The Federal Communications Commission may boost the amount of wireless spectrum that an operator can own in a single market, and may agree to drop the cap altogether -- but not without a fight.
When the panel meets this week, observers expect it to increase the spectrum limits, from 45 megahertz to 55 MHz, and set an 18-month deadline for abandoning the cap.
Although the Cellular Telecommunications and Internet Association, Verizon Wireless and powerful Rep. Billy Tauzin, R-La., say the intent of the cap -- to ensure continued competition -- has been achieved, others arent convinced.
"The quality of existing services will necessarily be decreased, and the delivery of new services will be discouraged," Nancy Victory, administrator of the National Telecommunications and Information Administration, wrote in a letter to FCC Chairman Michael Powell. The NTIA, a Department of Commerce agency, serves as President George W. Bushs principal adviser on telecommunications issues.
Without the limit, large operators may try to buy up spectrum to lock out competition. "Its much cheaper to buy and hold spectrum than it is to allow competitors to come in and erode the market," said Daniel Pegg, senior vice president of public affairs at Leap Wireless International.
Leaps Cricket product, which gives users unlimited local calling for a flat rate, expands the wireless market because 80 percent of its customers are first-time users; most other operators compete for the affluent top 30 percent of the marketplace, Pegg said.
Consumers Union also weighed in. The organization advised Sen. Ernest Hollings, D-S.C. -- who is already wrestling with Tauzin over other telecom issues -- that it is "ironic that the FCC would allow the companies with the weakest incentives to innovate and compete against wireline services to grow, rather than leave the cap in place and allow an opening for innovators to step in and offer new services."