FCC Loosens Spectrum Cap

In a boon to large carriers, the Federal Communications Commission today voted to lift and eventually eliminate the wireless spectrum cap.

The FCC voted 3-1 to expand immediately the maximum spectrum one carrier can own in any given market from 45 to 55MHz. The cap will disappear entirely in January of 2003.

Verizon Wireless, AT&T Wireless and VoiceStream Wireless Corp. all applauded the decision. All three companies hug the cap at 45 MHz in several markets.

The main complaint of large carriers was that the cap was not eliminated immediately.

“The decision to eliminate the spectrum cap is an important down payment on overcoming the current spectrum shortage,” said Tom Wheeler, CEO of the Cellular Telecommunications and Internet Association in Washington. “Unfortunately, the decision delays that down payment by 13 months.”

Meanwhile, smaller carriers and organizations such as the Consumer Federation of America are concerned that getting rid of the spectrum cap will mean mass consolidation in the wireless industry, thus stifling competition.

The Strategis Group, a consultancy in Washington, says several mergers are possible: Verizon Wireless and Sprint PCS (both of which utilize CDMA technology); Cingular Wireless and AT&T Wireless; Cingular and VoiceStream; AT&T Wireless and VoiceStream and Nextel Communications Inc. most any other carrier.

None of the carriers has officially voiced merger plans.