AT&T, FCC spar over incentive spectrum auction rules

AT&T (NYSE:T) and the FCC are locked in an increasingly contentious battle over proposed rules for incentive auctions of broadcast TV spectrum, with AT&T arguing that the FCC "might actually design auction rules that radically restrict AT&T's ability to participate."

Last week at the Consumer Electronics Show, FCC Chairman Julius Genachowski pressed for Congress to give the commission the authority to conduct the auctions, but he said that Congress should not tie the FCC's hands in how it manages the auction process.

"One proposal would prohibit the FCC from allocating any recovered spectrum to innovative unlicensed use; another would eliminate traditional FCC tools for setting terms for participation in auctions," Genachowski said in a speech last week at CES. "A broad range of America's top experts on auctions agree that it would not be wise to prejudge or micromanage FCC auction design and band plans."

At stake is an estimated $25 billion that could be generated by the auction of spectrum licenses currently held by the nation's local TV broadcasters. Genachowksi said Congress will make a decision on incentive auctions by March 1.

In a blog post clarifying its position, Robert Quinn, AT&T's senior vice president-federal regulatory, said the company is concerned that the FCC may design the auctions in a way that blocks AT&T from participating. "The proposed statutory language ensures any qualified entity's right to participate in the auction and prohibits the FCC from blocking an otherwise qualified bidder from participating in the auction--i.e., creating rules designed to pick winners and losers in the auction itself," he said.

Quinn cited several instances of the FCC tinkering with spectrum conditions, including the open access provisions the FCC placed on the 700 MHz auction. The FCC also prohibited AT&T and Verizon Wireless (NYSE:VZ) from acquiring more than 25 percent of LightSquared's network capacity, a stipulation the agency inserted into an order that created wholesale LTE provider LightSquared.

Meanwhile, T-Mobile USA, AT&T's erstwhile acquisition target, leapt the the FCC's defense on the issue. "T-Mobile strongly supports the chairman's ongoing efforts to obtain incentive auction authority and to make more spectrum available for the mobile industry," T-Mobile said in a statement. "Spectrum is the 'life blood' of the wireless industry and in a world of scarce spectrum opportunities, it is vital the FCC, as the expert agency, have the ability to design auctions to ensure robust competition exists for consumers."

For more:
- see this AT&T blog post
- see this Bloomberg article
- see this The Hill article

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