring competition versus an auction without competitive safeguards. Some of the most important lessons come from carriers who desperately needed spectrum and participated in auctions, but were unable to acquire the needed spectrum and promptly became a take-over target, unable to compete against the enormous resources of the two largest carriers. In light of the upcoming incentive auction – the next, and possibly final, auction for low-band (below 1 GHz) spectrum – policymakers should take a hard look at the consequences of carriers’ inabilities to win low-band spectrum.

For example, Alltel Corporation participated in Auction 73, the last major auction for low-band spectrum. In 2007, when the FCC was finalizing rules for Auction 73, Alltel was the fifth largest wireless carrier in the United States, serving over 12 million customers, many located in rural areas. Knowing the exceptional propagation characteristics of low-band spectrum, ideal for rural coverage and in-building penetration, Alltel expressed great interest in expanding its mobile services using the 700 MHz band, and made several recommendations to the FCC, including:

Creating multiple spectrum blocks using smaller, Cellular Market Area (CMA) geographic license sizes;

Rejecting blind and combinatorial or package bidding; and,

Considering eligibility restrictions on the two largest, ILEC affiliated carriers[1].

While the Commission auctioned one block of the Lower 700 MHz B Block in CMAs – which not coincidentally yielded by far the greatest revenue on a MHz-pop basis – the Commission failed to heed much of Alltel’s policy guidance. Nevertheless, Alltel participated in the auction, including one bid of over $600 million for the

Northeast Regional Economic Area Grouping

(REAG 001) covering Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, the eastern portion of Pennsylvania, Rhode Island, and Vermont. Alltel was willing to invest significant upfront capital to win spectrum that covered its home markets because it was that important to them to win spectrum. How did things turn out? Alltel was completely shut out of the auction. Alltel was simply unable to compete with the enormous resources of the two largest carriers. Following the auction even Senator Mark Pryor from Arkansas, home to Alltel’s Little Rock headquarters,

noted that

, “History will show that the way the FCC structured the auction basically helped the two big wireless companies [Verizon Communications and AT&T] to the detriment of competition in this country.”

Auction 73 closed on March 18, 2008. On June 4, 2008 – 78 days later –Alltel was acquired by Verizon.

Fast forward to present day. The two largest carriers, Verizon and AT&T, have nearly doubled in size, and the fifth largest remaining carrier has approximately half the number of subscribers as Alltel had before Auction 73. As we are hours away from the FCC’s vote on the first set of rules for the next, and possibly final, auction for low-band spectrum, policymakers must remain cognizant of the competitive impact that their decisions have on the wireless market and in turn consumers’ competitive choices. They would be wise to support a competitive auction structure so that remaining competitive carriers, many of which provide robust mobile broadband services in rural areas, have meaningful opportunities to bid and a legitimate chance to win needed spectrum. The FCC should do everything in its power to prevent circumstances that Alltel experienced. As the Department of Justice today reaffirmed, “the Department believes it is essential to maintain vigilance against any lessening of the intensity of competitive forces, or reduction in the number of effective competitors, in the wireless industry.”

Fortunately, the FCC has proposed rules that can create a competitive auction, providing all carriers with an opportunity to win spectrum. The FCC’s proposed rules include:

–        Auctioning spectrum in Partial Economic Area geographic license sizes, a compromise between very large and reasonably smaller license sizes; and

–        Reserving a limited amount of spectrum for non-dominant carriers after threshold revenue targets are reached.

The FCC will likely decide rules regarding combinatorial and blind bidding another day, however CCA cautions policymakers not to promote these procedures at the expense of competition.

CCA supports structuring a successful auction that raises significant revenue for FirstNet and the US Treasury, while fostering competition in the wireless industry.   We look forward to continuing to work with policymakers to craft a competitive auction – before the next Alltel is driven from the market at the expense of competition, rural customers, and ubiquitous mobile broadband service.

[1] Notably, Alltel opposed overbroad restrictions that would exclude or prevent AT&T and Verizon from participating in the auction entirely.

