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Verizon-Cable Opponents Goading FCC to Overreach its Authority Again — Part 9 of Series

May 17, 2012 | Filed Under Business, Capitalism, Computers, Congress, Democrats/Leftists, Google, Government, Inernet, Jobs, Liberals, Net Neutrality, Regulation, Scott Cleland, Taxes, Technology | Comments Off

-By Scott Cleland

Opponents urging the FCC to block the Verizon-Cable secondary market spectrum transaction are pushing the FCC into dangerous institutional territory, effectively goading it to: overreach its statutory authority; ignore FCC precedent, evidence, and facts; and game its own spectrum-screen process. The same FreePress radical fringe — that goaded the FCC to flout the D.C. Appeals Court decision and pass the Open Internet Order and Data-Roaming Order — are at it again.

The FreePress radical fringe who care not for the rule of law, are again goading the FCC to trump up some new public interest rationale and statutory theory to allow the FCC to transmogrify its limited public interest authority into unbounded authority that disregards the law, FCC precedent, or the facts. This radical manipulation of the process may be good for forwarding FreePress’ anti-business, Internet commons goals, but it is not good for the institution of the FCC, which is a creature of Congress and subject to the rule of law. And nor is it good for the American public.

The FreePress coalition appreciates that the FCC is in search of relevance in the broadband Internet era, and is preying on that uncertainty to goad the FCC to re-imagine its own legal authority by declaring broadband a Title II common carrier service and/or by interpreting their limited public interest authority boundlessly. If the FCC determines it needs new authority, it must seek it from Congress.

If the FCC were to somehow attempt to block the Verizon-Cable secondary market spectrum transaction, which is enabled and encouraged by law and FCC policy, the FCC could expect to be challenged in court for overstepping its authority and acting in an arbitrary and capricious manner a la the challenges to the FCC’s Open Internet Order and the Data-Roaming Order. It would be an FCC overreach trifecta. And it would tragically leave valuable fallow spectrum — fallow much longer.

The FCC’s Public Interest Authority is Bounded

Opponents want the FCC to imagine their public interest authority to be boundless. However, Congress has bounded the FCC’s public interest authority, with law that makes it the public interest for market forces, i.e. spectrum auctions and secondary markets, to be the mechanism for allocating spectrum, not the FCC. Just this year Congress reaffirmed this policy in law, in the incentive auctions authorization, where Congress bounded the FCC’s spectrum authority to general applicability. Moreover, under Section 310(d) of prior law and FCC precedent, the FCC decided it is statutorily prohibited from considering “whether some other proposal might comparatively better serve the public interest.” Simply, the FCC can approve or not approve Verizon-Cable on the legal merits, but it cannot disapprove it because it wishes to effectively allocate it to another buyer.

Thus the FCC must respect its own secondary markets goals/rules/precedents, including its operative 2000 policy statement on promoting secondary markets for spectrum: “The goal of this effort is to promote the operation of competitive markets for the sale and lease of the right to use spectrum by licensees. This will facilitate both the transfer of spectrum usage rights for existing services to new, higher valued uses and the availability of unused and underutilized spectrum to those who would use it for providing service.” The Verizon-Cable transaction fits like a glove into this operative FCC policy framework as Verizon is proposing to put currently fallow spectrum to fastest best use.

The FCC Must Apply the Spectrum Screen Fairly

To ensure the FCC does not operate arbitrarily or capriciously, it must fairly apply the FCC’s spectrum screen as it has applied it to others, and also ensure that the spectrum screen is up-to-date and unbiased in that it reflects the real total amount of spectrum already in, or soon coming into, the wireless ecosystem. The evidence shows that if the FCC used an accurate up-to date spectrum screen — including the spectrum planned for LTE use from Sprint and Clearwire — the Verizon-Cable spectrum would not come close to approaching the FCC’s spectrum screen limits. Even if the FCC were to employ their currently out-of-date spectrum screen, the Verizon-Cable transaction would implicate less than 2% of the pops affected and thus could be easily remediated to clear the way for approval.

In sum, some opponents are trying to goad the FCC into disregarding the law, precedent, or facts, in order to block this normal, encouraged secondary market transaction — a transaction that efficiently puts valuable fallow spectrum to use fastest in order to produce faster wireless broadband service for the most consumers.

The FCC has already put much of its perceived wire line regulatory authority at risk in flouting the D.C. Appeals Court decision with its Open Internet Order and Data-Roaming Order. If the FCC listens to opponents encouraging the FCC to overreach its perceived public interest authority as well, and then acts in an arbitrary and capricious manner to justify its decision and authority, the FCC ultimately could put much of its remaining perceived authority at risk.

***

Verizon-Cable Series:

Part 8 AAI’s Analysis of Verizon Cable is Industrial Policy Not Antitrust

Part 7 Verizon-Cable Hearing Exposes Weakness of the Opposition

Part 6 T-Mobile to FCC: Give us a Do-over and More Spectrum Too

Part 5 Verizon-Cable Senate Hearing: Competitive Facts vs. FreePress Fiction

Part 4 Verizon-Cable: Opponents Need FCC to Overreach Authority

Part 3 Why the Verizon-Cable Agreement is in the Public Interest

Part 2 Why the Verizon-Cable Agreement Increases Competition

Part 1 Verizon-Cable Spectrum: Is FCC Open to Competition?
_________________
Scott Cleland is one of nation’s foremost techcom analysts and experts at the nexus of: capital markets, public policy and techcom industry change. He is widely-respected in industry, government, media and capital markets as a forward thinker, free market proponent, and leading authority on the future of communications. Precursor LLC is an industry research and consulting firm, specializing in the techcom sector, whose mission is to help companies anticipate change for competitive advantage. Cleland is also Chairman of NetCompetition.org, a wholly-owned subsidiary of Precursor LLC and an e-forum on Net Neutrality funded by a wide range of broadband telecom, cable and wireless companies. He previously founded The Precursor Group Inc., which Institutional Investor magazine ranked as the #1 “Best Independent” research firm in communications for two years in a row. His latest op eds can be seen at www.precursorblog.com.

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