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FCC chief to wireless industry: I work for the American public

FCC chairman Tom Wheeler tells industry not to expect a free ride on any of the major issues his agency is now considering, including megamergers, Net neutrality, and the upcoming incentive wireless auction.

Federal Communications Commission Chairman Tom Wheeler had a few words of warning for the wireless industry Tuesday.

1. Keep your industry competitive.

2. Prepare for potentially stronger Net neutrality regulations in wireless.

3. Put your money where your mouth is when it comes to the upcoming incentive spectrum auction.

During a speech kicking off the CTIA's Super Mobility Week in Las Vegas, Wheeler said he wasn't there to "pound the table and issue regulatory dictates, but to begin a discussion."

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FCC Chairman Tom Wheeler offers a word of warning to the wireless industry as he addresses their annual trade show. Screenshot: Marguerite Reardon/CNET

Wheeler's comments and warnings come as many consumer advocates accuse him of being a shill for the broadband and wireless industries his agency is tasked with regulating. Much has been made of the chairman's previous work as the head of the National Cable Television Association (NCTA) from 1979 to 1984, as well as his stint as CEO of the CTIA Wireless Association from 1992 to 2004.

As the FCC considers several major agenda issues under his watch, such as Net neutrality and implementing the reallocation broadcast wireless spectrum to mobile broadband carriers, he is making a series of speeches to let the industries he regulates and the public know that he will be tough on them.

In a speech last week in Washington, DC, he came down hard on the wired broadband industry by stating it was not competitive. His message to the wireless industry was not as stark, but he warned that if the industry wanted the government to continue its light regulation of their networks and services, the major companies would have to show their commitment to doing what is right for the general public and not just padding their pockets.

"As I told the Senate Commerce Committee during my confirmation hearing, I hope I was a pretty good representative of this industry in its nascent years," he said. "But today I have a new client, the American people; and I will bring to bear every ounce of whatever capabilities I have -- and whatever understanding I have of the wireless industry -- to aggressively represent the best interests of my client.

Market competition

First, he addressed the state of competition in the wireless market. Specifically, he applauded the industry for its efforts to promote competition, but he warned the FCC will not allow too much consolidation, especially of large wireless operators.

He pointed to the FCC and Department of Justice's rejection of the AT&T and T-Mobile deal and also these agencies' negative view of a potential deal between Sprint and T-Mobile.

Still, he applauded the industry for opening its "walled garden" and allowing app developers to create products and services that run on devices on wireless networks. And he pointed to US wireless industry's leadership in 4G LTE as an indication that competition has been working.

"You have shown that competition and investment are not mutually exclusive," he said referring to the $260 billion wireless operators have invested in the past 10 years to create competitive infrastructure. "You are living proof that profit and progress can go hand-in-hand."

But he warned that competition is the key to ensuring light regulation from the government.

"What industry does to create a robust and competitive market has a bearing on how government responds," he said.

Net neutrality

Wheeler said he believes that wireless operators and other broadband providers are sincere in stating they also want an open Internet. And he acknowledged the need for some flexibility in the rules in order for wireless operators, in particular, to be able to manage their broadband networks. But he expressed doubts that wireless and wireline broadband networks should be treated differently in the upcoming rules, as was the case in the 2010 rules that a federal appeals court threw out.

Specifically, he said the agency has been concerned about mobile operators that have sold customers devices and services as unlimited and then turned around and "throttled" or slowed down the service of those customers when they used too much data. Earlier this summer, the FCC sent a strongly worded letter to Verizon Wireless asking it to explain the expansion of its throttling policy to customers subscribed to its unlimited service on 4G LTE. In the letter, Wheeler said he was "deeply troubled" that Verizon has singled out these customers. In his speech Tuesday, the chairman mentioned similar letters have also gone to other wireless operators.

"I am hard pressed to understand how either practice, much less the two together, could be a reasonable way to manage a network," he said.

Spectrum

Finally, the chairman touched on issues surrounding the upcoming incentive wireless spectrum auction. Next year, the FCC is expected to conduct a reverse auction, where TV broadcasters will volunteer to sell wireless spectrum to mobile operators, who at the same time will be bidding in a forward auction on that same spectrum. Mobile operators have complained for years that they need more spectrum in order to keep up with consumer demand for access to mobile data services.

In 2012, Congress authorized the FCC to conduct auctions to free up more TV broadcast spectrum for mobile use. The FCC is currently working the rules of both the forward and reverse auctions. A major concern of some companies hoping to bid on the freed up spectrum is that the TV broadcasters won't show up to sell their spectrum.

And TV broadcasters, which are suing the FCC over the proposed rules it's drafting for the auction, say they don't believe that the industry is genuine in their claims of how much spectrum they really need. As a result, they are concerned that the wireless industry won't live up to its promise to invest in this spectrum.

Wheeler warned that it's time for the wireless industry to put its money where it's mouth is. He said he has been heartened by AT&T's and Dish Network's "strong expressions of interest in the Incentive Auction." And he noted the reports of "big interest and big numbers" when Sprint and T-Mobile wanted to bid jointly on spectrum. But he said the rest of the industry has been "strangely silent."

"Your government has heard your cry for more spectrum," he said. "Whether or not wireless carriers show up with sufficient demand to incent broadcasters to participate is something only you control."

He said the time to show interest in the auction is now. He said the FCC will be reaching out to broadcasters in the next few weeks to explain more about how the auction will work, including estimates of potential opening bid amounts. He said the FCC will also explain the economic potential the auction represents to the broadcasters. But he said it's up to the wireless operators to make their intentions known to reassure broadcasters that these economic incentives can be met.

"They read the trade press, too," he said. "And wireless carriers showing interest in the Incentive Auction is the predicate to broadcasters showing interest."