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There’s No Question: FCC Has Authority to Structure a Competitive Auction

By:  Steven K. Berry, President & CEO, CCA & Rebecca Murphy Thompson, General Counsel, CCA | 5.13.2014 

May 13, 2014 – As the Federal Communications Commission prepares to adopt rules for an upcoming incentive auction, CCA strongly supports the FCC’s proposed plan to reserve spectrum for competitive carriers – a plan that is firmly based on law and on good public policy. The FCC has been auctioning spectrum for more than twenty years based on statutory authority from Congress, however, this upcoming auction will be the first of its kind. The 600 MHz spectrum to be sold will help carriers meet growing demand for mobile broadband services, increase competition for wireless services, and encourage high speed mobile buildout, particularly in rural America. The stakes are high, so high that AT&T and Verizon are now questioning the FCC’s authority to adopt its auction proposal. Fortunately for consumers, the Commission has the authority and an established record necessary to move forward.

When Congress first authorized competitive auctions over 20 years ago, it recognized that auctions were a much more efficient vehicle for license assignment and would provide value to American taxpayers. At that time, Congress was rightly concerned that a few companies were in a position to walk away with all the licenses. Accordingly, Congress directed the FCC to establish spectrum auction rules—including eligibility and auction methods—to (1) promote “economic opportunity for a wide variety of applicants, including small businesses, rural telephone companies, and businesses owned by members of minority groups and women;” (2) “ensure that small businesses, rural telephone companies, and businesses owned by members of minority groups and women are given the opportunity to participate in the provision of spectrum based services;” and (3) avoid “excessive concentration of licenses.”

That directive has not changed. Indeed, Congress recently reaffirmed the FCC’s authority to “adopt and enforce rules of general applicability, including rules concerning spectrum aggregation that promote competition.” The Commission, following the direction given to it by Congress, has proposed rules for the upcoming incentive auction of licenses in the 600 MHz band that will promote entry into the marketplace and expansion of wireless services by small and minority-owned businesses, while also preventing dominant carriers from aggregating large swaths of low-band spectrum. Specifically, the proposed incentive auction rules will reserve a limited number of licenses for any carrier who does not already hold significant low-band spectrum. Look at the statute – the FCC clearly has authority to adopt this rule. There’s no disputing it.

Nor can it be said that the Commission—having such authority to act—has done so in an arbitrary manner. On the contrary, the record is replete with evidence that low-band spectrum is unique. Multiple parties, including CCA, have shown that low-band spectrum has the unique ability to penetrate building walls and travel great distances far more efficiently than high-band spectrum. As Commissioner Rosenworcel said, “[T]he 600 MHz band is as good as it gets. These airwaves can sound almost heroic—they can leap over tall buildings and go through walls like they are not even there. They are pretty super . . . .” The U.S. Department of Justice has similarly explained that low-band spectrum is an essential component of any carrier’s spectrum portfolio because of the improved coverage it provides and the economies of scale it brings. Low-band spectrum is also important for fulfilling important public safety goals, such as facilitating a nationwide, interoperable public safety network, and making sure that wireless customers can provide 911 with accurate location information in times of emergency. The FCC’s proposed auction rules are necessary and justified to promote an equitable allocation of low-band spectrum licenses, and anyone who claims that “all spectrum is created equal” does so in contradiction to the weight of the evidence and the laws of physics.

Moreover, the FCC isn’t adopting rules solely for the benefit of one or two providers. Some have claimed that the proposed rules are designed only with Sprint and T-Mobile in mind, but there are more than 100 wireless carriers in this great country. We should want every one of them to have access to spectrum. Again, the Department of Justice recognized that “a lack of low-frequency spectrum may also impair the ability of a local or regional carrier to provide an additional, significant, competitive option in particular local areas.” As just one example of this, nTelos—the country’s seventh largest wireless provider serving 468,000 subscribers throughout Virginia and West Virginia and in parts of Maryland, Ohio, Kentucky, North Carolina and Pennsylvania—currently holds no licenses for low-band spectrum. The proposed reserve ensures that dominant holders cannot shut out non-dominant bidders, like nTelos, who want to expand services, usually in rural America.

