Regardless of what you think of the AT&T/T-Mobile merger or the recently announced purchase of SpectrumCo licenses by Verizon, these deals tell us one thing: wireless carriers need access to more spectrum for mobile broadband. If they can’t have access to TV broadcast spectrum, they will get it where they can, and that’s by acquiring competitors.
In a new Mercatus Center Working Paper filed today as a comment in the FCC’s 15th Annual Report and Analysis of Competitive Market Conditions With Respect to Mobile Wireless proceeding, Tom Hazlett writes that while the market it competitive, the prospects for “new” spectrum look dim.
[S]pectrum allocation is the essential public policy that enables—or limits—growth in mobile markets. Spectrum, assigned via liberal licenses yielding competitive operators control of frequency spaces, sets “disruptive innovation” in motion. Liberalization allowed the market to do what was unanticipated and could not be specified in a traditional FCC wireless license. That success deserves to grow; the amount of spectrum allocated to liberal licenses needs to expand. Additional bandwidth raises all consumer welfare boats, promoting competitive entry, technological upgrades, and more intense rivalry between incumbent firms.
In this, the Report (correctly) follows the strong emphasis placed on pushing bandwidth into the marketplace via liberal licenses in the FCC’s National Broadband Plan, issued in March 2010. That analysis underscored the looming “mobile data tsunami,” noting that the long delays associated with new spectrum allocations seriously handicap emerging wireless services. But, as if to spotlight a failure to adequately address those challenges, the FCC Report speaks approvingly of the Department of Commerce (which presides over the spectrum set-aside for federal agencies) initiative that proposes a “Fast Track Evaluation report . . . examin[ing] four spectrum bands for potential evaluation within five years … totaling 115 MHz … contingent upon the allocation of resources for necessary reallocation activities.” A five-year regulatory “fast track”—if everything goes as planned.
To paraphrase John Maynard Keynes: In the long run, we’re all in a dead spot.