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To: Jeff Vayda who wrote (1124)	11/8/2001 8:49:23 AM
From: Jon Koplik	Read Replies (1) \| Respond to of 2737

WSJ -- FCC to Boost Amount of Wireless Spectrum A Cellular Company Can Own in a Market November 8, 2001 FCC to Boost Amount of Wireless Spectrum A Cellular Company Can Own in a Market By YOCHI J. DREAZEN Staff Reporter of THE WALL STREET JOURNAL WASHINGTON -- In a move likely to trigger consolidation in the wireless industry, federal regulators are set to increase the amount of wireless spectrum a cellular company can own in a given market, the first step toward scrapping the cap altogether. The Federal Communications Commission will vote Thursday to eliminate the cap in about 12 to 14 months, according to people familiar with the situation. Meanwhile, these people said the commission plans to vote to immediately allow individual wireless companies to boost their spectrum holdings from 45 megahertz per urban market to 55 MHz, an increase of slightly more than 20%. The move would be a big win for the nation's largest wireless carriers, several of whom are at or near the cap in major markets such as New York and Chicago. The companies have long complained that the restrictions prevented them from acquiring enough spectrum to roll out advanced new services, add new subscribers or provide better service to existing ones. The change also is expected to set off a scramble in which carriers such as Verizon Wireless and AT&T Wireless acquire smaller competitors such as Nextel Communications Inc. or Northcoast Communications, both of which have spectrum in key markets. Verizon Wireless, a joint venture between New York's Verizon Communications Inc. and Britain's Vodafone Group PLC, would be able to add 10 MHz of needed spectrum in both Boston and New York, where customers often complain of dropped calls. Northcoast has exactly 10 MHz in each of those two markets. "Many years ago there may have been a need for the cap as a way of bringing new competition into the marketplace," said Verizon Wireless spokesman Jeffrey Nelson, who declined to comment on any potential acquisition targets. "But even if there's some consolidation, it's still a fiercely competitive industry and that competition will remain long after the cap is gone." Analysts said the FCC move -- along with an imminent agreement giving major carriers control of dozens of spectrum licenses now held by bankrupt NextWave Telecom Inc. -- should give carriers the spectrum they require for immediate needs, such as bolstering their existing networks. But the analysts said that deploying so-called third-generation services, such as high-speed wireless Internet access, will require the FCC to find a way of making large new sources of spectrum available to the carriers. "This is just a stop-gap measure," said Rudy Baca, an analyst with the Precursor Group, an independent research group here that focuses on telecommunications. The change also reflects the change in telecommunications regulation that has begun to occur since the Bush administration took office earlier this year. Many Democrats, by contrast, fear that eliminating the cap will spark dangerous levels of wireless-industry conglomeration. Earlier this week, for instance, Senate Commerce Committee Chairman Ernest F. Hollings (D., S.C.) and several other Democratic lawmakers sent a letter to FCC Chairman Michael Powell warning him that scrapping the cap could result in higher prices and poorer service for many wireless consumers. Similarly, Michael Copps, the FCC's lone Democratic commissioner, is set to vote against raising the cap when the issue is considered Thursday morning. Write to Yochi J. Dreazen at yochi.dreazen@wsj.com Copyright © 2001 Dow Jones & Company, Inc. All Rights Reserved.