Under the FCC auction proposal, the largest carriers are still allowed to acquire significant amounts of spectrum. Apart from being able to bid on unreserved spectrum in every market in the country, under the rules as proposed today AT&T will still be able to bid on reserved spectrum in almost two-thirds of U.S. markets. As the Public Interest Spectrum Coalition (PISC) recently emphasized, the FCC’s proposal to reserve at least 30 MHz of spectrum in each market for competitive carriers is not the Commission “picking winners and losers.” Rather, contrary to AT&T’s and Verizon’s claims, such limits will give the public access to real choices from competitive providersby ensuring the dominant carriers do not completely foreclose their rivals from bidding on and winning licenses for essential spectrum resources. This is neither arbitrary nor capricious.

By all accounts, this auction involves the last large tranche of spectrum below 1 GHz that will be made available to commercial wireless providers for the foreseeable future. The Communications Act gives the FCC the right, but also the responsibility to design auction rules aimed at ensuring that all carriers can acquire the spectrum they need so that all consumers continue to have ample choices.

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Rural America will Benefit from Competitive Carriers’ Access to Additional Low-Band Spectrum

FCC’s Incentive Auction Plan Presents Real Opportunities for Smaller Carriers

By Steven K. Berry, President & CEO, CCA | 5.9.2014

May 9, 2014 – The 600 MHz incentive auction is not about the largest one or two – or even four – carriers. It is about all carriers that need low band spectrum to compete – including CCA’s more than 100 carrier members, many of which serve the most rural and hard-to-reach areas of the United States. More importantly, the incentive auction is about consumers, and meeting all of their mobile broadband needs. When competitive carriers have the opportunity to bid on and win much-needed low band spectrum, rural America wins, too.

The Commission’s proposed rules to reserve at least 30 MHz after the auction surpasses certain revenue targets guards against excessive spectrum concentration in the 600 MHz incentive auction. Ensuring that the two nationally dominant carriers cannot prevent competitive carriers from acquiring the low-band resources they need to compete will accelerate innovation, expand consumer choice, and stimulate competition among wireless broadband providers.

AT&T pundit Fred Campbell is simply wrong when he assumes that the FCC’s pro-competition rules are intended to ensure one or two particular carriers win. The FCC’s proposed incentive auction rules simply create a reserve of licenses to prevent any already-dominant carrier from, as Chairman Wheeler said, “sweeping the auction” and taking home all or most of the licenses available.

CCA members are fiercely competitive, ardently independent companies, who have deployed wireless services in some of the most rural parts of the country and are more than willing to pay their fair share for valuable spectrum. Competitive carriers bid aggressively in Auction 73, including nearly $2 billion in winning bids from CCA members. As a result of the Lower 700 MHz auction, CCA members understand the significance of the 600 MHz auction and the need to be a part of the 600 MHz ecosystem. This auction may be the last chance for competitive carriers to strengthen and expand their service to rural customers by harnessing the unique propagation characteristics of 600 MHz low-band frequencies that make it possible to serve rural customers in a much more cost effective manner.

CCA’s members want a fair shot at bidding on 600 MHz spectrum, and are encouraged by the competitive opportunities fostered by the FCC’s proposed rules. Countless other rural interests have joined CCA and its member companies in speaking forcefully – and passionately – about how much the 600 MHz auction will mean to rural America. Providing competitive carriers with a real opportunity to win spectrum will encourage them to participate in the auction, which will, in turn, expand broadband deployment while driving revenues to the US Treasury. That’s a win for rural America, a win for the economy and a win for public safety.

The wireless industry is at a critical crossroads – one road leads down a continued path towards a duopoly, and the other leads to a more competitive industry. With its proposed incentive auction rules, the FCC is clearly choosing competition. But there is still work to be done.

