Consumers Union, Free Press, New America Foundation and Public Knowledge (“Public Interest Commenters”) respectfully submit these Reply Comments in response to the Federal Communications Commission’s 700 MHz Band Interoperability Notice of Proposed Rulemaking released on March 21, 2012.

In these Reply Comments, we review the systematic disadvantages currently faced by Lower 700 MHz A Block licensees, and the real and serious injuries a failure to mandate interoperability has produced and will continue to produce. Additionally, we respond to a number of flawed arguments made by incumbent wireless carriers and device manufacturers that overstate technical impediments, understate their own manipulation of the 3GPP Band Class creation process, and wrongly deny the Commission’s authority to mandate interoperability. We reiterate the pressing need for Commission intervention to ensure a vibrant, competitive wireless marketplace in the Lower 700 MHz Band—a marketplace that, because of adverse industry conditions and anticompetitive practices by incumbent carriers, only an FCC mandate can create.

Comments of A Block license holders dramatically illustrate what is at stake in this proceeding. Because of AT&T’s bad-faith conduct in the 3GPP standard-setting process, which created the artificial Band Class 12/Band Class 17 barrier, these licensees operate in perpetual uncertainty, unable to make good their investments by building out their networks. Despite AT&T’s reality-denying assertions, smaller, would-be competitive carriers lack leverage with device manufacturers and can only obtain LTE-compatible devices with great hardship and delay, if at all. Without interoperability, it is impossible for A Block licensees simultaneously to make the roaming agreements that are vital to competitive service and build out their own spectrum, forcing them to choose between becoming de facto subsidiaries or going out of business. Smaller, regional, “greenfield” carriers providing coverage to underserved rural communities are especially hard-hit. Mandating Lower 700 MHz Band interoperability—which, at time of Auction, A Block licensees and the Commission both assumed would be the natural state of the spectrum—would alleviate this profoundly anticompetitive situation.

Arguments against interoperability raised by incumbent carriers and their device manufacturer allies fail to make their case. Technical impediments to interoperability are overstated: real-world technical analyses demonstrate that interference from Channel 51 and E Block transmissions will be rare, and the effects negligible for Lower B and C Block holders. Upgrades to existing networks and devices are minimal and can be accomplished at substantially less cost than opponents estimate. Furthermore, arguments that the industry will be destabilized by Commission interference with the 3GPP standard-setting process are undercut by AT&T’s own manipulation of the process to create the current band-class environment.

Finally, AT&T and other opponents’ legal arguments are baseless. Section 316 of the Communications Act confers broad power to modify the terms of all existing licenses to further the public interest, and opponents cannot and do not cite other provisions that countermand this authority. Their arguments against other provisions cited by the Commission stand on shaky legal ground, citing dubious precedent. And their argument that a Commission mandate would retroactively interfere with bidders’ expectations backfires: it was the reasonable interoperability expectations of A Block bidders that were frustrated by AT&T’s interference in the 3GPP process. Mandating interoperability would counteract this bad-faith interference and restore the genuine expectations of Auction 73 bidders.

Public Interest Commenters support full 700 MHz Band interoperability because it will mean more competition, more choice, and more consumer convenience in a wireless marketplace that currently has very little of these things. Accordingly, in this proceeding we strongly urge the Commission to intervene swiftly to ensure interoperability in the Lower 700 MHz Band, so as to promote meaningful competition in Lower 700 MHz Band LTE services to the ultimate benefit of consumers.