AT&T plays FirstNet card in clash over 600 MHz auction rules

AT&T (NYSE:T), battling to keep regulators from restricting its access to spectrum in the upcoming auction of TV broadcast spectrum, said spectrum set-asides proposed by T-Mobile US (NYSE:TMUS) would curtail auction proceeds earmarked for public-safety communications and thus deprive first responders of the modern communications tools they need.

"The set asides and restrictions proposed specifically by Deutsche Telekom's U.S. subsidiary, T-Mobile, would drastically limit the amount of spectrum AT&T and Verizon (NYSE:VZ) could bid upon at auction thereby effectively guaranteeing T-Mobile the ability to obtain substantial amounts of spectrum at an artificially low cost subsidized by U.S. taxpayers," wrote Bob Quinn, AT&T's senior vice president-federal regulatory and chief privacy officer, in a blog entry.

"While that subsidy proposal might permit T-Mobile's parent company, Deutsche Telekom, to build more broadband in Europe, it will do nothing to protect American citizens at home where we work and live because it would mean less spectrum being auctioned and less revenue to pay off our national debt and finance a long overdue national public safety network," he said.

During a May 29 meeting with Ruth Milkman, chief of the FCC's Wireless Telecommunications Bureau, and other FCC staffers, a number of T-Mobile executives pushed for an auction spectrum aggregation rule that would restrict AT&T and Verizon Wireless to a "one-third limit on spectrum holdings below 1 GHz."

They noted, for example, that if Verizon controls 84 MHz, or 63 percent, of all low-band spectrum in nine markets, the cap would preclude it from winning 600 MHz licenses in those particular markets. However, T-Mobile also offered up an "exception," via which the FCC could assure that, regardless of how concentrated a bidder's spectrum holdings are in a given county, a bidder could always acquire a single 5x5 MHz block of spectrum at auction.

The 600 MHz auction, planned for 2014, is creating a quandary for the FCC, which is being encouraged by the Department of Justice and others to restrict bidding by AT&T and Verizon. However, the commission is also responsible for convincing a substantial number of broadcasters to relinquish their 6 MHz pieces of spectrum in a reverse auction, enabling the commission to then auction off those frequencies for wireless broadband use. Excess auction proceeds are earmarked to provide $7 billion in funding for the national public-safety broadband network that will be overseen by the First Responder Network Authority (FirstNet).

Last month, the Public Safety Alliance (PSA), a partnership of public-safety associations, urged the FCC in a letter to recognize that "the goal of using the auction proceeds to deploy FirstNet depends upon a successful auction that realizes the full value of the repurposed broadcast spectrum."

Quinn contends that an open auction with no bidding restriction is the only way to achieve full spectrum valuations.

He also noted Sprint Nextel (NYSE:S) and T-Mobile both chose not to participate in the 700 MHz spectrum auction, which AT&T and Verizon dominated. However, during the last major auction in which T-Mobile participated--that being the AWS 1700/2100 MHz spectrum auction in 2006--T-Mobile won more spectrum than either Verizon or AT&T.

For more:
- see this AT&T blog entry
- see this T-Mobile letter
- see this Public Safety Alliance letter

Special Report: FierceWireless' spectrum auction guide: What you need to know about the upcoming auctions

Related articles:
Entner: Managing market share by restricting spectrum ownership - warnings of a managed economy?
Sparks fly at Senate hearing about spectrum auctions
It's Verizon and AT&T vs. Sprint and T-Mobile in the 600 MHz auction battle
FCC seeks input on alternative band plans for 600 MHz auction
T-Mobile spars with AT&T over rules for broadcast spectrum auction

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