Building on its proposed framework, the Commission should account for the effects of national market power during the auction, as the Department of Justice recommended, by adopting a national eligibility requirement for reserved spectrum in addition to a local eligibility requirement. A dual eligibility requirement would more accurately reflect market power while still allowing the two largest carriers to bid on reserved blocks of spectrum in local markets where they do not hold excessive low-band spectrum. Similarly, competition would be enhanced if the Commission reserved more licenses for competitive access by allocating an odd number of unreserved licenses, which would force the largest carriers to compete with each other and generate more revenue in both the reserved and unreserved blocks.

The FCC’s proposed plan presents opportunities for all carriers to participate in the auction – including more than a hundred smaller and rural carriers Campbell conveniently fails to acknowledge.   We look forward to an auction where every competitive carrier can compete and win valuable low-band spectrum to expand the reach of wireless broadband service throughout the United States.

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AT&T Fearful of Market Domination by Small Rural Carriers

By: Rebecca Murphy Thompson, General Counsel, CCA | May 7, 2014

Have you ever heard of Union Wireless? Unless you’re from Wyoming, chances are probably not. According to AT&T, though, you should be concerned – very concerned – about Union Wireless.

AT&T has more than 116 million mobile subscribers, captures some 40% of allwireless revenue, and is one of the world’s largest wireless operators. Family-owned and operated Union Wireless provides wireless service throughout the state of Wyoming and in few counties in some neighboring states. The company has fewer than 500 employees and made news recently from its sponsorship of the 2014 Bridger Valley Jackalope Jump, where participants jump into freezing water to raise money for the Special Olympics.

Recently, AT&T started lobbying to have the same rules intended to curb the market dominance of AT&T apply to Union Wireless and other small carriers that serve rural communities.   The crux of AT&T’s argument is that Union Wireless, which provides cellular service to towns like Medicine Bow (population 284) and Frannie, Wyoming (population 157), has as much ability to exercise anticompetitive market power as AT&T.

It’s an extraordinary claim, even by AT&T’s standards. But AT&T’s lobbying gambit is driven out of fear – fear that reasonable low-band spectrum aggregation limits currently under consideration by the Federal Communications Commission might finally create enough breathing space for competitors to challenge AT&T’s and Verizon’s national market power.

In just over a year, the FCC plans to hold a voluntary incentive auction for broadcasters to sell their 600 MHz spectrum to be repurposed for broadband use. This 600 MHz low-band spectrum is ideal for both urban and rural broadband coverage because low-band spectrum travels longer distances and penetrates buildings and other obstacles far more readily than higher-band spectrum. Using low-band spectrum results in substantially lower deployment costs, which make providing service to less densely populated areas of the country economically sustainable.

As of a year ago, AT&T and Verizon held licenses for approximately 90% of Cellular (800 MHz) spectrum and 84% of Cellular and 700 MHz bands, for a combined total of 78% of nationwide low-band spectrum. And those percentages keep growing as the largest two carriers continue to aggregate low-band spectrum resources. CCA represents more than 100 competitive carriers. Some CCA members hold low-band spectrum; others do not. Nevertheless, the amount of low-band spectrum held by CCA members is dwarfed in comparison to the low-band spectrum held by the Twin Bells, AT&T and Verizon. As a result, CCA has consistently argued for low-band spectrum aggregation limits to provide assurance that our small and rural members will not be foreclosed from this valuable 600 MHz spectrum. To expand competition in rural markets and prevent one or two carriers from running the table at the auction once certain revenue thresholds are met, the Commission is considering “reserving” a limited amount of spectrum available for bidding by carriers that possess little or no low-band spectrum. CCA enthusiastically supports the Commission’s proposal to limit the amount of spectrum any one carrier can acquire in the incentive auction. Aggregation limits help ensure that competitive carriers are not kept from accessing a resource they require to effectively compete in their home markets.

