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June 23, 2010

The FCC currently exhibits what some observers in the wireless industry view as very audacious plans to unlock up to 300 megahertz of new wireless spectrum over the next five years and about 500 megahertz more over the next ten years. And of course, as you might expect, this has drawn considerable interest among wireless carriers and mobile service operators, both large and small. It looks like the agency that regulates the wireless segment is very busy these days.

Ruth Milkman, bureau chief for the FCC’s Wireless Communications Division, agrees that unlocking more wireless bandwidth is an ambitious plan and that the agency will face some challenges in freeing up most if not all of that spectrum, which the FCC hopes to wrestle from the hands of commercial TV broadcasters that have "enjoyed" all that bandwidth almost since commercial television was invented more than 58 years ago.

To accomplish that feat, the FCC is looking at changes to the current law that require proceeds from spectrum auctions be deposited into the national treasury so that it may instead use some of the proceeds to reimburse TV broadcasters for giving up their precious spectrum assets.

Some say that's a long shot, and that Congress may or may not agree to such a plan.

Whichever direction this takes, the next few months will determine the outcome of the Commission's immediate plans. “We have to have a goal and we know that the 300 megahertz goal is ambitious, but we think it’s achievable,” Milkman said.

However, one change that does appear to be cooking up is a potential loophole in the traditionally strong regulatory sector pursued by the wireless industry’s nationwide operators and spearheaded by the wireless trade association, the CTIA.

Overall, the growing market share difference between the nation’s No. 1 and No. 2 operators Verizon Wireless and AT&T Mobility and the No. 3 and No. 4 operators Sprint Nextel and T-Mobile USA has started to cause a division amongst the interest of those wireless carriers.

One wireless industry analyst noted that Sprint Nextel and T-Mobile USA have recently begun to side more with the interest of smaller rural operators that for years have struggled to compete against the industry’s stronger, nationwide operators.

But Milkman did say that the FCC is comfortable with the current method in which spectrum is auctioned off to interested telecom providers, a method that has seen nearly $35 billion in proceeds deposited into the national treasury since 2005.

Charles McKee, vice president for state and federal regulatory issues at Sprint Nextel says “the wireless industry is still united on most issues, but there are still some areas of tension that need to be acknowledged. Trade associations have the difficult job of trying to reconcile amongst its members, but our goal is to promote our agenda that is beneficial to the wireless segment and not to the ILEC (incumbent local exchange carrier) industry.”

Almost everybody agreed that while there is a lot of competition on the commercial side of the wireless industry, they questioned the same level of competition when it comes to the behind-the-scenes aspects, including special access and certain legacy government programs.

Those targeted for having a specific advantage in these regards included both large companies like Verizon Wireless and AT&T Mobility as well as regional and rural wireline players in the telecom segment.

And some say there's even a possibility of a complete rewrite of the 1996 Telecom Act that has been mentioned by some Congressmen. While there was acknowledgement that the telecommunications, and more specifically the mobile industry, is vastly different today than it was in 1996, the chances of revamping the whole Telecom Act are rather slim. But the possibility is still there.

Sprint Nextel’s McKee also noted that any talk of a rewrite is laced with a lot of risk, but acknowledged that the telecommunications industry today is vastly different from the one 14 years ago when the act was passed.

“Furthermore, when it comes to problems like special access we also have to look harder in finding competition in that segment,” said Kathleen Ham, vice president of Federal Regulatory Affairs for T-Mobile USA.

She added "overall, the Telecom Act of 1996 did a lot to transform the telecommunications industry and in a positive fashion. But there is no way we could have predicted how much the industry would change and where we are now. Rewriting the whole Telecom Act? That would be a pretty big undertaking to say the least.”

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Source: The Federal Communications Commission.