T-Mobile is still pressing its case to the FCC to encourage the organization to reserve more spectrum for smaller carriers in the 2016 600 MHz broadcast spectrum auction. The carrier is concerned that the way the auction is currently designed will enable Verizon and AT&T to end up with most of the spectrum licenses that are up for bidding.
On December 17th, a meeting was held between T-Mobile’s vice president of federal regulatory, its director and chief of engineering and technology policy and FCC Chairman Tom Wheeler’s legal advisor. During the meeting, each representative reiterated the importance of low-band spectrum as well as auction’s spectrum reserve. T-Mobile previously argued that at least half of the spectrum that is cleared in a given market should be reserved for smaller carriers.
It has been suggested for the FCC to increase the size of the spectrum reserve from three blocks to four. T-Mobile’s filing stated, “Expanding the reserve would ensure that the two dominant carriers will be forced to compete with one another in the auction and that sufficient blocks will exist for two non-dominant carriers to acquire spectrum sufficient to compete nationally against the two dominant providers.”
The auction will comprise of two parts, with the first being a “reverse” auction, in which broadcasters agree to sell spectrum rights. The FCC will then conduct the “forward” auction, where carriers will be able to bid on the spectrum licenses. Afterwards, the spectrum will be “repacked,” according to which stations have relinquished spectrum.
Earlier this year, the FCC approved tentative 600 MHz auction rules designed to prevent AT&T and Verizon from acquiring all available spectrum in that up to 30 MHz of spectrum would be reserved for smaller carriers.
T-Mobile has contended that if a maximum of 30 MHz is reserved, AT&T and Verizon will be able to divide unreserved spectrum among them and pay less than they should. However, if four blocks were set aside as a reserve, AT&T and Verizon would have to bid against one another for unreserved spectrum, which would not only increase auction revenues; it would ensure that there would be enough reserved spectrum for the two smaller carriers to obtain sufficient airwaves to compete nationally.
In setting its tentative rules, the FCC has set an initial benchmark of $1.25 per MHz-POP that needs to be reached in the largest markets before cell carriers can place bids on reserved spectrum. However, T-Mobile argued that the specified pricing would “discourage forward auction participation and lower revenues” and “frustrate reverse auction participation and reduce spectrum clearing by preventing willing broadcasters from selling licenses to forward auction participants willing to pay the broadcasters’ asking prices.”
It is also speculated that this would make AT&T and Verizon’s “anti-competitive foreclosure strategy easier to implement.”