If past is prologue, foreclosure is not only a possibility, it’s a probability. AT&T single-handedly kept $2 billion in investment in low-band spectrum stranded on the sidelines for several years by derailing interoperability in the Lower 700 MHz Band, effectively prohibiting rural consumers’ access to the latest devices and fastest LTE service.  It was only on the eve of Commission action under Acting Chairwoman Mignon Clyburn that AT&T acquiesced to an industry-driven solution. This costly delay to broadband deployment proves why it is so important that competitive carriers have a fair shot at entering the 600 MHz ecosystem.

The current FCC spectrum aggregation proposal would determine reserved license participation only on a local market basis and ignore the effects of national market power. Under these rules, many small and rural wireless carriers – including Union Wireless – would face limitations in their home markets even though they come nowhere close to holding national or local market power.

Under the FCC’s current proposal, Union Wireless would be kept out of reserved spectrum in a core market, while AT&T would be eligible to bid on reserved spectrum in that market. Surely the Commission does not intend to put a small, rural competitor in the same (or worse) position than a better capitalized, dominant carrier like AT&T? Doing so unnecessarily penalizes small businesses focused on providing high-quality service in their home markets, like Union Wireless, while ignoring national market power.

Adding a national eligibility requirement as a prerequisite to limiting a carrier’s eligibility to bid on reserved spectrum blocks keeps the focus on national market power, where it belongs. Focusing on national market power also recognizes that, unless we create space for companies like Union Wireless to flourish, AT&T could box out small rural competitors from the 600 MHz ecosystem any time it chooses.

This approach has a proven track record. The Department of Justice reviews national and local market effects in its antitrust analysis of mergers and acquisitions and the DoJ recommended the FCC review both national and local effects of spectrum aggregation using both a national and local standard. Regulators in Canada, meanwhile, adopted just this test in their recent successful 700 MHz auction, applying a national test of market power (a 10% share threshold) and a local trigger (a 20% threshold in a particular license area) to determine eligibility for certain blocks of spectrum.

Distinguishing a company without market power from one with enormous market power is not a double standard; it’s common sense. Well-designed limits on spectrum aggregation in the incentive auction will drive up auction revenues and promote competitive access. CCA’s proposal shows that neither of these benefits has to come at the cost of preventing small and rural carriers, like Union Wireless, from better serving their communities.

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All Carriers Must have the Opportunity to Participate in the Upcoming Auction; Not just AT&T

By Steven K. Berry, President & CEO, CCA

April 16, 2014 – Earlier today, AT&T filed an ex parte with the FCC essentially threatening to sit out of the upcoming 600 MHz spectrum auction because AT&T is not getting everything it asked for.  Is anyone really surprised by AT&T’s reaction?  I, for one, am not – this is simply more of the same from the nation’s second largest carrier.  The FCC is trying to create a pro-competitive auction that gives every carrier an opportunity to bid on and win much needed interoperable low-band spectrum.  Using a bright-line limit of the amount of spectrum any one carrier can acquire, after achieving sufficient competition in the auction, is one way to foster competition.  Another way to address current inequities is to use a nationwide MHz population-weighted spectrum screen, which is one of the options CCA has proposed.  AT&T and Verizon own almost 80% of all low band spectrum nationwide – a fact that AT&T time and again tries to downplay by claiming that low-band spectrum isn’t that much different from high-band spectrum, despite its continuing attempts to aggregate low-band spectrum.  The FCC’s aggregation framework will help competitive carriers get access to critical low-band spectrum necessary to compete in a 4G-LTE market.  Let’s not forget that the ultimate goal is to bring high speed broadband services to every American in all areas – rural, suburban and urban.

AT&T’s letter filed today fails to recognize that carriers can aggregate across spectrum bands, so AT&T could in fact use spectrum in its current portfolio at 700 MHz and aggregate at 600 MHz.   With the right incentives, the FCC could realistically clear 70 MHz of auctionable 600 MHz spectrum, which would allow AT&T to acquire in the incentive auction up to 40 MHz of unreserved spectrum.  That’s a lot of spectrum of any one band, especially 600 MHz spectrum, considering the superior propagation characteristics.   And it fulfills AT&T’s stated demand for 10 x 10 or larger allocations.  If it truly values low-band spectrum, AT&T will compete vigorously to acquire this spectrum.  From its statement, it appears AT&T doesn’t want to compete for the spectrum, but rather walk away with superior low-band spectrum for a song, shutting out its competitors from the ecosystem, just like it did in the 700 MHz spectrum for years.

