The FCC’s International Bureau recently announced its approval of a license transfer for spectrum currently held by a mobile satellite service operator. The company that will now hold the spectrum license, Harbinger, plans to use portions of it to build a new terrestrial 4G wireless network that would serve a substantial majority of people living in the United States. One of the restrictions on the deal is causing quite a stir — the network will be offered wholesale for broadband service, but FCC approval is required before more than 25 percent of the network’s capacity can be used by AT&T, Verizon or any combination thereof.

If you're wondering why any of this matters, it's because the wireless market isn't working very well. The market is dominated by two huge providers, Verizon and AT&T. Although other carriers still have a number of subscribers, the deck is stacked against them in many ways: devices locked into exclusive deals, high unregulated costs for backhaul, loopholes preventing data roaming at reasonable rates, and other "features," many of which are unique to the American wireless industry and regulatory system. As a result of poor competition, wireless service is expensive; it comes with hidden limitations and fees; the quality is often poor; and users don't have a meaningful choice of devices or providers.

The hope is that this license transfer could help create a viable competitor to Verizon and AT&T in 4G networks, and thus disrupt the increasingly stagnant state of wireless competition. More of a far-off, less than likely dream, really, but it’s a start. We’ll call it a baby step on the road to wireless competition.

There are many positive aspects to this move. The buildout requirements attached to the spectrum are aggressive — Harbinger has committed to a fast nationwide deployment of the new network, which will necessitate substantial investment in wireless network infrastructure. Of course, wireless competition will only improve if the new network isn't immediately leased to the two companies that already have a disproportionate share of the current spectrum used for wireless broadband — which is why the 25 percent condition is so important.

AT&T and Verizon naturally objected, even though the restrictions were offered voluntarily by the parties. Apparently they like being a near-duopoly, because it prevents them from competing over service price and allows them to under-invest as they see fit. So, like a broken record, they immediately said this was somehow beyond the FCC’s authority (that’s their answer to everything these days). AT&T’s Jim Cicconi gives the best line: “The commission is setting a very disturbing precedent when it implies that it may use allocation of spectrum to manipulate the wireless market… This action is manifestly unwise and potentially unlawful.”

I wonder if Jim remembers the spectrum cap — it wasn’t that long ago. For that matter, I wonder if he’s aware of the spectrum screen that’s still in place. Both the spectrum cap and spectrum screen are FCC policies for using spectrum allocation to promote competition in the wireless market. In fact, since the spectrum cap was removed, the wireless industry has seen steadily reduced investment as a percentage of revenue, and other signs of worsening competition.

Moaning and groaning by AT&T and Verizon aside, is this transaction a good thing for the public interest? In short: It’s definitely not bad. This is valuable spectrum that should be very useful for broadband. And the conditions do help.

Ultimately, this move by the FCC might not make much of a difference. The conditions on AT&T/Verizon access to the network can be waived at any time for any reason by this or a future FCC. Moreover, there are a number of problems with the wireless market that this won’t fix.

Nonetheless, this is the sort of thing the FCC needs to do. This move opens spectrum for a valuable broadband purpose, and it takes some measures — albeit imperfect ones — to improve wireless competition. If this works out, in theory, this spectrum could enable a new entrant or a leveling of the playing field among current providers.

I would like to see more actions like this, with much more willingness to disrupt and displease the dominant incumbents in an effort to improve competition, when the FCC pursues spectrum and wireless rulemakings following the national broadband plan and the next report on the status of competition in the wireless market.

Now if only the FCC would do something about that wired broadband duopoly…