US DoJ calls on FCC to limit spectrum to big players

The US Department of Justice’s (DoJ) Antitrust Division has called on telecoms regulator the Federal Communications Commission (FCC) to more aggressively regulate the amount of spectrum that the country’s larger operators are able to own.

“The Department of Justice’s principal concern is that acquisitions of spectrum, whether at auction or through subsequent transactions, should not be used to create or enhance market power,” it wrote in a letter to the FCC.

“The Department concludes that rules that ensure the smaller nationwide networks, which  currently lack substantial low-frequency spectrum, have an opportunity to acquire such spectrum could improve the competitive dynamic among nationwide carriers and benefit consumers.”

It has been widely reported that US operators are facing a radio spectrum shortage. As a result, US carriers have been frantically acquiring more spectrum from rival firms.

In January 2013, Verizon signed a deal with rival AT&T to sell its excess 700MHz spectrum licenses. AT&T has also looked to acquire smaller firms for more spectrum, such as the retail wireless operations of Atlantic Tele-Network, which it bought for $780m. Meanwhile, Sprint also looks close to sealing an acquisition of Wimax player Clearwire and T-Mobile USA appears close to sealing its acquisition of MetroPCS.

In response to the spectrum shortage, the FCC has plans in place to make 500MHz of additional spectrum available within ten years, predominantly through freeing up spectrum used by television broadcasters in the country. However, the DoJ voiced its fears that in the meantime, the situation could lead to operators being incentivised to acquire spectrum for the wrong reasons.

The Department added that it is therefore “essential to maintain vigilance against any lessening of the intensity of competitive forces”.

Mike Roberts, principal analyst and head of Americas at Informa Telecoms & Media, said that although operators always crave more spectrum, he concurred that in terms of MHz per subscriber, that the US does look a little tight compared to other major markets.

“Operators have been doing everything they can to get their hands on spectrum or by buying other companies such as T-Mobile buying Metro PCS,” he said. “It has been a pretty high level strategic chess game, driven in part by the need for spectrum.”