Spectrum Cap Debate Rages

The wireless spectrum cap debate raged on stage this week at the 2001 CDMA Americas Congress in San Diego.

The wireless spectrum cap debate raged on stage this week at the 2001 CDMA Americas Congress in San Diego.

The argument centered on how spectrum limits can affect innovation. "If I run a company and Im at the cap, I have low incentive to lower prices or offer new services," said Tom Wheeler, president of the Cellular Telecommunications and Internet Association, one of the biggest proponents of abolishing the limit on how much spectrum operators can own. "If I cant handle all the potential voice customers, why should I offer data?"

Sue Swenson, president and COO of Leap Wireless International, disagreed. Swenson says removing the cap will lead to further consolidation -- a fact few would argue with -- and the resulting large operators wont have the incentive to move forward. She spent many years working for large carriers. "Theres no motivation to innovate at big carriers. Its just the nature of the organization," she said.

The large operators offer similar services at like prices and compete for the same affluent users, she said. Leap is one of the few operators to do t hat with a service called Cricket. Its customers pay a flat fee for unlimited local calls and some of them use the service as their only phone.

The Federal Communications Commission is expected to discuss and possibly rule on a change to the spectrum cap on Nov. 8. Wheeler hopes the cap will be abolished.

Perhaps in a concession that the days of the spectrum cap are surely numbered, executives at Leap hope the FCC might put a time frame on removal of the cap so that businesses can alter their strategies accordingly.

"Any change that occurs sooner than a year beyond the notice is essentially a flash cut and a bit draconian for those of us that built a business based on a certain set of regulations," said Daniel Pegg, senior vice president of public affairs for Leap.

Leap has purchased much of its spectrum in the aftermarket and believes that it will be more difficult for a company of its size to compete for spectrum against some of the larger operators if there is no spectrum cap. If Leap knows that the cap will be removed at some future date, then it can change its plans to accommodate a changing market.

Wheeler, however, believes that a better compromise would be to remove the cap as soon as possible and allow the Department of Justice to do its job of ensuring that competition remains in the market.