T-Mobile, Charter Plead for More Spectrum in 600 MHz Auction

By Josh Long

Smaller wireless carriers and pay-television providers are continuing to press the Federal Communications Commision to set aside more airwaves for them in an upcoming ‘incentive auction” for spectrum to the detriment of AT&T and Verizon Wireless.

T-Mobile on Tuesday renewed its pleas that the FCC increase the amount of reserved spectrum to 40 megahertz from 30 megahertz in the 600 MHz auction where broadcasters will have the chance to exchange their television spectrum in exchange for a portion of the proceeds that will be paid by wireless carriers.

The FCC plans to reserve spectrum for regional carriers and wireless providers that don’t hold at least 45 megahertz of low-band spectrum in a particular area, according to T-Mobile’s August petition requesting that the Commission set aside more spectrum.

The unprecedented auction is anticipated to be held next year and fetch as much as $45 billion.

Neville Ray, T-Mobile’s chief technology officer, said AT&T and Verizon Wireless control approximately 73 percent of all low-band spectrum that is available for commercial use.

“Without a reserve of at least 40 megahertz, AT&T and Verizon will be able to increase their low-band spectrum holdings, entrench their dominant positions in the wireless marketplace, and choke off any threat of competition in the future,” he wrote in an FCC filing.

Neil Grace, an FCC spokesman, declined to comment.

T-Mobile’s argument is one AT&T and Verizon Wireless have heard a number of times before — and refuted.

The FCC has already “concluded that making the reserve larger would fail ‘to provide all bidders with an adequate opportunity to acquire licenses in the 600 MHz spectrum,’” AT&T pointed out in a March FCC filing.

AT&T also said T-Mobile – and all the auction participants – are free to bid on any of the unreserved spectrum.

Last month, Verizon Wireless argued companies clamoring for a reservation of additional spectrum are just being greedy. The licenses AT&T and Verizon Wireless cannot bid on enable Dish, Sprint and T-Mobile “to win spectrum at below-market prices,” wrote Kathleen Grillo, Verizon senior vice president of federal regulatory and legal affairs, in a May 18 blog.

“This special treatment not only robs taxpayers who won’t get paid what the spectrum is actually worth, but also harms consumers by …

… limiting the amount of spectrum they can access for mobile broadband,” Grillo said. “T-Mobile, Sprint and Dish may play the sympathy card at the FCC, but they are multibillion-dollar corporations capable of bringing serious money to the auction table and bidding for spectrum on the same terms as everyone else.”

The spectrum that is up for grabs in the incentive auction is especially valuable “because it penetrates buildings more readily and covers a much wider geographic area with fewer transmitters than higher-band spectrum,” Ray wrote.

Another company that is pressing the FCC to reserve 40 megahertz is Charter Communications Inc., which announced plans last month to merge with Time Warner Cable. Charter is part of Save Wireless Choice, a coalition of several companies and organizations that are calling for the FCC to preserve competition in the 600 MHz auction.

“The spectrum reserve will provide non-nationwide carriers and those carriers that do not already have significant low-band holdings access opportunities to the 600 MHz band,” Charter said last month in an FCC filing. “Without a meaningful reserve, however, rural and regional competing providers and new entrants will not be able to obtain the spectrum, and competition, consumers, and auction revenues will suffer.”

In recent days, some Pennsylvania state lawmakers have called on the FCC to increase the size of the spectrum reserve in order to promote competition.

“Because the upcoming incentive auction represents [what] will likely be the last opportunity for any wireless service provider to acquire low-band spectrum in the United States, it is imperative that the FCC adopt appropriate policies that permit all wireless providers to secure meaningful quantities of critical low-band spectrum,” said state Rep. Robert Godshall, a Republican, in an FCC filing. 

Last year, FCC Chairman Tom Wheeler characterized the auction as an “unparalleled business opportunity” in a letter to broadcasters. Broadcasters’ participation in the auction is voluntary, but FCC officials said that their participation is crucial to its success.

In large markets including Los Angeles, New York and Philadelphia, FCC staff estimated individual broadcasters could fetch hundreds of millions of dollars. Even in smaller markets that are adjacent to larger cities, such as Providence, Rhode Island, the FCC estimates broadcasters could reap tens of millions of dollars.

The auction will be comprised of two parts: a “reverse auction” in which broadcasters relinquish their spectrum rights in exchange for compensation; and a “forward auction” in which mobile operators bid for licenses.

In an October progress report, the FCC said it anticipated the auction will begin in early 2016.