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As the Federal Communications Commission prepares to adopt rules for a 2015 spectrum auction, the nation’s four biggest wireless providers continue to argue over whether the agency should reserve a portion of low-band spectrum for carriers that lack such capacity.
AT&T (116 million customers) and Verizon Wireless (103 million retail connections), the two largest wireless carriers, oppose a plan that would exclude them from bidding on all the low-band spectrum in an “incentive auction” through which TV broadcasters will have the chance to relinquish airwaves for a portion of the anticipated billions in proceeds.
Sprint and T-Mobile USA have had opportunities to purchase low-band spectrum in the past and are large companies that shouldn’t get preferential treatment, AT&T and Verizon Wireless said in filings with the FCC.
The FCC is expected to vote Thursday on rules for the auction during its open meeting.
In a meeting with FCC officials, “Verizon stressed that it would be perverse and unjust for the Commission to adopt auction rules that subsidize some large multinational companies at the expense of their competitors,” Verizon declared in a May 6 FCC filing. “T-Mobile and Sprint are large corporations with established, well-financed corporate parents. They and their parent corporations are more than capable of paying substantial amounts to acquire spectrum in the incentive auction if they choose to do so.”
T-Mobile acquired more spectrum than AT&T and Verizon combined the last time it participated in an auction, spending $4.2 billion, Verizon said.
The filing also said Sprint holds nearly twice as much overall spectrum as Verizon while pointing out T-Mobile has acquired 700 MHz A Block licenses, covering nine of the ten top markets and 70 percent of its customer base.
In a separate filing, AT&T sought to dispel the notion that it was given most of its low-band spectrum in the 1980s. Rather, the company purchased more than 97 percent of the spectrum at an auction or through transactions in the secondary market, AT&T said.
“Sprint and T-Mobile had their own opportunities to acquire low-frequency spectrum, but they consciously chose not to, purely for reasons of business strategy,” AT&T stated in a May 2 FCC filing.
“AT&T is missing the point,” responded Kathleen Ham, vice president of federal regulatory affairs with T-Mobile USA, the fourth-largest wireless carrier with approximately 49 million customers. “Competitions matters. The rules the FCC is proposing are designed to benefit consumers in a wireless marketplace dominated by AT&T and Verizon.”
In a May 2 FCC filing, T-Mobile asserted the FCC has explicit authority under Section 6404 of the Middle Class Tax Relief and Job Creation Act of 2012 (Spectrum Act) to reserve blocks of spectrum in order to promote competition.
In a meeting last month with the FCC, Sprint, T-Mobile USA and other competitive carriers expressed their support for the FCC’s proposed framework governing the auction.
“It is critical that smaller carriers and carriers that currently have little or no access to low-band spectrum become part of the 600 MHz ecosystem, allowing them to leverage economies of scale and provide new consumer services,” T-Mobile USA said in an April 28 filing, commenting on an April 24 meeting between FCC officials – including commissioner Mignon Clyburn – and competitive carriers. “As a result, the Commission’s proposed framework will lead to greater auction revenue and higher payments to those broadcasters who voluntarily sell their spectrum.”
The low-band spectrum is important to wireless carriers because it can travel longer distances and better penetrate buildings and other obstacles than higher-band spectrum, resulting in lower costs to deploy it, according to Sprint, T-Mobile USA and others in a separate FCC filing.
“The broadcast TV incentive auction is one of the most significant proceedings in terms of the future of the mobile broadband industry and in terms of maintaining our global leadership in the mobile Internet,” said Scott Bergman, vice president of regulatory affairs with CTIA-The Wireless Association, in a phone interview last month with Channel Partners.
The groundbreaking auction will mark the first one since roughly $19.5 billion was raised in an auction of 700 MHz spectrum. That was in 2008 when the iPhone was a baby and before tablet computers flooded the American market.