Spectrum Reflections: It’s Time for A Moment of Reflection, CCA

CCA, please tell us you are kidding.

In December, the Competitive Carriers Association (CCA), a trade association that represents most wireless carriers with the exception of Verizon Wireless and AT&T, filed comments at the Federal Communications Commission (FCC) in response to the FCC’s proposed rulemaking to eliminate the so-called UHF television discount. The filing would be downright funny if it wasn’t so desperate, specious and irresponsible.

The UHF discount proceeding is a pure broadcast television issue. By way of brief background, the broadcast television ownership rule prohibits a single entity from owning stations that reach in the aggregate more than 39 percent of total television households nationwide. The “UHF discount” allows stations broadcasting in UHF to count toward that cap only half of the TV households in their markets, as opposed to all of the households for VHF stations. The FCC has proposed to eliminate that discount.

The issue has absolutely no impact on the wireless industry. So why would CCA file? Was it a mistake?

CCA’s comments prodded the FCC to “examine . . . rules applicable to broadcast stations and take action to eliminate remaining regulatory distortions. . . . [T]he Commission should carefully consider how the existing rules and proposed reforms would affect broadcast stations’ incentives to relinquish spectrum in the upcoming 600 MHz incentive auction and adopt reforms in light of that vital consideration.”

In plain English, CCA expressly asked the FCC to strong arm broadcasters into participating in the wholly unrelated voluntary broadcast spectrum incentive auction. CCA’s theory is that if the FCC takes actions that affirmatively harm broadcasters, more broadcasters will participate in the voluntary auction, and then CCA’s members will have access to more spectrum than they would have otherwise. 

Underlying CCA’s advocacy is the notion that broadcasters benefit from regulations that “distort” the market. Presumably CCA is not referring to all of the obligations imposed on broadcasters (that are not imposed on the wireless industry), such as children’s programming mandates, indecency regulation and captioning requirements, just to name a few. 

I don’t know whether to laugh or cry. Maybe both.

Let’s have a good laugh first. CCA apparently neither understands the regulatory regime under which broadcasting is governed nor the concept of irony.

First, no industry is more heavily regulated by the FCC than broadcasting. Unlike any other industry, the FCC’s regulations govern many facets of broadcasters’ operation. The very structure of our industry is dictated by the federal government. For example, as noted above, in terms of ownership, Congress set a cap on how big any one television group can get: no entity can reach more than 39 percent of the U.S. population. There is no corresponding rule in the wireless industry. Indeed AT&T and Verizon Wireless produce maps claiming to cover more of the country than the other. The government has also imposed a number of mandates on broadcasters to which no other industry is subject. Broadcasters have to produce a certain amount of children’s programming for example. CCA’s members, on the other hand, just have to throw up a tower and let whatever comes across – and we sure know what can come across – reach the end user. Speaking of the Internet, unlike wireless companies (including those that got their spectrum “for free”), the FCC has imposed decency standards on broadcasters. Cable channels don’t even have the same obligations. Broadcasters are also subject to accessibility regulations far beyond what CCA’s members could fathom. So it is safe to say that broadcasting is not an industry propped up by regulation – unlike small wireless carriers (a point to which I will return) – we are primarily saddled with government regulation.

Second, unlike broadcasters it is CCA’s members that depend on government regulation.  Government intervention is their oxygen. In a largely deregulated wireless industry, CCA pays visits to the Commission time and time again, imploring the FCC to give its members preferential treatment. In fact, in the incentive auction proceeding itself, CCA is virtually begging the Commission to give its members a leg up on AT&T and Verizon Wireless. CCA also routinely seeks forced interconnection among wireless carriers, so that its members can free ride on the investment of others who have invested billions to build their networks. It asks the FCC to subsidize its members through the Universal Service Fund so they don’t have to invest. And it routinely seeks to force other carriers to interoperate with its members so they can ride off the bigger carriers’ backs on equipment orders. CCA is an association that has never met a regulation it hasn’t liked. It relies on, and affirmatively seeks to increase, government intervention in the marketplace.

This characterization is not simply my opinion; all it takes is a quick walk through CCA’s recent filings to discover its government-prop-us-up mission. Just over the past year, CCA has fervently advocated in favor of the following market interventions:

  • Revision of the spectrum screen to impose government-mandated limits on the amount of spectrum commercial carriers may aggregate;
  • Adoption of auction rules that limit the amount of spectrum large carriers may  acquire, as well as bidding credits and other mechanisms to favor other carriers, and license areas tailored to the desires of CCA’s membership;
  • Forced provision of data roaming arrangements;
  • Mandated interconnection obligations for  incumbent Local Exchange Carriers following the IP transition, including the full panoply of Section 251 and 252 requirements;
  • Forced interoperability of handsets;
  • Revision of the USF rules to increase subsidies for rural wireless service providers;
  • Conditions on the merger of AT&T and Leap, including divestiture of spectrum in markets where AT&T exceeds the spectrum screen, as well as forced offering of roaming arrangements on the same terms and conditions carriers previously negotiated with Leap; and
  • Conditions on the Verizon-AT&T spectrum swap, including an interoperability mandate.

Now for the part that’s no laughing matter.

Somewhere along the way, CCA – and they are not alone in this – conveniently overlooked Congress’s clear direction that the incentive auction must be voluntary. “Voluntary” means that no broadcaster, by any means, can or should be coerced into participating in the auction. CCA is asking the FCC to violate the law by forcing broadcasters, through regulatory arm twisting, to give up their spectrum. If the FCC turns up the heat enough, says CCA, then broadcasters will have no choice but to “volunteer.” That is a big no-no, although CCA seems not to care about staying within the bounds of the law.

If CCA were the only organization heading down this road, I likely would not be writing this post. For if a tree falls in a forest…well, you know the rest. But there are others out there with similar motives. And it is time to shine light on an issue that needs to be crystal clear. The FCC cannot, under the law, take any action designed to harm broadcasters with an eye towards encouraging participation in the auction. The lone incentive for participation is the market-based auction itself, and the compensation broadcasters are offered to relinquish their licenses.  Anything else is unlawful, and it is no laughing matter to push the FCC to violate the law.

The voluntary broadcast spectrum incentive auction can be a success. The Commission does not need to cheat in order to make it so. NAB, as always, stands ready and is committed to doing what we can to see the Commission succeed in its auction and to do so in a way that adheres to the law.