Democracy & Technology Blog Block a wireless merger because regulators might be able to produce a superior outcome?
The Wall Street Journal quotes two high-ranking former officials from the Federal Communications Commission who are skeptical of the AT&T/T-Mobile merger.
AT&T is citing the need for more spectrum in urban areas to keep up with the increasing amount of wireless data traffic. As the article points out, data traffic is up 8,000% on AT&T’s wireless network over the past 4 years. Meanwhile, T-Mobile’s network uses the same technology as AT&T’s, and T-Mobile’s spectrum is underutilized.
A former chief technology officer at the FCC shares his thoughts on the best way to fix the shortage.
The correct way to do it is to change policy and release a huge amount of spectrum. Spectrum is in short supply where you want it and plentiful where it’s inconvenient to use it. If the FCC changed the rules things would get better.
The FCC wants to double the amount of spectrum available for mobile phones by reallocating spectrum currently available for television broadcasters.
Sounds great in theory.
But according to the National Broadband Plan (at p. 79), the time required historically to reallocate spectrum is anywhere from 6 to 13 years. It’s no secret that broadcasters are politically influential. What politician would not appreciate reverential local TV coverage? As the Plan also points out (at p. 81),
FCC spectrum licensees often possess certain rights and expectations that can make it difficult, in practice, for the FCC to reclaim and re-license that spectrum for another purpose. Contentious spectrum proceedings can be time-consuming, sometimes taking many years to resolve, and incurring significant opportunity costs.
Maybe AT&T and it’s customers cannot wait indefinitely.
Just because regulation cannot keep up with the real world is not, in itself, a valid reason to hold up a free market transaction.
Given a perfect set of circumstances, it always appears that sophisticated government policy potentially could produce superior outcomes. It rarely works that way in practice.
The other high-ranking former FCC official, a chief economist, points out that “putting the two networks together does not create spectrum.” True enough. No mortal can do that.