One day before the election and possibly a new chairman of the Federal Communications Commission, the issue of how best the FCC provides access to the airwaves by wireless communications companies may be approached differently depending on which party takes control of the FCC. Two commission members, Mignon Clyburn and Ajit Pai, are placing themselves in the thick of spectrum issues and their articulations on the issue of spectrum management reflect their divergent positions on the issue.
Mignon Clyburn, a former member of the Public Service Commission of South Carolina, has been at the forefront of digital divide issues impacting minority communities. Ms. Clyburn believes that in order to best address the demand for broadband, the most efficient use of broadband has to be made. “Access to broadband is an economic imperative”, according to Ms. Clyburn.
Specifically, Ms. Clyburn would like to see the FCC ensure that spectrum is put to its highest and best use. “Regulations must adopt spectrum policies that encourage this process”, according to Ms. Clyburn. Clearing and reallocating spectrum may not be enough under the Clyburn school of thought. The FCC may have to implement policies addressing the structure of the economy, including the promotion of competition; encouraging investment; and deploying infrastructure.
But while Ms. Clyburn sees regulation playing a strong role in the allocation and distribution of spectrum, Ajit Pai would rather see regulators take a more hands off approach to spectrum management.
Mr. Pai, a Kansas native and former partner of a Washington, DC law firm, believes that the auction process has had a positive impact on the distribution of spectrum given America’s global leadership in spectrum deployment. He does believe that the FCC should accelerate its efforts to get spectrum into the hands of wireless service providers.
Mr. Pai’s overall view on telecommunications regulation is that today’s telecommunications industry should not be subject to the 20th century framework reflected in the current Communications Act. He wants to remove the uncertainty that eliminates the incentive of businesses to take on risk.
Unlike Ms. Clyburn, Mr. Pai places a greater emphasis on spectrum clearing versus spectrum sharing. Spectrum clearing sees a spectrum license holder, i.e. a television station, giving up all of its use of a frequency band so that another provider, i.e. a wireless telecommunications company, can exclusively use the band. Spectrum sharing occurs whenever multiple wireless systems operate in the same frequency band. Mr. Pai believes that spectrum clearing encourages more competition during the auctioning for licenses and that wireless carriers will have an incentive to invest more in infrastructure.
In addition where sharing takes place between government agencies and private wireless carriers, Mr. Pai is concerned that where there are disputes, one sharer, the government, will also be the final arbiter. Such a sharing arrangement and the dispute resolution process for it may not be equitable for carriers.
From a market perspective, Ms. Clyburn’s approach is intrusive relative to Mr. Pai’s approach. There is a difference between ensuring that spectrum is being put to its best use versus getting spectrum into the hands of carriers who value it the most.
Ensuring that spectrum is being put to its best use means that government will continue to influence the business judgment of a carrier beyond granting the carrier access to the airwaves. This approach would keep the cloud of regulatory uncertainty hanging over the heads of carriers who would remain in a near perpetual state determining whether their decisions on investment and infrastructure deployment pass the FCC’s test for best use.
On the other hand, getting spectrum into the hands of carriers that value the resource the most is not only less intrusive but measurable. The FCC can identify the carriers that value spectrum the most primarily by observing the bids carriers make and noting the premium that carriers are including in those bids. The lighter touch regulatory approach advocated by Mr. Pai should mitigate concerns about regulatory uncertainty held by wireless carriers.
Given the current makeup of the FCC, with three Democratic commissioners and two Republicans, the intrusive approach as espoused by Ms, Clyburn is prevailing. Which school of thought prevails between 2013 and 2017 all depends on what happens at the ballot box on November 6.