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Justice Joins NTIA in Promoting Spectrum Reallocation

The Justice Department has weighed in at the FCC on the
national broadband plan, echoingthe National Telecommunications & Information Administration, the
administration's chief telecom policy advisor, in saying that freeing up more
spectrum is crucial to broadband competition.

"Given the potential of wireless services to reach
underserved areas and to provide an alternative to wireline broadband providers
in other areas," the department said in comments at the FCC Jan. 4,
"the Commission's primary tool for promoting broadband competition should
be freeing up spectrum." It advised the FCC to make that a priority,
beginning with determining "when the total value of that spectrum is
significantly greater in a new use than in its existing use, after accounting
for transition costs."

Justice also proposed a baseline broadband speed, 3-4 Mbps,
saying, "In the near term, it appears reasonable to expect that most
consumer demand will be met by services offering [that speed]."

It also advised that the FCC devise a market-specific method
for classifying/evaluating competition, perhaps using the HHI index for degree
of market concentration. Justice said that the commission should evaluate
actual rather than advertised speeds or speeds under "ideal

The department, which clearly coordinated its filing with
that of NTIA, said it was too early to tell whether wireless broadband will be
a significant competitor to wired broadband from cable or telcos.

It appeared to give cable operators some purchase on
the argument that the MVPD marketplace is robustly competitive, though with a

"The entry of two national direct broadcast satellite
("DBS") providers--DirecTV and the DISH Network--as well as wireline
overbuilders and, more recently, the telephone companies, has changed the
dynamics of competition in the MVPD market," said Justice. It said that
cable has increasingly faced competition from DBS and, in a more limited way,
from overbuilders, and that competition has led to facilities upgrades by
cable, including more channels, more VOD and HD, and more focus on customer service.

The department called overbuilders and telcos closer
substitutes than satellite and a greater constraint on prices and spur to
quality. But is also says that DBS has not significantly disciplined cable

"It is premature to predict whether the wireless
broadband firms will be able to discipline the behavior of the established
wireline providers," said Justice, "but early developments are mildly
encouraging. Notably, the fact that some customers are willing to abandon the
established wireline providers for a wireless carrier suggests that the two
offerings may become part of a broader marketplace."

Justice said it was not looking to define particular markets
as competitive.

It said that in some cases, economies of scale preclude
having many small suppliers. Instead, it said, the "operative
question" is what policies can be adopted to produce "superior
outcomes." It suggested that in highly concentrated areas, those policy
levers could include regulations to control mergers, limits on blocking
interconnection, or lowering barriers to entry for new entrants.

Again mirroring the NTIA filing, Justice said that even
areas with two wireline providers may not provide sufficient choice because
only one may provide sufficient speeds. It cited the FCC's broadband status
report that 50%-80% of homes may only get "the speed they need" from
one provider. "If this proves to be supported by further data," said
Justice, "it will be highly significant, and rather discouraging, in terms
of effective broadband competition in the years ahead."