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Editorial: Spectrum of Possibilities

According to Verizon/SpectrumCo. watchers inside and outside the FCC, the commission is close to approving the telco’s $3.9 billion purchase of spectrum from cable operators, contingent on the Justice Department’s review of associated marketing agreements.

We think that would be a good thing, both for the companies involved and for a government hungry for spectrum.

Modifications to those marketing agreements are not expected to be a deal-breaker for either side of the transaction. So we are looking for approval by mid-August, which would get the deal in under the FCC’s 180-day shot clock, and maybe even earn it brownie points with congressional overseers increasingly concerned with the snail’s pace of some FCC actions (that will be the subject of a future editorial).

Cable operators say they’re not going to build a competitive stand-alone wireless broadband network in competition to the incumbents. So the spectrum is essentially lying fallow, something the FCC and the Obama administration clearly do not want. It will take up to a decade to move spectrum from broadcasters to wireless operators via incentive auctions—a point FCC commissioner Robert McDowell made last week in a Hill hearing—while spectrum off the secondary market can be employed almost immediately to extend and improve mobile broadband service.

Another way to relieve some of the pressure from broadcasters to give up their real estate for the greater good of broadband (slight irony alert) would be for the government to drill down deeper into its own reserves.

The size of government bureaucracy, combined with the natural inclination not to relinquish spectrum real estate, combined with the lack of a comprehensive inventory, may have led to overly pessimistic estimates of the cost in time and money of prying that spectrum from the Defense Department and others. McDowell offered up one possible solution, or at least a larger stick than, say, the National Telecommunications & Information Administration has been able to apply.

McDowell suggested that an executive order from the president, where the buck ultimately starts and stops, might be a good idea. He also said it would be better to view the cost benefit to reclaiming spectrum as the cost of reclaiming the spectrum—relocating current users, auctions—vs. the total economic impact, rather than simply what the spectrum will produce at auction. We agree.

Finally, we will hold FCC chairman Julius Genachowski to his pledge last week that the FCC would provide broadcasters with sufficient information about the incentive auctions and associated station repacking in time to decide whether they want to participate— which should mean before it starts firing off notices of proposed rulemaking.

The chairman included some caveats to his promise, saying the FCC would provide “all the information that it can that is actually helpful and relevant.” Those caveats should not swallow the rule. As Rep. John Dingell (D-Mich.) pointed out last week, should the FCC not provide enough information to broadcasters, the commission could face a lawsuit it would be hard-pressed to defend against. And the last thing the FCC should want to do is log more time in court.