European Affairs

A Conversation with Commissioner Harold Furchtgott-Roth,
Federal Communications Commission

Harold W. Furchtgott-Roth met with members of The European Institute's Roundtable on Telecommunications and Multimedia to discuss his views on the role of the FCC and its policies on a variety of issues. The following are excerpts of the discussion.

Q:You were a member of the U.S. delegation at the recent World Radio Conference in Istanbul. What were your impressions?

A:I was pleased that the U.S. positions had certain "signatures," or sets of characteristics, that were in many ways predictable. It is good for countries to have predictable policies. From a broad policy perspective, I believe the "signatures" that were imprinted were freedom, commerce, and communications. They form the basis on which policy ought to be written and they include principles that take into consideration property rights, simplicity, and some respect for sovereignty.

These principles are not uniquely American, but they combine to create a certain predictability about American policy. Individuals and institutions can better organize their affairs if they have an idea of how governments will act.

I think there is something about American policy that is recognizably different. The three principles of freedom, commerce, and communications can be traced directly into ideas about the structure of American government, about concepts of individual rights, and the idea that government serves at the behest of individuals, rather than vice versa.

In this context, let me briefly review some of the issues before the Commission, as well as the policy issues at WRC. During the Conference, the U.S. position with respect to third generation spectrum allocations (3G) centered on flexibility within certain bands - a position that is consistent with the concepts of freedom, of simplicity, and of not having government dictate a specific standard or way that spectrum should be used.

Similarly, the U.S. position of not imposing prior consent on satellite broadcast services is very consistent with the concepts of freedom and commerce, as is U.S. policy regarding the coordination of geostationary and non-geostationary satellites.

Q:Regarding the WRC process, do you think the private sector's role in terms of formulating the U.S. positions helps or hurts the concepts of simplicity and freedom from government intervention?

A:I am part of a regulatory agency independent of the executive branch and, in my strict view of American government, only the executive branch can represent the United States internationally. The relations between different nations, constitutionally, must be done through the executive branch. Therefore, the private sector cannot represent the American government internationally.

That is not to say, however, that the executive branch, at its discretion, cannot pull together expertise from sources both inside and outside the government, and use that expertise as a basis for decision-making.

The process that goes on in an international setting such as the ITU is quite different from that which goes on at the FCC, and the types of informal arrangements developed in the ITU format have been quite beneficial. The results obtained at the WRC would be far inferior if we had to rely solely on government personnel, and even worse if we had to rely exclusively on executive branch personnel.

Q:For those of us who are interested in using spectrum, we thought that the WRC conference was particularly successful with regard to 3G issues. Could you elaborate a bit more on this from your perspective?

A:I agree that it was successful. Many countries are at different stages of wireless technology development. From the outset it was difficult to see how a "one size fits all" approach to either 3G or fixed wireless service would be of mutual interest to all nations.

At the same time, however, everyone can see that there are lots of wonderful technologies being developed and that the timeline for allocating international spectrum employed by institutions such as the ITU is very slow relative to the speed of this technological development. We now have a situation where technologies are being developed far more rapidly than the pace at which international institutions are able to react.

Allowing flexible use of spectrum in three bands provides entrepreneurs with a degree of certainty when considering the development of these new technologies, without locking nations into a specific technology. This policy also provides enough flexibility to meet market demand. Certainly, this will not be the final word in terrestrial wireless services. There probably never will be a final word, as I'm sure every WRC from now to eternity will be wrestling with similar questions.

Q:What are your views of spectrum auctions, particularly in light of the enormous amount of money raised during the recent British auction process?

A:I think auctions are an extremely efficient mechanism to assign licenses, once a certain band of spectrum has been allocated for broad use. The U.S. experience with auctions, however, has been mixed.

While the United States has been very successful at getting licenses out quickly and, in most instances, to parties that value them the most, there have been problems in some areas. The biggest mistake the United States has made has been to allow auction winners to pay the government in installment payments, particularly in the C and F Block auctions. The idea that the U.S. government will act as "banker" to auction winners creates a very bad situation, and has led to licensing decisions that are still in litigation today.

Finding the right balance when determining geographic area and band size for licenses has been another area of difficulty. At the FCC we have tried issuing smaller geographic licenses than other countries; some would say with success, while others would disagree.

Another area of difficulty has been figuring out how to clear the spectrum - either before or after an auction. Compared to most other countries, the United States already has a lot of incumbent users in practically all bands. As a result, the United States has significant clearing issues.

While many times people speak of first mover advantages, there are also first mover disadvantages. The United States has encountered these advantages and disadvantages because it was the first country to use auctions on a large scale for the assignment of spectrum licenses.

There was a great amount of learning involved developing these policies, and the United States has done remarkably well. While we have had significant problems, it could have been much worse. In addition, other countries have benefited from seeing the mistakes the United States has encountered and have been able to avoid them. Hopefully, we in the United States will also avoid them in the future.

Q:What are the FCC's next steps now that WRC is concluded?

A:I assume we will take the conclusions from WRC and start looking at those bands identified during the conference. I don't know if we will have a notice of inquiry or another option, but certainly many at the FCC are looking at this. The ITU and the FCC work in very slow and mysterious ways, but somehow at the end of the day they both seem to accomplish something.

Q:Could you comment further on issues raised by foreign ownership of U.S. ground stations?

A:I have been very annoyed that, in certain license transfer situations involving international parties and earth stations, the FBI has held the license transfers hostage. The FBI is a very powerful institution, and is an element of an even more powerful institution - the Department of Justice.

In my view, if the FBI has national security concerns they need not come to the FCC to ask for enforcement. They have asked that we condition our license transfers on the remedies they think they need for national security purposes. I find that process very strange.

Q:How do you view U.S./EU relations and development of telecom policy on each side?

A:Remarkably, there is little formal communication between regulatory agencies from state to state. While there is a lot of informal communication, government to government relations are handled through the State Department.

The transition in Europe from a number of relatively autonomous nations into the European Union is a fascinating process to watch from this side of the Atlantic. With regard to telecommunications, this process is obviously leading to laws and rules at the national and community levels.

This is interesting from an American perspective because we grapple with issues of Federalism. Where is the right place for certain types of decisions to be made - at the federal, state, or municipal level? A prime example is the question of unbundling cable or, depending upon which side you are on, open or forced access.

We are still debating whether this is a federal or state issue, and I don't think there is an obvious answer. It is clear that, in Europe, relying on a number of autonomous but geographically close countries was not as efficient as creating some over-arching set of rules that would govern all of them.

There are trade-offs when trying to achieve consistency of rules as applied across broad geographic stretches. While you get certainty and economies of scale, you lose a bit of innovation. In the United States we try to learn in both directions and in Europe, I'm sure learning will continue, as well.


This article was published in European Affairs: Volume number I, Issue number IV in the Fall of 2000.