AT&T Duels with Sprint, Others Over Spectrum Legislation

AT&T is in a battle royal with smaller wireless carriers over legislation that would limit the authority of the Federal Communications Commission to conduct auctions for wireless spectrum in a manner that the agency sees fit.

In a letter submitted on Wednesday to some members of Congress, AT&T’s rival Sprint and several other wireless operators  including the carrier AT&T failed to buy, T-Mobile USA  raised concerns over language contained in a mammoth bill that would extend payroll tax cuts for Americans.

“Stripping the FCC of its auction design discretion would disserve the public interest by permitting unchecked participation by the two largest, best-funded carriers in the future spectrum auctions,” stated the letter, referring to AT&T and Verizon Wireless. “That would discourage smaller competitors from participating in future auctions thereby reducing auction revenues and limiting wireless competition and innovation.”

In a blog posting Wednesday, AT&T’s Jim Cicconi asserted that any company should have the right to bid on any spectrum that is available in an auction.

“This group, however, wants the FCC to stack the deck in its favor,” wrote Cicconi, AT&T’s senior executive vice president of external and legislative affairs.

“These companies should be prepared to compete in a fair and open auction,” he added, “and should stop seeking a rigged spectrum auction that would harm consumers and cost the Treasury billions.”

The head of an organization that represents Sprint and other companies that compete with AT&T and Verizon Wireless raised concerns that the nation’s two largest wireless operators would be in a position to buy all the spectrum available on the market if the FCC is deprived of authority to place terms and conditions on auctions.

“If the FCC couldn’t split the licenses and limit the amount of spectrum that each person could give in a market on a license, then you’ll have two bidders buying two national licenses,” said Steven Berry, president and CEO of RCA – The Competitive Carriers Association, in a telephone interview. Wireless operators, Berry added, “will tell you spectrum is the lifeblood of the wireless world. The best way to eliminate your competition is to make sure they become spectrum starved.”

The relevant legislation appears to prohibit the FCC, in connection with spectrum auctions, from requiring a wireless carrier to sell access to its network on a wholesale basis or impose obligations concerning how an operator manages and prioritizes traffic on its network. The language also appears to preclude the FCC from keeping any company out of a bidding process so long as it meets certain financial and other qualifications.

In a speech last month, FCC Chairman Julius Genachowski expressed his opposition to legislative proposals that would limit the FCC’s authority over auctions. “A broad range of America’s top experts on auctions agree that it would not be wise to prejudge or micromanage FCC auction design and band plans,” he said.

America’s largest wireless operators certainly consider spectrum to be a vital consideration in their strategies for growth. AT&T often cited its need for spectrum while pursuing its acquisition of T-Mobile USA. In December, AT&T pulled the plug on the $39 billion deal in the face of strong opposition from the FCC and U.S. Department of Justice.

Verizon Wireless, the largest wireless provider, is hoping the FCC will grant the carrier approval to purchase 122 spectrum licenses from a consortium of cable companies led by Comcast.

In a filing with the FCC requesting approval for the license transfers, Verizon Wireless disclosed that it “has sufficient spectrum to meet its immediate needs, and generally to meet increased demands in many areas until 2015.” The company warned, however, it will need to purchase additional spectrum in the meantime because it can take years to put such assets to use.

Asked about Wednesday’s letter from Sprint and other wireless operators in connection with the so-called “JOBS” Act, a spokesman for Verizon gave a response that was rather bland and innocuous: “We have consistently supported open and fair incentive auctions, with Congress and the FCC fulfilling their appropriate roles in the overall process,” the spokesperson stated in an email.

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