It’s quite evident that both AT&T and Verizon are getting thoroughly agitated by T-Mobile’s continued accumulation of spectrum, both directly and through lease arrangements. Once a distant third, T-Mobile claimed national dominance in 5G coverage last year and threatens to clobber its two rivals in mindshare.
Verizon registered its spectrum concerns last month in a petition asking the FCC to reconsider T-Mobile’s 600 MHz lease arrangements with Columbia Capital, which controls Channel 51 License Company and LB License Co. licenses. Verizon argued that these arrangements will “exacerbate the extent to which T-Mobile exceeds the Commission’s 250 MHz screen for low- and mid-band spectrum in the relevant markets,” including those where it already exceeds the screen by more than 100 MHz.
T-Mobile holds more low- and mid-band spectrum licenses than Verizon and AT&T combined, an advantage the “un-carrier” is all too happy to brag about. Now, Verizon and AT&T are crying foul, something they were mostly mum about leading up to T-Mobile’s closure of the Sprint transaction, where it acquired 160 MHz on average of 2.5 GHz in the top 100 markets.
AT&T piled on last week with a filing where it said the combination of Sprint and T-Mobile has resulted in an “unprecedented concentration of spectrum in the hands of one carrier.” In fact, “the combined company exceeds the Commission’s spectrum screen, often by a wide margin, in Cellular Market Areas (CMAs) representing 82 percent of the U.S. population, including all major markets,” AT&T stated. “This level of concentration requires much more transparency into how the Commission evaluates transactions (and auction applications) involving spectrum aggregation in excess of the screen.”
RELATED: Verizon tries to prevent T-Mobile from getting more 600 MHz spectrum
AT&T called for changes in the commission’s review process and a re-examination of how the commission approaches its spectrum screen, which is something the FCC crafted years ago to measure whether one carrier’s wireless holdings were getting so big as to cause competitive harm.
“If the Commission determines that an entity’s acquisition will have an anti-competitive impact on any specific market – which it has previously done when the acquisition materially exceeds the defined thresholds – it can require that entity to divest a portion of its holdings or bar additional acquisitions in the relevant areas,” wrote Joan Marsh, EVP of Regulatory & State External Affairs at AT&T in a blog post last week.
In the case of T-Mobile’s 600 MHz leases, the FCC needs to clarify how the screen was applied, but it also needs to provide guidance on how the screen will be applied moving forward, according to Marsh.
“If the spectrum screen is to continue to have meaning, the Commission needs to explain how it will be applied so there is some clarity on when, and under what circumstances, entities will be permitted to continue to amass holdings in excess of the screen. Absent such clarity, the screen will become an empty vessel,” she wrote.
Ahead of T-Mobile’s closure of the Sprint transaction, Verizon and AT&T didn’t exactly scream their concerns about the spectrum the new T-Mobile was amassing. They mostly stood on the sidelines as merger opponents made their case.
Now, however, they’re chronicling their concerns before the auction of C-band spectrum starts in December. T-Mobile CEO Mike Sievert last week predicted his two rivals would “absolutely kill each other over C-band,” spending billions of dollars in moves that stress out their balance sheets, all the while chasing T-Mobile in the 5G mid-band party.
In her blog, Marsh said T-Mobile has historically been one of the loudest proponents of aggressive application of the spectrum screen to prevent spectrum acquisitions. However, “in the wake of its acquisition of Sprint (in which the FCC declined to require any divestitures), T-Mobile itself now exceeds the Commission’s screen by an unprecedented margin throughout much of the country,” she wrote. “And T-Mobile continues to add additional spectrum to its hoard. Additional spectrum leases with Dish will cause T-Mobile to exceed the 250 MHz screen by as much as 136 MHz.”
In its September 18 filing with the commission, AT&T said it takes no position on whether T-Mobile’s lease applications were properly accepted by the FCC. However, it believes that the FCC should provide an explanation as to why it permitted T-Mobile to further exceed the spectrum screen. Typically, the commission would issue a written order that includes an analysis supporting whatever decision it reaches, and that wasn’t done here. “The Commission’s failure to issue a written order in a transaction allowing spectrum aggregation in excess of the screen to this degree is highly unusual,” AT&T wrote.
The operator notes that the clock is ticking. Bidding on the C-band auction starts in less than three months, and the commission has stated it will apply its spectrum screen and case-by-case review to the long-form application process. If T-Mobile participates in the auction, the commission will almost certainly be forced to contend – for the first time – with the situation of applying its spectrum screen to an applicant whose holdings already exceed the screen “by a wide margin.”
Time to re-evaluate spectrum screen?
It’s interesting to note that in a separate proceeding before the commission, T-Mobile recently argued that the current spectrum screen is “woefully out of date.” The commission’s spectrum aggregation policies were initially formulated when a limited number of spectrum bands were designated for commercial mobile services. Since then, the commission has licensed significantly more spectrum, much which is not included in the spectrum screen.
If you were guessing the “un-carrier” was alluding to millimeter wave (mmWave), of which Verizon has a ton, you’d be correct.
“Millimeter wave spectrum, which is the centerpiece of other providers’ 5G service offerings are not included in the screen,” T-Mobile told the commission (PDF). “Similarly, other licensed spectrum, like the 3550-3650 MHz band, or 700 MHz spectrum used in connection with the FirstNet network (used by AT&T to provide competitive service), are available to provide commercial services but are not included in the screen.”
T-Mobile also said the spectrum screen doesn’t include unlicensed spectrum, which is increasingly being used to provide competitive wireless services, particularly by cable companies.