AT&T continues to oppose any limitations or eligibility rules that might bring multiple carriers into the auction and access to low-band 600 MHz spectrum. Threatening not to bid in the auction unless it gets its way rings hollow and is more like a chest-thumping roar of disappointment over pro-competitive policies that will nurture a successful auction.

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FCC: Act Now as Wireless Duopoly Looms

By Steven K. Berry, President & CEO, CCA

Each day, consumers rely more and more on wireless services to connect to people, places, information, and things. We’ve come to expect access to data anytime, anywhere. Meanwhile, mobile applications and other innovative uses of wireless technology are softening the impact of an otherwise sluggish economy.

For the complete story, please visit Light Reading’s website here.

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Why Competitive Carriers Support the Innovation Act

By: Steven K. Berry, President & CEO, CCA & Tim Donovan, VP of Legislative Affairs, CCA

In recent years, harmful legal activities of patent assertion entities, also known as PAEs or patent trolls, have increased exponentially.  While PAEs have continued to frustrate large high-tech corporations, they have expanded their reach to smaller companies across the country, and their abusive actions can be absolutely devastating for a small company.  Like many small and medium sized businesses, competitive wireless carriers are now the frequent targets of patent trolls. To push back against these distracting and destructive trolling activities, CCA joined in the call to address these abuses.

This week, the House Judiciary Committee will consider H.R. 3309, the “Innovation Act.”  CCA supports this bipartisan effort and hopes that Wednesday’s markup will take us one step closer to addressing these abusive activities.  We commend Chairman Goodlatte and the 14 cosponsors for their work.

As the Committee gears up for the markup, there is no better time to highlight specific ways CCA members are impacted by patent trolls:

Competitive carriers, particularly smaller rural and regional carriers, typically have smaller legal departments – sometimes only one or two individuals – who must marshal resources to defend against claims.  Even if outside patent counsel is retained, in-house staff must direct defense efforts, resulting in an unquantifiable time drain and distraction from other business activities, such as transactions, network deployments, or other compliance work—in addition to the added expense of retaining outside counsel.

Smaller carriers have a smaller voice in industry standards bodies, and accordingly may be subject to mandates or other industry standards.  Sometimes compliance with such standards, even on critically important requirements such as providing 911 services, makes them targets for trolls.

Carriers may lack scope and scale, and in turn negotiating power, in discussions with vendors, and may have difficulty reaching indemnification agreements or prompting a vendor to defend the carrier.  Conversely, smaller vendors that serve competitive carriers may be more likely to indemnify and defend a carrier, but the resulting burdens and costs disproportionately impact smaller companies, potentially driving them out of the market as a result of trying to defend against a frivolous suit.

Trolling has impacts well beyond the carrier initially targeted.  Indeed, trolls often target smaller providers first to develop a “war chest” of funds to use in actions against larger companies.  This also allows trolls an opportunity to establish a distorted market license value for the patent based on settlements reached by smaller firms with insufficient resources or who are otherwise unable to successfully fight the claims.  For example, a carrier with 20,000 subscribers may not have the resources to litigate, so may settle for $20,000.  The trolling entity agrees, and moves up to larger companies, using $1/subscriber as the purported market value for a license.  Because the small business could not fight back, the problem snowballs throughout the industry.

Patent trolls look to line their pockets while killing innovation and eliminating jobs.  Trolls do not innovate—they destroy small businesses, and their activities must be stopped.  CCA’s members want to focus on providing service to customers, not fighting costly suits, and would much prefer to build-out a new cell tower in rural America than litigate a frivolous claim.  CCA supports H.R. 3309 and commends all Members of Congress who are leading the fight to address patent troll problems.