FCC to Vote on Mergers, USF & White Spaces, Nov 4


The FCC is poised to vote Nov. 4 on a series of big issues including the Sprint-Clearwire deal, the Verizon Wireless-Alltel merger, Universal Service Fees, rural interconnection fees, and wireless operations in TV white spaces, says RCR Wireless News. FCC Chairman Kevin Martin is expected to outline his proposed agenda at a 1 p.m EST news briefing today. Here’s the official agenda (pdf).

Following approval of the Sprint-Clearwire deal, the company will raise $3.2 billion of capital from Google, Comcast, Time Warner Cable and Bright House Networks. It will allow Clearwire to expand mobile WiMAX in dozens of cities across the United States. It’s still subject to a shareholder’s vote mid-November. The $28.1 billion Verizon Wireless-Alltel deal still needs Justice Department approval.

As for rural wireless subsidies, the FCC will vote on whether to eliminate the identical support rule for the Universal Service Fund (USF). Such an action would lower the amount of funds a rural wireless carrier could get as compared with a rural wireline carrier.

The FCC’s vote on inter-carrier compensation could essentially reform the payments carriers make to one another in an attempt to bring more parity and less complexity to the system. Wireless trade group CTIA argues that, in the current structure, the fees are weighted heavily in favor of wireline carriers. In 2003, CTIA estimated wireless carriers paid $3 billion to $4 billion in interconnection costs alone.

Currently, some carriers charge a fraction of a penny per minute for calls to their customers, and others charge hundreds of times that much for the same service. AT&T has said establishing one, lower national rate for connecting calls would result in roughly $4 billion in savings for the entire industry. Martin is proposing requiring wireless companies to spell out their losses in order to access the multi-billion dollar universal service fund.

Consumer advocates say the changes Martin wants, bringing the highest rates in rural areas down to a fraction of the current level, will cause millions of customers to see $1 to $2 increases in their monthly phone bills while phone giants like Verizon and AT&T could gain millions in savings. Martin said he wants to phase in the rate changes, some of which are governed by the states, and to require states to set low, uniform rates for all kinds of calls.

“This could be potentially a billion-dollar giveaway to phone monopolies, paid for out of consumers’ pocketbooks,” said Chris Murray, an attorney with Consumers Union. Free Press is calling on the FCC to ensure that reforms include support for broadband infrastructure development.

The TV white spaces vote centers on whether to open up that spectrum to wireless uses.

The FCC is preparing to release a report that finds there are no major interference problems with using vacant TV airwaves, says the Wall Street Journal. The FCC’s finding on white spaces would be a victory for high tech companies including Intel, Microsoft and Google, which have lobbied heavily to convince the FCC to allow them to use the unlicensed, vacant TV airwaves. This is different than the report the FCC released last week that found no interference in the licensed AWS band between the proposed “free” 2150 MHz band and cellular users on the lower AWS band.

Both “white spaces” and “AWS-3″ may be used to provide inexpensive broadband, especially for rural users. According to Gartner Research, the U.S. is tied for 12th with Japan and Spain in broadband penetration. Only 55% of U.S. households had a broadband connection by the end of 2007.

By comparison, South Korea has a whopping 93% penetration, Hong Kong 76%, Switzerland with 69% and Canada has 65% of households connected with broadband. Not every comparison is apples-to-apples, though. For example, island countries such as Hong Kong are densely packed with the majority of their populations living in high-rises — which are much easier to connect to fiber.

Martin will likely step down as chairman early next year when a new administration settles in.

Posted by Sam Churchill on .

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