Wireless communications have changed the lives of millions of people across the United States and the world. With the rapid expansion of wireless services has come growing pains. The electronic spectrum on which most communications are broadcast is a limited resource, which is quickly filling up. Domain over the spectrum and the frequencies we use are controlled in most countries by national governments. In the United States, the Federal Communications Commission regulates the spectrum and how these frequencies are distributed.
The most significant issue regarding the regulation of the spectrum and how it is distributed today is the proposed sale of advanced wireless broadcast spectrum rights by cable television providers SpectrumCo (which consists of cable providers Comcast, Time Warner Cable, and Bright House) and Cox Communications to Verizon Wireless, a company providing wireless services. After months of debate, which has put much-needed spectrum in limbo, Federal Communications Commission Chairman Julius Genachowski and the Justice Department have finally signed off on the sale. The transaction will now go before the entire five-person commission for approval.
Responding to concerns by Genachowski and the Justice Department, Verizon and the cable companies involved in the transaction — Comcast, Time Warner Cable and Bright House Networks — agreed to restrictions on how they can market each other’s video and broadband services in areas where they compete. Verizon also agreed to divest spectrum to one of its competitors, T-Mobile.
The $3.6 billion deal transfers to Verizon broadcast spectrum in the 1700 MHz range, which is ideal for mobile broadband and covers over 80 percent of the U.S. population. This would open up a wide band of unused spectrum to the market, which is not as fully utilized in the United States as in other countries. This growing lack of spectrum capacity has emerged due primarily to both the slow issuance of new spectrum by the FCC through competitive auctions and Congresses indecision on allowing voluntary transfer of broadcast spectrum already owned by broadcasters like SpectrumCo.
Opponents of the spectrum sale have argued that the agreement would reinforce what they believe is a wireless duopoly between AT&T and Verizon. These critics claim that the deal would create a non-competitive environment where each company would avoid direct completion by exclusively marketing the other companies’ products and by developing new technology together.
In reality, the sale is likely increase competition in the wireless market and free up a great deal of spectrum that the cable companies are not using. Additionally, the new deal provides cable providers an infusion of capital through the spectrum sale and therefore allows cable companies to purchase access to Verizon’s wireless network on which they can launch their own products and services.