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U.S. Federal Communications Commission Chairman Michael Powell signaled Tuesday that the agency is likely to adjust rules that limit the amount of spectrum any one carrier can possess in a single market. The wireless industry contends that the cap, currently 45 megahertz per market, restricts cellular telephone providers from reaching users and offering new products and services. And industry experts say loosening of ownership restrictions could prompt large providers to begin buying up smaller operators. At a Las Vegas conference hosted by the Cellular Telecommunications and Internet Association, which was attended by wireless service providers and equipment makers, Powell said the FCC recognizes the need to make more spectrum available. “The country needs a nationally harmonized spectrum policy,” he said. “I think we have a duty and an obligation to re-evaluate, devalidate or get rid of rules that are artificial or are structural restraints on the growth or time it takes to deploy new technologies.” One of Powell’s first acts after being appointed FCC chairman in January was to formally ask for industry comment on the cap issue, a precursor to revising agency policy. By law, the FCC could not make a decision on the cap until after the comment period ends May 14. Along with enhancing the ability of providers to reach customers, steps to eliminate or phase out the spectrum cap could speed up merger and acquisition activity among U.S. wireless providers. Rather than wait until spectrum becomes available, Rudy Baca, telecom analyst with the Precursor Group, says that large national carriers could acquire more capacity by buying smaller, regional carriers. “Removing the cap would almost certainly lead to increased merger and acquisitions activity,” Baca said. “All the majors need more spectrum if they’re to move to 3G [third-generation wireless systems], so buying a provider certainly makes sense.” Baca said chances were quite good that the FCC would raise the spectrum cap and reasonably good that the agency would eliminate the restriction altogether. While Powell was more restrained about when and whether the FCC would act on the cap issue, John Stanton, CEO of VoiceStream Wireless Corp., said it was imperative that the FCC act quickly. Stanton said that in many cases, European countries have allocated twice as much spectrum as the United States. “We’re running out of spectrum, and the government holds the key,” Stanton said. “Internationally, those corporate competitors that are able to own more spectrum have the advantage of being able to build their businesses and attract capital on a scale we cannot match.” VoiceStream, which is hoping to close its merger with Deutsche Telekom AG this summer, needs more spectrum if it hopes to avoid having to pay larger rivals to allow customers to make long-distance calls. Television broadcasters that operate on channels 52 through 59 own the most likely source of spectrum that could be auctioned. Though the so-called 700 megahertz auction is scheduled for Sept. 12, the sale is likely to be postponed because broadcasters are not required to vacate the spectrum until 2006, or when 85 percent of households have digital televisions. Last week, the FCC adopted a resolution calling for the broadcasters to vacate those frequencies. In all likelihood, the government will have to negotiate an expedited timeline with the broadcasters, according to Knox Bricken, telecom analyst with The Yankee Group. Another source of spectrum is the frequencies controlled but unused by the military. Talks are under way, Powell said, but no one should expect spectrum to be quickly made available. “We can’t trivialize the uses of spectrum for our national defense,” he said. “Those decisions are well above my position. And as the son of a four-star [Secretary of State Colin Powell], I have to respect them.” Copyright (c)2001 TDD, LLC. All rights reserved.

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