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FCC meets to debate spectrum cap

Three congressmen--anticipating that the FCC will lift the cap--protest, saying the move would pose a "significant risk to consumers."

In a move that could spark a wave of consolidations within the wireless industry, the Federal Communications Commission will decide Thursday whether to increase the amount of radio spectrum mobile telephone companies can own in any one market.

The FCC is scheduled to vote Thursday whether to raise the current spectrum levels by 20 percent and then abolish the cap within the next 18 months. Wireless companies can only own 45MHz of spectrum in large markets, where a total of 185MHz are available to all carriers.

The wireless industry has been asking for such a move for several years, claiming there is a spectrum shortage. As a result, carriers in large markets are leery they won't be able to service new customers.

If the cap is removed, analysts expect large companies like Verizon Wireless and Cingular Wireless to quickly start buying up smaller carriers competing in their markets. Some companies that may be ripe for buyouts include Nextel Communications and VoiceStream Wireless, according to analysts.

But three congressmen, anticipating that the FCC will move to lift the cap, have registered their protests. Ernest F. Hollings, D-S.C., Sen. Daniel Inouye, D-Hawaii, and Rep. Edward Market, D-Mass., sent a letter to FCC Chairman Michael Powell saying the expected move would hurt the wireless industry.

Lifting the cap would "encourage unnecessary consolidation, relieve pressure on companies to innovate, and pose a significant risk to consumers," the letter said.

On Wednesday, an AT&T Wireless executive said he didn't think the FCC vote would affect the company's business.

"It will not have a big impact on us at all," Chief Financial Officer Joseph McCabe told analysts at the J.P. Morgan Global Telecommunications Conference in New York. He added that the company has enough spectrum to provide third-generation services in 90 of the top 100 U.S. markets, especially if it gets the Nextwave Telecom spectrum it won in an auction in January.

AT&T Wireless won some licenses for airwaves that formerly belonged to bankrupt NextWave, but NextWave complained that the licenses were illegally confiscated. NextWave and the U.S. government are expected to reach a settlement that would allow auction winners to keep the licenses.

Reuters contributed to this report.