As stated in the initial Comments filed by the Public Interest Organizations in this proceeding, Wall Street analysts estimate the incremental value of the cost-free AWS-4 license grant proposed in the NPRM to be on the order of $4 to $6 billion. Despite the enormous market value of this Federal grant, the Commission proposes no set of conditions comparable to those associated with the LightSquared authorizations. The Public Interest Organizations note that a substantial number of comments concur with the thrust of our conclusion that the Commission must add substantial conditions, in addition to buildout requirements, to avoid unjust enrichment and to ensure that the public resource is actually used to promote competition, innovation and more affordable mobile broadband for the public.
Comments filed by several competitive carriers and their trade association correctly point out that the Commission’s proposed grant of fully-flexible licenses for 40 MHz of prime spectrum nationwide to the MSS incumbents is likely to result in unprecedented unjust enrichment for a single company in the absence of competitive bidding or, at a minimum, conditions likely to enhance market competition and protect against further consolidation of the wireless industry. MetroPCS opposes the proposed cost-free grant of AWS-4 licenses on the grounds that DISH Network Corporation (“DISH”) would receive “a substantial unwarranted windfall by converting their MSS licenses into 40 MHz of largely unfettered terrestrial licenses without competitive bidding or any return to the United States for the increased spectrum value.” T-Mobile, which also supported competitive bidding, observes that “[t]he Commission has long maintained a policy against granting windfalls to a single party to avoid marketplace distortions and unjust competitive advantages.” And in its comments, RCA—The Competitive Carriers Association advocates conditions, including an unjust enrichment penalty modeled after the Commission’s Designated Entity program, to prevent “an unjustified windfall at the expense of competitive carriers that are forced to acquire additional spectrum at auction.
Although a number of commenters propose competitive bidding as the appropriate alternative to unjust enrichment, the primary thrust of comments by both competitive carriers and the Public Interest Organizations is the need for additional conditions that promote rather than undermine competition and consumer choice in the rapidly consolidating wireless market. Two conditions supported by RCA and by the Public Interest Organizations stand out in this regard: a requirement that AWS-4 licensees offer wholesale leasing and roaming on at least a substantial portion of its network capacity; and a requirement that AWS-4 licensees must seek Commission approval before making more than 25 percent of data traffic capacity within any Economic Area available to any single carrier or other entity.
The full reply comments are available for download as a PDF.