OTTAWA – Brendan Carr, recently appointed commissioner of the U.S. Federal Communications Commission (FCC) has some advice for Canadian spectrum regulators: avoid using spectrum set asides in the 600 MHz auction.
In an interview style session with Cartt.ca publisher and editor Greg O’Brien at the International Institute of Canada’s annual conference in Ottawa on Tuesday, Carr, one of three Republicans on the five-member commission, characterized the FCC’s 600 MHz auction as generally successful, but noted it didn’t need to be as complicated as it was. The complexity resulted from the FCC’s decision to set aside spectrum as a way to stimulate more competition in the U.S. wireless market.
Even though the set aside was supposed to encourage participation from specific players, some didn’t even show up, said Carr. Verizon, for example, stayed out of the auction altogether. He added that when spectrum set asides are in play, or “interventionist methods to produce particular outcomes” are used, they don’t work out.
“I think that’s a cautionary tale,” Carr told an audience of about 280 communications industry professionals.
Innovation, Science and Economic Development (ISED) is in the final stages of establishing the licensing framework for its 600 MHz auction. In the recent reply comments, the Big Three wireless providers argued against set asides while newer competitors such as Shaw Communications noted that it would be the last chance to give competitors more low frequency spectrum.
During the more than 30 minute session, Carr also touched on the FCC’s ongoing consultation on net neutrality. That proceeding is considering the adoption of a new approach to regulating the Internet. Rather than using existing common carrier regulations (they are referred to as Title II in the US) brought in just three years ago by former FCC chair Democrat Tom Wheeler, the FCC under Republican Ajit Pai is studying a new regime that could be solely governed by the Federal Trade Commission, lifting Title II from American network operators and finally okay practices like zero rating, which are against the rules here in Canada.
“The question is what’s the right regulatory framework to both enable us to continue to have a free and open Internet but also to see the massive investment into networks that we need to see whether it’s wireless or wireline,” he said.
“it’s very clear to me that the regime we have now is not working.” – Brendan Carr, FCC
In Carr’s opinion, a Title II type of regulatory regime isn’t the best way to govern the Internet because it’s an approach that focuses on monopolies, which is not the case with ISPs. “Title II is about managing a scarce resource. You’ve got one pipe. How do you regulate the rates to that pipe? How do you regulate where that pipe goes?” he noted.
But if one of the goals of the FCC is to ensure greater facilities-based competition in telecommunications “it’s not clear that Title II is the right approach to incentivizing that type of investment,” said Carr.
When it comes to the size of the networks required over the next number of years, Carr pegs deployment at more than one million small cells across the country just for new wireless tech. The quantum of investment for 5G and small cell 4G advanced services will be upwards of $275 billion, he said.
“If we get that regulatory framework right, we’re going to see that $275 billion investment. That’s going to mean an additional three million jobs, half a trillion dollars added to the U.S. GDP. So I look at how we get the right regulatory framework to make this transition and it’s very clear to me that the regime we have now is not working,” he said.
Added Carr: “The regime we have now is potentially going to be the bottleneck that holds us back from seeing that massive new deployment and that massive amount of investment.”
