Stephenson: AT&T would accept limits to spectrum purchases during incentive auctions

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AT&T (NYSE:T) is open to rules for the 600 MHz broadcast TV spectrum incentive auctions that would limit how much spectrum any one carrier could acquire, but wants such rules applied evenly, according to AT&T CEO Randall Stephenson.

AT&T CEO Randall Stephenson

Stephenson

Stephenson said it was very wise that FCC Chairman Tom Wheeler decided last week to push the start of the auctions back to mid-2015. But he said it is "still going to be a heroic effort to get this put together," because the auction involves incentivizing broadcasters and carriers to participate.

"We would be supportive of rules around the auction that would limit the amount of spectrum any one company could garner," Stephenson said, as long as "everyone is bound" to that rule. The AT&T chief, speaking at the at the UBS Global Media & Communications Conference, said that "the more restrictions you begin to put on the auction participants" the more it will drive down the revenue the auction will produce, and the more it will increase the risk of an auction failure.

Last week Wheeler said one of the FCC's key goals is ensuring that all carriers have enough spectrum to compete and operate their networks, which some took as a signal that the FCC will put in place rules to ensure that smaller carriers including Sprint (NYSE:S) and T-Mobile US (NYSE:TMUS) get access to 600 MHz spectrum. AT&T and Verizon Communications (NYSE:VZ) have argued in general against setting limits on how much spectrum they can acquire in the auctions.

Stephenson noted that over the past several years AT&T has been busy acquiring spectrum. Some of the most notable transactions include the 30 MHz of 2.3 GHz WCS spectrum it pieced together as well as Qualcomm's lower 700 MHz D and E Block spectrum, which Stephenson has said AT&T will use for LTE Broadcast. AT&T has also acquired lower 700 MHz B Block spectrum from Verizon, and will get AWS spectrum through its pending transaction to buy Leap Wireless.

"I think it's really good," Stephenson said of AT&T's spectrum position, but he added that the company is "encouraging the FCC to keep pushing on the government auction" because by 2018-2019 carriers will be clamoring for more spectrum.

Stephenson also touched on the recent move toward device financing among the Tier 1 carriers, and AT&T's recent price changes. "The industry has made what I think is a transformative move," he said, explaining that handset financing creates a more transparent relationship between carriers and consumers.

AT&T has denied its new Mobile Share Value plans, which don't require a contract, are a response to competition, but many analysts and market observers see the plans as a pushback against T-Mobile, which has seen strong subscriber growth this year since it removed device subsidies from its plans.

Stephenson said that device financing plans improve the subsidy model for the carriers. He said in the past carriers offered aggressive subsidies to get customers to buy smartphones, but now carriers are focused on maintaining their smartphone subscriber bases instead of acquiring new customers. As carriers get more into this "maintenance mode" he said, "device financing plans are really very critical to doing that."

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